SwampFox

Science + Image: A Formula for Financing Success

By Karl Kelly and Clare Morris

The best new technology won’t ever reach the market if the business founded on the discovery can’t obtain the funding necessary to become a successful company.

During the past five years, South Carolina has seen novel technology company formations in fields ranging from biotech to automotive. These companies are essential to the competitive position of the Palmetto State in the international marketplace.

South Carolina continues to work to bridge seed and early-round funding with increased financing programs through the Venture Capital Investment Act and more frequent venture capital conferences. However, as with all emerging Southeastern companies, our technology start-ups will need regional and national venture firms to complete a successful mezzanine round.

The life science industry has experienced broad swings in total annual financing during the past seven years (from $5.4 billion to more than $38 billion) yet, according to BIO, the total number of established biotech companies in the U.S. remained relatively constant (1,300 to 1,400 companies) during that time.

Moreover, almost every field of biotechnology has internal competition well-defined by existing companies with advanced products.

The challenge remains for emerging South Carolina companies to successfully vie for mezzanine financing within this highly competitive market. To be competitive, emerging companies must be sophisticated.

Venture firms are savvy investors that stay current on new emerging trends in science and technology. Potential investors need to be convinced that a company’s science is solid and protected, that the commercialization potential is high, that the firm has established industry partnerships in research, sales, or manufacturing, and that the management team has the energy and the business acumen to lead the company to success (and profitability).

A strategic branding and investor relations plan accomplishes these goals by calling for the development of a well-conceived company image and ensuring that the right people receive a positive, consistent, and memorable message about the company and its product.

Having name or brand recognition establishes early credibility and supports differentiation. For start-up biotech companies, a professional logo, an appealing brand identity, and convincing presentation capabilities should not be undervalued when it comes to securing financing. Without these, even the best companies can’t compete successfully for limited regional and national venture dollars.

Media relations have also become important in creating and maintaining investor interest. The more public “buzz” about the company, the greater the ability to sustain a higher company valuation.

While performing due diligence, an analyst will review a host of media sources and publications. Did key science journals review the original presentation of the technology? Were there press announcements about the development of the products, follow-up discoveries, senior management appointments, and the like?

How well a company’s science, products, and management team will “sell” is a component of a venture firm’s investment decision. Although frequently overlooked, image is that intangible element that—after the basic requirements are established—can sway the vote.

***************

Karl Kelly is CEO of SC Bio (The South Carolina Biotechnology Incubation Program) a public/private not-for-profit organization composed of industry, universities, and private companies collaborating to develop the life science industry in South Carolina. (www.scbio.org)

Clare Morris is President of The Clare Morris Agency, a full-service marketing and communications firm specializing in new technology companies and higher education. (www.claremorrisagency.com)