Stand Out to Investors: Mastering Differentiation for Life Sciences Companies

Fundraising isn’t a design competition, it’s a communications competition. 

In the sage words of Eminem, "you only get one shot, do not miss your chance to blow." And that one shot to make your investor deck stand out lasts less than 4 minutes. 

You read that right. A study revealed that investors don’t look at pitch decks for very long — just an average of 3 minutes and 44 seconds.

Many life sciences companies are focused on groundbreaking solutions that have the possibility to transform healthcare as we know it. Yet capturing the attention and securing the support of investors is a crucial challenge.

In the dynamic and ever-evolving landscape, it's not enough to have an innovative idea or a revolutionary product. To secure the backing of medtech investors, you must be able to communicate the immense potential and value of your innovation in a way that captivates and convinces them you’re the horse to bet on.

First, let’s look at the current market investment temperature.

The biotech and life sciences sector saw significant venture capital activity from 2019 to mid-2022, raising nearly $20 billion annually. However, this trend declined sharply due to rising interest rates and the US Inflation Reduction Act (IRA), which restricted price increases and caused investor hesitation.

Despite these challenges, opportunities are emerging for private equity and venture capital investments in life science companies. The IRA's provisions to reduce drug spending and increase treatment access, coupled with the focus on cost control, present new avenues. The recent US debt ceiling bill may also facilitate investment, but investors will prioritize companies delivering innovative value-based care solutions or products. 

Today life sciences companies will need to stand out in an increasingly competitive value-based care-driven environment where the price of entry is improving efficiency and outcomes. But standing out to investors is proving harder than ever.

So, let’s unravel the secrets of igniting investor interest. We’ll explore insights, strategies, and practical tips to help you craft a compelling narrative and present a case that resonates deeply with those who hold the purse strings to unlock financial backing.

POV First

Your story is what investors buy into. If you don’t tell a clear and compelling story, you’re wasting their time. Why would you do that?  

To make your story worthy of their time, lead with the problem not your product. And the problem you’re solving better be a big one. 

Center your point of view (POV) narrative around the current state and future state of a specific aspect of healthcare. If you cannot convince an investor there’s something deeply broken, they won’t be interested in what your solution is to the problem even if you think it’s game changing.

Humans tend to look at the world though a lens that is deeply rooted in the legacy world. You essentially accept the world as it is and are looking to make things better. This, however, translates to incremental enhancements not exponential advancements. Most life sciences companies tell a story that puts them into the former category. So, it shouldn’t be a surprise when an investor passes.  

To forge a new future, your story must start by rejecting the status quo and reimagining the problem or solution to make a serious and positive impact. To simplify this concept, think of it as a different way to skin the cat. Everyone else is focused on improving X but you understand the biggest opportunity for impact is to address Y. 

Answer these questions to help frame your POV:
1. What's the accepted status quo that needs to change?
2. What's the problem with it?
3. How does this problem show up?
4. What are the consequences if this problem is not solved?
5. How can your solution uniquely solve this problem?
6. What positive changes occur in this new world you unlock?

Frankly they may not be aware of this problem you’re framing, so you have to make it real. Not just numbers but people. Focus on the value you would unlock. What’s going to change if you make this future happen? How is it measured? What trend line or quality metric is going to go up or down? Why is that critical to value-based healthcare today and tomorrow? Your ability to comprehend and communicate that slope is what matters.

We understand no investor just blindly accepts what you tell them. But if your POV is done well, a light will go off in their head and they’ll see why what you do is different, why it’s valuable, and the problem you uniquely solve. They’ll get it. If they don’t, it’s either the wrong investor or your POV needs work. If you’re really solving an urgent problem in a unique way, you likely just need to sharpen your story. 

Feel free to reach out to us if you’d like us to make a quick assessment of your POV. It’s usually something you can instantly tell. 

There’re a few other pitfalls and power moves to keep in mind as you build your story: 

Pitfalls

Position yourself or be positioned. Even if they’re experts in your space, the investors will likely call surgeons and physicians they know and try to vet your story. If you don’t tell them exactly what you are and why it matters, someone else will. 

Be aware of the anchoring effect. This is a cognitive bias whereby early information affects the perception of future information. If your investors don’t understand why you’re different than something that’s come before, they might group you under an existing category that was not well received by the market or had lackluster results. 

Don’t glom on to a hot space. Intentionally create a new space or category to define and own. It may seem like a good idea to anchor yourself in an existing, high-growth market, but to stand out you need to separate hype from the real drivers of a technology’s commercial promise. 

Excess is the enemy. Start out making a list of what you think is important to communicate. Then kill anything that isn’t critical. Additionally, use simple language. Keep revising until you can’t be clearer. If you can rewrite something to say the same thing in fewer words, you’ve made it better.

Power Moves

Create a category, not a product. By doing so, you are deliberately teaching the world the value of your category and controlling the narrative. Don’t just present features and benefits. Show how your technology and layers of innovation will create a different future for people. With a new category (versus a better product), you create a new space in people’s minds and distance from competitors and previous products. 

Name the villain. To get people to embrace your story and vision, you need to identify a goal that is crucial to your target audience’s very existence and frame the problem in those terms. You never want to blame your customers for what’s wrong. So, it can be very powerful to name a villain that’s getting in the way of them achieving their critical goal. Then you’re creating a new category solution that lets your key stakeholders be the hero and a cause they can get behind.

Be different. Don’t play a comparison game. Don’t use the same words to describe your product or technology as your competitors. If you do, you run the risk of selling an incremental benefit instead of focusing on how your product solves a meaningful problem and beats the named villain. Show them the difference different makes. Focus on what your customers will feel and the value they’ll experience when your category delivers on its promise. Save the technical details for another time.

Timing matters. There needs to be a clear “why now.” Explain why your solution hasn’t been built before now. There are often good reasons for this. What happened in the industry to make this the perfect time to act? Highlight the market forces in your favor. Make them worried they’re going to miss the next big thing because it is going to happen.

If you’re struggling to effectively communicate your life sciences innovation to investors, we're here to help. Reach out to us for a pitch deck assessment and discover how we can sharpen your story to ignite investor interest. Let's unlock the doors to funding together so you can go change the world.