VCs' Most Common Mistakes
This article was originally published in Start Up
Our VC correspondent details the 10 most common mistakes his colleagues make in investing in biotech--from investing in dataless hypothesis to firing management too soon (or too late).
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The most common mistakes made by biotech entrepreneurs in raising money and in managing venture-backed companies are: 1) Raising large amounts of pre-venture angel financing at increasingly high valuations before seeking venture funding; 2) Using a placement agent to raise an initial round of venture funding and/or investing time and money in fancy/lengthy presentation materials; 3) Raising more money than needed; 4) Choosing a venture fund based on valuation; 5) Racing to do a significant corporate partnering deal before the first round of venture financing; 6) Failing to be honest with investors and manage their expectations; 7) Deferring difficult personnel decisions; 8) betting on the timing of a clinical milestone, corporate partnering deal, or IPO; 9) relying on patent filings as an enduring corporate asset; and 10) failing to leave enough runway for the next financing.
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