Finding and Winning Venture Capital for Medical Start-ups: A Canadian Model

Abstract

The health care industry is maturing and consolidating during a period when the demographics of increasing age and affluence are creating unprecedented demand for new and innovative modalities of prevention, diagnosis and treatment of disease. New companies are being incorporated to meet this demand, in many cases being set up to commercialise one or more technologies. The management team of these start-ups is often comprised of the principal investigator and a business executive with industry experience, frequently in disciplines such as business development or marketing.

One of the first challenges facing the management team is to raise enough money to finance continued research and development, plus corporate and business development activities appropriate to the company's stage of development. One source of money, plus the knowledge of how to build technology-based businesses, is the venture capital community. There is a consistent perception that venture capital is limited and difficult to secure. The good news is that there is more investment capital available than ever before, and the pools are growing. This must be tempered by the understanding that venture capitalists have certain requirements for investment that new companies must meet before they can obtain financing.

This paper provides background on the venture capital industry as it pertains to Canada, and outlines the basics of what investors are looking for in technology-based start-ups.