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    If you're thinking about going the angel route, here are five critical things to know see more

    If you're thinking about going the angel route, here are five critical things to know about the process that can lead to a successful round.

     

    For startups, a great alternative to venture capital is angel funding. A silver lining that has rapidly emerged over the past year is the uptick of virtual angel investment groups. 

    At Keiretsu Forum we have pivoted online, a notable trend amid large angel investment groups, which means existing investors, no matter their location, can access and evaluate any of the deals that go through the network. Concurrently, new investors seeking to diversify their portfolios are gravitating to the virtual angel model. Member onboarding, due diligence, live presentations, and member meetings are now all conducted online.

    If you’re thinking about going the angel route, here are five critical things to know about the process that can help lead to a successful round:

     

    1. Prepare for virtual fundraising

    In a post-Covid-19 pandemic, world capital must be raised virtually. The biggest challenge for entrepreneurs is that investments are made without ever meeting potential investors face-to-face. There is minimal eye contact and little body language—which is the language of funding—in a Zoom meeting. The goal is selling the upside potential and creating interest.

    Try and get into the mind of the angel, who will be evaluating you and asking themselves:

    • Who are you?
    • Why would I want to be involved and work with you?
    • Do I support the journey, the mission, and the impact?
    • Is the technology compelling?
    • How vast is the market opportunity?

    All those questions must be addressed during the pitch presentation.

    Fundraising as an ongoing process, with presentation and speaking skills evolving over the course of the campaign. Constantly evaluate your own presentation: Is the audience-market quickly defined? What is the pitch about? Why is it being pitched? Who will benefit from it?

    Indeed, the most effective technique for improving your pitch skills is to watch entrepreneurs with similar stage companies deliver pitches. Presenting to 50, 60, or hundreds of investors is no small task. Before and during the process, put your ego aside, and attend a few online investor forums to see how the best do it.

    A good pitch coach is someone who can simplify the process and make it less daunting. In addition to the pitch itself, not to be underestimated is honing the presentation skills that enable the entrepreneur to deliver an engaging and compelling presentation.

     

    2. Angels like familiarity

    Angels gravitate toward opportunities in the industries they have direct experience in, and the insights they can share with founders on how to successfully grow companies within those markets is invaluable.

    Relationships between entrepreneurs and angels can get started quickly and can be very hands-on, with angels oftentimes embedded within the company’s extended management and advisory network. In scenarios like this, the expertise, plans, and funding take place within an exciting and collaborative environment.

    “People invest in people they know, like and trust. Once an entrepreneur goes through the process of securing angel funding, they are part of a tight community.”

    People invest in people they know, like, and trust. Once an entrepreneur goes through the process of securing angel funding, they are part of a tight community. By example, approximately half the entrepreneurs that present to Keiretsu Forum are members of the group. Many are angels and entrepreneurs that have built and sold several companies.

    The companies that make it through the full process are typically ones who raise capital, have a track record of success, understand the fundraising process and the value of seed funding. This environment helps to cultivate relationships between the investors and the entrepreneurs.

     

    3. Due diligence is the force multiplier

    Due diligence is the key to a successful funding round. The process can be lengthy, taking upwards of 80 to 100 hours over six to eight weeks, but once completed the company is now able to syndicate and receive further capital.

    Typically, in an angel group setting, companies initially pitch first to a deal screening committee who determines if the opportunity is worthy of a full investor presentation. If there is interest, the due diligence process begins. Keiretsu Forum deploys on average 50 to 60 members that evaluate the opportunities and vote on inviting opportunities forward to the next step. Tight screening should be a confidence builder for both angel and entrepreneur.

    For example, Keiretsu Forum members back more than 80% of the companies that go through the process. An affiliated fund, Keiretsu Capital, will often invest alongside the members backing the company. This process gets repeated when the deal is syndicated across the network that includes numerous additional angel groups. At the end of the cycle, there should be 50-70 interested angels to close capital from.

     

    4. Protect intellectual property

    Most angel investment groups will not sign NDAs to conduct due diligence. It is critical to have a proper patent strategy to protect key intellectual property (IP). That said, due diligence plays a large hand in formulating that strategy, ensuring there is a good framework in place for the company to document a sustainable differentiation, with the freedom to operate and prevent competition from infringing on their patents.

    Most angel groups have IP attorneys who are members and conduct those reviews. Be careful about what you put in writing—angels should be able to understand what is going on with your business without you disclosing important assets.

     

    5. Family offices deliver patient backing

    The alignment between family offices and angel groups is the future of entrepreneurial finance. Indeed, family offices are experiencing a huge transfer of wealth (approximately $20 trillion) to the next generation of family members who are eager to make impact and diversity investments. Consider that more than one-half of the companies funded through Keiretsu Capital are now also funded by family offices.

    Moreover, unlike VCs, family offices are geared toward investing over a longer horizon and do not have an incentive to overly dilute the companies they invest in. Most important, family office investment adds a substantial balance sheet for fueling growth, and a sense of financial confidence for anticipated tough stretches.

    The symbiotic relationship between the angel investors that have the entrepreneurial expertise and the family offices that have the wealth that should most excite female entrepreneurs seeking to raise capital.

     

    Brianna McDonald is president of Keiretsu Forum Northwest, the largest chapter of Keiretsu Forum, the world’s biggest angel investor network ranked by Pitchbook #1 “Most active investors early stage US region” and “Most active investors late-stage US region.” Brianna is adept at screening companies for angel investment, coaching companies on presentation and investor relations, sales strategy execution, relationship management, and leading due diligence teams. Brianna believes in companies that have “multiple bottom lines”, in that they are not solely focused on profits but also focused on impact, social good, diversity, and making the world a better place for the next generation. 

  • Article
    Aclipse Therapeutics has been awarded a $2.1 million grant see more

    Aclipse Therapeutics is pleased to announce that one of the world’s largest biomedical research funding agencies has awarded Aclipse a $2.1 million grant to support the development of Aclipse’s M102 for the treatment of ALS. The grant is non-dilutive and will fund the completion of IND-enabling studies and will allow Aclipse to initiate the first-in-human studies for M102. The grant will also further fund the development of therapeutic biomarkers for M102’s efficacy and patient stratification. The grant award was the result of a highly competitive application and peer-review scientific process. 

    This most recent grant makes a total of over $2.8 million non-dilutive funds awarded to the M102 program in the last month and further validates M102’s biological approach and potential to become a targeted and life-saving therapeutics for ALS patients. 

    Raymond K. Houck, CEO of Aclipse Therapeutics, said: “We are honored by the support from FightMND which shares our vision for a novel and broad multi-disease pathomechanism approach to treating ALS patients.

     

     

     “The FightMND award also confirms M102’s success to date and validates M102’s potential to become a targeted and life-saving therapeutic for ALS patients.”

    The research forms part of the work of the University of Sheffield’s Neuroscience Institute, which aims to bring academics and scientists together from across varied specialties to translate scientific discoveries from the lab into pioneering treatments that will benefit patients living with neurodegenerative disorders.

    The study was supported by the National Institute for Health Research (NIHR) Sheffield Biomedical Research Centre, which is the UK’s only Biomedical Research Centre dedicated to Neurology. It is a research partnership between the University of Sheffield and Sheffield Teaching Hospitals NHS Foundation Trust, dedicated to improving the treatment and care of people living with chronic neurological disorders.

    Read the article to know more.

     

     Keiretsu Capital identified and invested in Aclipse Therapeutics, an innovative biopharmaceutical company that focuses on developing novel and highly differentiated drugs to address diseases with high unmet medical needs. We are confident in this company and team; they continue to meet their milestones and deliver on targets.” said Nathan McDonald, Managing Partner and CEO of Keiretsu Capital.  

     

    About Keiretsu Forum

    Keiretsu Forum, the world’s leading angel investor network with over 1,500 investors in 38 chapters on 3 continents. Keiretsu Forum has invested more than $500 million into more than 700 companies since inception. Keiretsu Capital administers funds on behalf of its Limited Partners - the Co-Investment & Opportunities Fund creates a diversified portfolio of technology start-ups backed by top tier angel groups and pursues the high upside value potential in these dynamic investment opportunities while promoting the sharing of risk inherent in any early-stage venture.  The firm is based in Seattle and San Francisco and its principals are veteran Silicon Valley and technology investors Randy Williams, Matthew C. Le Merle, and Nathan McDonald. 

    For more information please visit www.keiretsuforum.com or contact us.

     

    About  Aclipse Therapeutics 

    • Aclipse has an experienced management team that exited Thar Pharmaceuticals, where we developed a phase 3 orphan drug that was acquired by Grünenthal.
    • They have an ALS clinical advisory board of 5 of the top 10 ALS physicians in the world.
    • Their first product M102 is a disease-modifying, new chemical entity drug candidate for Amyotrophic Lateral Sclerosis (ALS, Lou Gehrig’s disease) with a significant upside to also treat in Huntington's disease, Friedreich’s ataxia, and Parkinson's disease.
    • M102 activates the Nrf2 and HSF1 pathways and, in animal models, not only stops ALS disease progression, but reverses the animals back toward the healthy state.
    • They can identify those ALS patients who respond to M102 vs. those patients who do not respond. This ability to precisely target specific patients increases our probability of clinical success by 3.1-fold according to industry data
    • The US spends $6 billion per year on treating ALS patients. M102 is projected to generate $2.3 billion/year in peak sales.

    Learn more - https://www.aclipsetherapeutics.com/

     

     

     

     

  • Article
    “I know there is a huge need for this product" says Kathy Fields, renowned dermatologist see more

    “We are the vagina queens,” declares Colette Courtion, CEO and founder of Joylux

     

    RACHEL BROWN, SEPTEMBER 15, 2020, beautyindependent.com 

    If the market hasn’t yet coronated the femtech firm atop the women’s intimate care territory, it might move in that direction now that Joylux is teaming up with direct-sales royalty. Kathy Fields, the dermatologist renowned in the beauty industry for joining forces with fellow dermatologist Katie Rodan on direct-sales brand Rodan + Fields and Proactiv, the acne solution infomercial powerhouse for Guthy-Renker currently in EQT-owned Galderma’s portfolio, has signed on as a Joylux investor and board member after her patients tested its red light-powered vFit and experienced results she describes as “life-changing.”

    “I know there is a huge need for this product. It’s the first at-home device that offers real science,” says Fields, who completed an internship in obstetrics and gynecology prior to specializing in dermatology. She adds, “It’s time we openly discuss and destigmatize the prevalent intimate health issues women face, and Joylux is well-positioned to lead this charge. I look forward to mentoring and partnering with the Joylux team as we work together to become category leaders in intimate care.”

     

     

    Aimed at menopausal women and created with gynecologist Sarah de la Torre, the $495 vFit harnesses LED light, heat and sonic vibration to combat pelvic floor weakness. Women using it for 10 to 12 minutes three days a week for six to eight weeks notice greater bladder control, reduced inflammation and enhanced sexual function. Approved by the U.S. Food and Drug Administration for wellness purposes, the device has been vetted in six clinical studies to validate its technology is effective. Courtion says, “All these things that women are dealing with, but no one is talking about, our products are for them.”

    Over the past five months, Courtion has raised about $1.2 million for Joylux to bring the total amount the company has secured to roughly $16 million. Individual angel investors like Fields, not large institutional backers, are responsible for Joylux’s funding. Although there’s been high-profile femtech investments—fertility startups Future Family and Celmatix have drawn $114.2 million and almost $80.8 million, respectively, according to Crunchbase—venture fund Rock Health points out that a mere 3% of the around 2,730 digital health deals done in the United States since 2011 involved women’s health.

    “It’s time we openly discuss and destigmatize the prevalent intimate health issues women face.”

    “It was one check at a time from one investor at a time over the course of six years,” says Courtion of Joylux’s fundraising process. “Hims got $100 million before it even launched. For me, the challenge is that VCs, when it comes to vaginas, they get all embarrassed, and they turn red. They don’t know if they can talk about vaginas in their meetings, but this is a huge opportunity. My goal is to raise a $10 million round that will just skyrocket us.” Joylux is on track to generate $5 million in 2020 sales. Courtion predicts it will become profitable within a year.

    The pandemic has pushed forward Joylux’s distribution strategy. Following in Clarisonic’s footsteps, the brand had been primarily sticking to the medical channel while maintaining its direct-to-consumer platform as a secondary channel. It reached 400 physicians’ offices, and Courtion had planned to concentrate more on DTC once it hit 1,000. However, with the pandemic diminishing physicians’ businesses, she decided to accelerate Joylux’s DTC pivot.

     

     

    Joylux CEO and founder Colette Courtion

     

    It introduced an online membership program enabling customers to pay for vFit, Photogenic Gel to pair with it and Intimate Care personal care products over six months at a savings of 35%. Courtion says the membership program is doubling to tripling expectations. Joylux is available beyond its website and physicians’ offices at the e-tailers Goop, CurrentBody, LovelySkin and Truth In Aging.

    Courtion anticipates department stores and television shopping networks becoming part of Joylux’s distribution mix. To date, though, she mostly hasn’t received a warm reception from them in the U.S. “Retailers are conservative,” says Courtion. “We are talking about the vagina, and that’s been a taboo word for so long that it’s been challenging to convince them to see the potential.” In Canada, Joylux has appeared on TSC and, last year, Courtion reports it drove $1 million-plus in sales for the television shopping network.

    “We will span the spectrum of women’s lives, from motherhood to menopause.”

    With Fields literally and figuratively on board with Joylux, a question of its prospects in direct-sales distribution arises. “Direct sales is all about person-to-person sharing, sharing our deepest concerns with our sister or best friend and getting trusted information from firsthand users. So, it could be a real possibility,” says Field. “These honest conversations happen naturally and organically with women. If we have something that works and can help our best friend with issues, we want to share.”

    Joylux owes its start to a conversation between girlfriends. Courtion, previously CEO of skincare device company JeNu Biosciences, and CEO and founder of Calidora Skin Clinic, came up with the concept for Joylux in 2012 when she began thinking about becoming a mother. “I was sitting down with my girlfriends, sharing my desire to become a mom, and they all had children. They said to me, ‘OK, Colette, be prepared to pee in your pants whenever you laugh of sneeze,’” she recounts. “I had no idea that women deal with such prevalent pelvic floor issues. They explained to me that, after you carry a baby, you lose muscle tone, and you experience this issue. My OBGYN hadn’t talked to me about it.” If doctors weren’t addressing extensive pelvic floor issues, Courtion figured there was room in the market for her to address them.

    Joylux has raised roughly $16 million. This year, the company is on track to generate $5 million in sales.Angela Carlyle
    

    In 2013, she focused on shoring up Joylux’s intellectual property. Research and development was the priority in 2014. In 2017, Joylux ventured into Canada and the United Kingdom. In 2018, it launched in the U.S. Last year, the company rolled out its clean Intimate Care personal care range with three products—gentle cleanser CleansHER, hydrating serum RevitalizHER and deodorizing mist RefresHER—priced individually from $20 to $65. The company’s product pipeline includes a cheaper version of its vFit Courtion calls a “connected device” and a second device within the vaginal health category that will be priced under $100.

    “Going into the development of a device, you have to keep in mind: How do you keep your cost of goods down? What so many companies do that don’t have experience in devices is they have a vision, and they build a product that’s too expensive,” says Courtion. “Going in, we were really smart about our cost of goods. We have nice margins that allow us to be flexible on pricing.”

    Joylux’s nice margins could come in handy in its eventual courtship of possible acquirers. “We want to be a billion-dollar women’s consumer health brand and the leaders in women’s intimate care. We will span the spectrum of women’s lives, from motherhood to menopause,” says Courtion. “We want to be known as the company that understands women’s intimate health better than anybody and, hopefully, a large CPG company will see the potential and acquire us, whether its P&G, RB or J&J.” Vagina queens indeed.

     

    Keiretsu Forum has supported and invested in Joylux

     

    About Keiretsu Forum

    Keiretsu Forum, the world’s leading angel investor network with over 1,500 investors in 38 chapters on 3 continents. Keiretsu Forum has invested more than $500 million into more than 700 companies since inception. Keiretsu Capital administers funds on behalf of its Limited Partners - the Co-Investment & Opportunities Fund creates a diversified portfolio of technology start-ups backed by top tier angel groups and pursues the high upside value potential in these dynamic investment opportunities while promoting the sharing of risk inherent in any early-stage venture.  The firm is based in Seattle and San Francisco and its principals are veteran Silicon Valley and technology investors Randy Williams, Matthew C. Le Merle, and Nathan McDonald. 

    For more information please visit www.keiretsuforum.com or contact us.

     

     

  • Article
    An Interview with Brianna McDonald on how to successfully raise funding during the pandemic. see more

     

    425 business, August 10, 2020: Interview with  Brianna McDonald on how to successfully raise funding during COVID.

    Despite a worldwide pandemic, entrepreneurs and investors continue the quest to uncover emerging-market drivers and opportunities. At Keiretsu Forum, we have funded nearly all of the companies this year that have participated in our (now virtual) online investment forum, with a continuous flow of due-diligence packages completed or syndicated new deals successfully closed. 

    We strongly believe there will be a V-shaped recovery for 85 percent of the economy; already there are favorable market indicators such as a stabilized and appreciating stock market. Available capital and liquidity also remain abundant. Companies that have significant demand drivers associated with COVID-19 are raising capital fairly quickly and efficiently in large amounts. Technology also remains an area of continued interest with a high quality of deal flow.

    A silver lining is we expect to see leaner, more efficient, and more focused companies moving forward, ready to take advantage of a market recovery. If you’re considering funding or in the process now, here are seven steps early-stage companies can take to become more attractive to investors.


    1. Strengthen the balance sheet by closing outstanding commitments, and explore venture debt and lines of credit.

    Companies should exhaust every opportunity to generate additional working cash flow without taking on additional liabilities. One way is to convert lines of credit or venture debt into expanded cash flow. Likewise, companies with inventory will want to increase stock, even though there might be volatility in inventory drawdowns and/or potential supply chain challenges. To do such, close any existing sales or partnerships because they can provide additional flexibility and cash where applicable. For example, Palarum offers a product for hospitals that prevent falls and just completed key pilot studies. It recently concluded a three-year purchase letter of intent from a key customer, which is leveraged to acquire additional financing that covered the cost of the product rollout.

    2. Negotiate with vendors/landlords/others to reduce or defer costs.

    On average, our portfolio companies are negotiating reduced rates cut at nearly 50 percent. If no reduction is available, look to get two or three free months deferred to the end of the lease. You might be surprised at how easy it can be to negotiate favorable terms. Replacing a tenant is a high-cost landlord who wants to avoid for otherwise high-quality growing companies.

    3. Immediately variabilize costs/shift to equity-based compensation where it makes sense.

    A great way to reduce cash burn is to increase option pools and/or create more equity-based incentive compensation in the form of stock options available to executive team members. Less cash-out equals less cash burned! Equity-based compensation is tied to milestones and is considered a variable cost.

    4. Slow down payables, including maximizing payment schedules against terms and conditions.

    This is another case of “Ask and Ye Shall Receive.” Negotiate longer payment terms, and/or purchase upfront or in bulk. That can drive substantial price reductions and savings of as much as 50 percent.

    5. Take swift action to cut costs and reduce burn rates — earlier decisions are rarely regretted.

    Where are you focusing your marketing spend? Where are you focusing on your business development efforts? Is that spend really realistic going forward? Is engineering fully focused on where it should be? If not, cut back as much of that discretionary spending to further reduce the burn rate. Look at ways you can be a more efficient customer-focused organization versus a market-focused one.

    6. Focus on revenue generation, reorder priorities, replan the road map to emphasize the top line.

    Maximize the top line and get healthy around that line of business. Start by replanning the go-to-market road map, with a focus on the core values and core customers that maximize survival. Oftentimes companies try to do lots of different things, but in reality, there are only one or two things they do really well. Everything else is a distraction that drives excess costs. Focus on the customers who have money and will have significant demand for your product or service. Then make sure to take really good care of them!

    7. Get in line now for government support/non-dilutive funding (e.g. DoD, NIH grants), etc.

    Most companies have probably filed for PPP funding; if not, do so immediately, but there are other opportunities for government funding. Many of our life sciences and health care technology portfolio companies, such as XYZ, have applied for DoD and NIH grants administered via the Small Business Innovation Research and Small Business Technology Transfer (STTR) programs.


    Brianna McDonald is president of the Northwest region of the Keiretsu Forum angel investment community.