Medtech Financing in Europe: Current State and Insights from Successful Raises | LSI Europe '24

Roger Brooks 00:07
Roger, so I'm Roger Brooks. I'm the founder and creator of RBrooks Group, a retained search firm based out of Boulder. I want to be able to introduce our panel, but I want our panel to also introduce themselves. I also want to tell a little bit of a story about them so you get some additional color. Sandrine, I'm just getting to know. We just met at this conference, and she's an investment banker. She's got all the knowledge base around what a company needs to have pulled together to be able to help them raise capital. So she's a great observer of companies and what they need to be able to go to the next level.

Dave. Dave Marver and I got to know each other a few years back on a CEO search. I'm the person that pulled him into a company that at the time was called GTX Medical, now called ONWARD. Dave, he probably won't say this about himself, so I'll say it for him. Dave, hopefully you don't get upset with me. He's done something that's quite remarkable. When you look at impactful CEOs and organizations, this one you can look at numerically. The needle that he moved when he joined the company was significant. They were probably at a, well, I might get my numbers wrong, but they had a pre-money valuation where investors were providing term sheets that were probably around the mid-30s. There was $85 million invested in the company, and so the investors wanted to make a change. Dave comes aboard, essentially with the company, didn't change much. It's really the same product, and Dave kind of rethought the strategy around the company and the markets, and most of all, figured out how to tell the story so an investor could see it. They can now visualize it. He took that company that was struggling at a $35 million valuation to what some think was the largest IPO in med tech history on the Euronext, with a market cap of about $350 million or so. He raised $100 million by going public, which would be a great question we'll get to: why on earth would you do an IPO when you don't have revenue yet? So he'll address that one.

And then we have Aidan Crawley on the scene with one of the most remarkable capital raises that's catching everybody's attention, pulling in a $100 million tranche investment from not unsophisticated investors. His investors seem to be some of the most sophisticated and experienced groups out there. So hats off to him. I can't wait to hear how he did that, but it's really neat to see. So why don't we go down the line? Give your own introduction of yourself and a bit about maybe the capital you've raised or things like that—a little bit of history.

Sandrine Cailleteau 03:21
Yeah. So hi, I'm Sandrine Cailleteau. I am responsible for covering European med tech and diagnostic companies. My background is in the industry where I worked for 20 years in various M&A and business development licensing roles. I've also been in your shoes, trying to raise funds for a listed AIM company just before the demand crisis. So that was quite an endeavor. I've been on the advisory side now for almost 15 years, with RBC Capital Markets for two years, and I've helped a number of companies with their Series B, Series C financing, crossover financing, and going to the US. Where I put all my effort is in bringing US investors on board for European companies to help them gain not only money but also expertise and connections into the US, and also supporting companies with their M&A needs. I see this as a partnership, and nothing makes me happier than to help innovative companies succeed and see their progress.

Aidan Crawley 04:25
Thank you, and thanks Roger for the opportunity to join this panel today. I am a US and EU citizen, born and raised in America, actually in Ohio, where they eat dogs and cats. I've spent my whole career in med tech. The first half was spent with Medtronic, and that was my first opportunity to come live and work in Europe and Switzerland. I fell in love with the opportunity to live here, in addition to working for a big company like Medtronic, where I had vice president roles in sales, marketing strategy, and corporate development. I've also founded two startups. I love to create cultures where there's a lot of innovation. I have three Time Magazine best inventions, and I'm hoping to add to that shortly. While CEO of ONWARD, I've raised capital via a convertible note, an IPO, a follow-on financing, and also debt financing. So I do what it takes, right? I have a broad range of experience that way.

Aidan Crawley 05:33
Hi, and I'm Aidan Crawley, the founder of Amber Therapeutics. I guess I made the mad move to come from tech to med tech. Maybe it's because I didn't know any better as the sort of route of managing to get this Series A done. I think my background was traditional, sort of software, and I was actually in FinTech. The opportunity to work with the co-founders that I'm now working with on the Amber opportunity was just so irresistible. I think that is the underlying basis for why we got this fundraising done. For me to move from where I was to want to do this and try and be all in, despite the difficulties with regulatory risk, clinical risk, the amount of capital you need to raise, the time it takes, and the problems with valuation as a first-time med tech CEO—all of that is worth it if the underlying value proposition of what you're doing is just so clearly transformational.

My biggest insight with a fundraise is that if you have a story about why you joined or started something, and you have to then create a story for investors, there's already a problem. If the story that you joined is the reason and the one that you sell to investors, at least you know you're on to something from that starting point. So I guess that's my introduction.

Roger Brooks 06:53
Thank you. Our official title for our panel is "The Current State and Insights from Successful Raises." We think of this as really a broad topic, so we want to go all over the place, but let's start with the current state of affairs—how everybody's feeling about our current fundraising environment, where the hot pockets are, where the challenges are, and how do you see things playing out here in the next year or so? So maybe we go in the same order and share that.

Sandrine Cailleteau 07:31
Yeah. So clearly, we see this year some improvement in the financing environment. In terms of total raises this year, we are higher at this stage than we were last year. So that's a slight improvement. I think in terms of valuation, it still remains soft, with about 30% of all the raises, both in Europe and in the US, being down or flat. The median increase in valuation is only 1.1, so quite limited. But what is interesting is that there's a lot of money and dry powder available, with lots of new funds that have been raised and different profiles of funds. There are growth equity investors and structured funds. I think this creates lots of opportunities. As you could benefit from a lot of new debt funds, just the traditional debt venture funds. So clearly, it's a more positive environment.

To your point, there has also been an increase in M&A, which is obviously critical for investors. It's still difficult, though. I think for the IPO market, we still see it as pretty closed at the moment, with most transactions targeted now towards 2025. But the mood is certainly shifting, and I'm very interested in hearing your views, and also the size of the rounds, because clearly it's interesting to see a lot of sizable rounds recently. For investors, it's important to see that companies are well-funded.

Roger Brooks 09:19
So Dave, your story is a little more complex because you're already public, and so you have to tap different places, I imagine. So tell us about what you're experiencing out there, who's responsive, and whether it's good or bad.

Dave Marver 09:35
I mean, it's all nice to put guys up here that have raised $100 million. It makes it look easy. I can tell you that anybody with a pre-revenue med tech company, it is hard, and it has been hard for two to three years. I think if you're one of those CEOs and you're in the audience, you know it is stressful, and you lose sleep because you're responsible for the welfare of your team and for coming through for your investors, as well as just fulfilling your mission to help people. It's a tremendous stress and burden if you're a CEO of a pre-revenue med tech right now. I think to paint it any other way would be unfair and inaccurate.

Roger Brooks 10:20
Yeah, well, and to build on that, I've been coming to these conferences, different variations of them, for a long time. It's always been hard. There's always a reason not to invest and why it's doomsday or something negative, but I'm incredibly optimistic. Of course, I mainly speak to people who have already raised a bunch of money, but I think we're in a nice, steady climate. It's getting better.

Dave Marver 10:45
Yeah, but you still have to turn over every rock. You've got to find capital wherever you can, whether it's family offices, high net worth individuals, venture clubs that aggregate individual or retail investors, corporates—whatever it takes, you have to do it. That's the environment.

Aidan Crawley 11:06
Innovative, while at the same time, you know, having a validated business model and clear commercial paths.

Roger Brooks 11:12
So Aidan, it looks like you read the press, and it seems pretty simple. I think you turned over four rocks, or five. You turned over five rocks, and you picked up $100 million in committed capital. It looks easy. Tell us a little bit about what you sensed out there from the environment.

Aidan Crawley 11:33
So I agree with Dave. I think it's really hard, particularly in the last three years since I've come into the space. One of the elements that is hard is the process itself. As you were saying, for early-stage companies to need 10-year validated business models with routes to markets and every layer of due diligence being overturned, even in a process where all the investors want to invest, it's still seven months. So I think there's an element that even when you have the interest, converting interest to capital in the bank has never been harder.

Actually, you know, from my old tech days, you had a sniff of interest, and it meant you had capital. Here, you have to temper every good meeting you have, even the 15th one—it's still just nothing until you get a term sheet. Even when you get a term sheet, it's not committal until you've closed the deal. So I think there's an element that the hardness isn't just in attracting capital, because there's loads of capital out there. It's about converting interest to capital in the bank. That's one element that's got harder.

Say that again: converting interest in your idea to money in the bank and actually getting through that process. That's what for me has got harder in the last three years. People will always take a first meeting, even in a bad market. The only positive spin I would have is that I believe that the hardest markets are often the best for the companies with the best value propositions. In a good market where there's plenty of noise and tons of capital, and everyone is getting invested in, often the concentration of great companies is diluted a bit, and investing money flies everywhere.

I personally put a lot of the reason that we got such a big round from such great investors down to nothing to do with my ingenuity. It's more that funds recognized our value proposition, and they all wanted in because there weren't that many other things that they had that level of conviction about. So I actually think that the size of the round we raised was in part due to the hardness of the market for us. But that's why you have to have conviction in what your business is and what your value proposition is. If you're half-hearted about what you're doing and the value that it presents to investors, it's going to be a very hard market. If you really believe in it, then yeah, it's out there.

Roger Brooks 13:31
So how did you figure out who to approach? Did you approach everybody, or did you have a system? What was your system or process? And what advice would you have for others about developing a system and process around who to approach? Then we can talk about how to approach them second. But how do you figure out who to approach?

Aidan Crawley 13:52
I mean, again, Dave and I would share different things because public markets, I think the strategy is different from very early stage. At early stage, it's the founding story, and it is us. There's no kind of third parties. I would always say it has to be a warm intro. Every intro has to come, even if it's not your direct relationship. It's when you know, in every aspect of life, if someone you really trust is introducing you to someone else in terms of a partner and a fund, that meeting already has a pre-meeting associated with it because of the connection that those two people have.

We could have met the same funds through different means and had a radically different entry point that would have made it a much more uphill struggle to get to the right connect. So I would say, always warm intro. Then, if all intros are equal, there are just certain funds that fit the profile of what you're doing better than others. I think really early on, distinguishing between who is a proper lead investor—who will go out on a limb, even if others aren't interested, and lead—versus who are co-investors that are people, even with tons of capital, that will basically wait to see a lead in place before they jump in.

Then you have the whole question of the strategic and if you want to play that or not, in terms of if and when, at what stage in your business? Again, for Dave, probably strategics have always been a part of it. Early on, it's not always completely clear whether you want strategic interest. How did you get that information? You go into their website using intuition? You got a network?

Roger Brooks 15:38
We're not just giving you your answer.

Aidan Crawley 15:39
Yeah, and I didn't have a med tech network, but it's not, I mean, there's not a big community. Even coming to LSI, you know, two or three times, there is a handful of med tech. It isn't that sexy in comparison to technology. There are a few really blue-chip funds in the US and Europe that still have a very interested and great track record in med tech, and in our case, medical devices.

Roger Brooks 16:15
Yeah, well, before we leave Aidan, once he says his story was compelling and easy in a way, but there are a lot of companies that have seen what happened with Axonics and are entering that space. The competition for capital, I think, was probably fairly competitive, but Aidan's got this laser focus that he blocked out all the competition—all the other people knocking at the door—because he knew he had something. I imagine that's what happened. But it's crowded out there.

Aidan Crawley 16:43
But when you say it's crowded, it might be a crowded space, but it might not be a crowded value proposition. I don't think that was for me. The issue was more that I have the best founding team in the world—most experienced, you know, in terms of engineering and clinical expertise—the best innovators in the world to deliver on what I would call a transformational therapy proposition, and the technology to deliver that.

I think the hard bit for me was the story. If it works, it sells itself. The hard bit is you need to navigate around the skepticism in the market. Whether it's my experience, whether it is, there's no skepticism around the size of the market opportunity. There's no skepticism around the lack of a perfect solution today, and neuromodulation has been established in the space for 20 years. So on that side, those are not uphill battles.

I felt that the skepticism was: why can you do this when no one else has done it before in terms of our nerve target? How do you have the experience to navigate yourselves through this very complex challenge of taking a regulated product to market when you haven't done it before? These are difficult challenges, and that's where you invest your energy. The story, the reason I hopped from tech to med tech, as I said earlier, is that was not the difficult bit. It was the execution of it that I think was the bit that needed a really convincing narrative backed up by your team and talent.

Roger Brooks 17:33
So Dave, hit me with how you figured out how to tell your story. Tell us that whole process.

Dave Marver 17:41
Well, I actually think most of it is relatively formulaic. You know, investors, whether they know it or not, do have a checklist. Sandrine referred to it a couple of times thus far. They're assessing the strength of the management team, the technology differentiation, the strength of the intellectual property, the maturity and compelling nature of the clinical data.

In many cases, I think European companies suffer from a great deal of scrutiny and skepticism around that entity's ability to commercialize successfully in the US, especially if going against large, entrenched competitors. So all of these things are boxes that need to be checked. But what Aidan said is also really important, especially in life sciences: telling your story with emotion and impact. Because investors are people too.

I think those that self-select into life sciences want to make a difference and want to make an impact. They also have to sell to their LPs. They have to bring interesting stories about their portfolio companies, their activities, and returns to their LPs. This is where the ability of a founder to convey, in a succinct and focused way, passion, enthusiasm, and impact really matters.

Communication, in my experience, and the bankers told me this quite a bit, especially in Europe, is that founders tend to be quite technical, and they cannot stop themselves from explaining their widget in great minutia. This becomes a problem. They really have to be disciplined.

Roger Brooks 19:23
And you had quite impactful press in the, you know, on the BBC, the Financial Times, and other European outlets.

Dave Marver 19:32
In our case, that's very intentional. When I got to the company, the marketing guy was paying for advertorials, which I think was silly. We have something that's really understandable and accessible and powerful. So I do intentionally use earned media wherever possible to raise awareness. It does resonate with the investor community as well, but not every company can do that.

Roger Brooks 19:57
But yeah. So if the audience isn't tracking ONWARD, you can do it on their website. You can somehow get access to the incredible amount of free publicity they get out there on all these stories that generate a lot of interest, and of course, being on the cover of Nature magazine three times.

Dave Marver 20:19
There have been multiple Nature publications. I mean, that's the scientific foundation. That's critical. But being a listed company, and I think I skipped over your question, we listed because it was the one place we could go to raise 80 to 85 million euros and provide three years of runway at a time when we needed the capital.

For a lot of companies, it's not ideal. On Euronext in particular, there's low trading volume. It could be difficult for people to get in and out of the stock. One of my jobs, then, is to maintain interest and trading volume in the stock by using earned media. It's just part of the toolkit that a private company doesn't necessarily need to exploit. For me, I think it's very important and valuable.

And was there an appetite from any private investors to invest $80 million into ONWARD? I didn't have time. To Aidan's point, the VCs in the US, particularly in the US that could write large tickets, needed time. I had to raise the capital quickly. I got here; there wasn't a lot of capital. I did a quick convertible note, and then boom, right on to Euronext. Now I'm managing the best I can on Euronext. Not so bad, really, but I'm comfortable running a public company because I'd done it on NASDAQ before. It would be challenging for a first-time CEO.

Roger Brooks 21:49
Your IPO was really unique and circumstantial. Okay, well, let's bridge it to the story of if somebody wants to think about the public markets eventually. Even Shockwave went public; they made a lot of progress first. But what did the investment bankers want to hear?

Sandrine Cailleteau 22:13
I think Sandrine can start. This is her day job.

Sandrine Cailleteau 22:16
News flow is something you want regularly. I think sometimes that's one of the challenges as companies raise a lot of money, and then it takes time before the next milestone. News flow is important, with obviously all the challenges from technologies, ups and downs. Then clearly, time to market is also an important point because a company going public early, when time to market is still far, creates its own difficulties. Once being listed, it's a new series of difficulties because then investors want you to be profitable when you're still innovative.

Dave Marver 23:06
Yeah, so in my view, there's Euronext and there's NASDAQ, right? I think NASDAQ is a market that responds more readily to progress that reflects a company's intrinsic valuation more accurately. There has not been a med tech IPO on NASDAQ in over 30 months. So it is indeed closed. There should be one or two this fall, but they're bulletproof. They have $50 million in revenue, predictable growth, etc.

If you look at the companies that have listed on NASDAQ in the last five years, the vast majority of them have lost 90% of their value or more because they don't have that. So you should not rush to NASDAQ. If you consider Euronext, it is a place to raise money. You do have to deal with the lack of liquidity. In many ways, it's easier to deal with ECM investors than four or five VCs on your board, by the way, because everyone has access to the same information, and you don't have to do anything bespoke for anybody.

But you really have to simplify your message because these VCs have very smart people who specialize in med tech, whereas most of the public company investors in Europe don't have med tech specialists. They either know biotech or they're generalists. So that's where, as CEO, you have to refine your message, make sure it's simple and resonates, which is a good discipline because it means you're probably better with your end patients and your end users if you can refine that message. It works for both your investors and for the people you're trying to help.

Sandrine Cailleteau 24:47
Yeah. Then you need to go back quickly on a regular basis to the market to create liquidity.

Dave Marver 25:03
In my experience, if you do a good IPO, you can select your investors. You allocate, and ideally, you pick those that have a long-term view. If they have a long-term view, they understand an early-stage company has some ups and downs. They might miss some dates, but they know they're going to hang with you. I get very few calls from investors saying, "What's going on, Dave?" They get it, and we try to proactively communicate but not overdo it. So it's a lot less burdensome than you might think.

Roger Brooks 25:33
What do you mean you get to pick your investors when you do your IPO? How is that process?

Dave Marver 25:38
It's called a book build. First, you do a series of meetings where you test the waters and make sure that there's demand. Then you do a proper roadshow, and at the completion of the roadshow, the funds essentially put in orders. They say, "Okay, I'll put in $2 million or $5 million at this price," and another firm will say, "I'll put in $5 million at another price," and you wind up with a book of demand. That's why you hear sometimes, "Oh, we're two times oversubscribed," because you might want to raise $100 million, but you have $200 million in demand. At that time, that's when you can allocate where your shares go, and you can pick pedigreed, responsible, long-term investors.

Sandrine Cailleteau 26:21
You want to create some rarity so that those who are not fully allocated still want to buy shares. You also need to have some short-term ones who can sell so that there is activity on the shares. It's fascinating.

Roger Brooks 26:33
So Sandrine, you get to hear a lot of med tech companies give their pitch. When you think about all the presentations you've heard, what do you find is really missing? What kind of advice would you have for people out raising money on how to properly tell their story in a way that will resonate?

Sandrine Cailleteau 26:59
I think it's, I mean, the CEO is super important because in the end, the investors will invest in a CEO. So definitely that's critical in terms of story. I think, as you were saying, it's about having a good value proposition and a clear execution plan because it's all about managing the risk for investors. Also, be rightly sized so that when investors come in, they have a clear view of what's the exit for them. They usually come to invest for a three to four-year time period, so what's the exit event for them, or what's the next round that will happen? Very often, young companies haven't met that yet, or they are also very cautious in terms of size.

I think Aidan, that's quite interesting. We were discussing the size of the round, and you were saying, "I took as much as I could." Often I see CEOs saying, "Oh, but I don't want to be diluted, so I'm just starting with this amount." But med tech is different like that. I mean, in tech and in the old tech model, you wouldn't want to take loads of money because you had the potential, two years later, to raise at 1,000 times what you just raised at. You would almost risk taking less capital to be less diluted to go up.

My view on med tech, for all the reasons most people are aware of, is that your upside is capped a little bit. The value of the maximum amount of money today to get to the next juncture is sort of more valuable than any other metric. In some ways, it's very hard to go. You're not going to have viral growth at an early-stage med tech company. There's more propensity as time goes on for things to go wrong.

I think raising the maximum amount of money, giving yourself the maximum buffer to get to the next point, and I should contextualize like $100 million is a lot. It would still be one of the cheapest capital raises to get to FDA approval ever. It's a lot of money, but we're raising that to get as close as we can to FDA approval. If you even put it in the context of how much capital it takes companies to get to FDA approval with the core therapy, it would still be relatively small.

Roger Brooks 29:23
So even are you helping investors think through the idea that, to kind of rephrase it, if you run a clinical trial and the results are what you expect, you would have a valuation of this amount of money. They're trying to get a 2x, 3x, or 5x on their early money. You really don't want to take too much. You want to get enough so that they get a nice return at that next pivot.

Aidan Crawley 29:49
I'd be fair. I think the investors are telling me that as much as me telling them that, to be fair. They have the return on capital that they need. Again, it is very different from other sectors because of the amount of capital and time needed. As I said, you don't have many Facebook-like growth stories in med tech. To get to a billion-dollar valuation is a great achievement. You don't go from $100 million to $100 billion in med tech.

So it's that basis where you do have a sort of fairly formulaic return profile. The main impetus is not to have to raise down rounds, not to have to raise side rounds, and to be efficient and to go to market as few times as you can because obviously that's more dilutive.

Roger Brooks 30:30
Yeah, one of the things I think about with you is how much time and effort and thought did it take to figure out your tranches so as to be able to work with the investors? What do you call milestones? You have to hit certain milestones to get to the next tranche.

Aidan Crawley 30:51
It was very straightforward in the sense that for us to get to FDA approval, there are literally two things that we need to do in terms of a European feasibility study to prove out the modifications we've made to our device since the first in human—that's one milestone. Then getting FDA approval to do our pivotal trial in the US is the next milestone.

Negotiating around the quantum, how much buffer, how to get there, that does require some nuance, but actually, they're very supportive investors. It's not that these tranches are like stretch goals. These tranches are more just protecting their capital. Let's just make sure you get to the next gate before we give you the next batch, and we get to have the interest on the money before we hand it over. That's more the way it works.

Roger Brooks 31:46
Gotcha. Dave, any comments on that? Congratulations.

Dave Marver 31:49
I just hope it resonates. Here we're talking about, "Oh, we don't want to take too much money." The reality is that most people at this conference are really scraping to get any capital right now, and we need to be cognizant of that and sensitive to that.

You could have three great rounds, and it's all going well, and then suddenly it goes sideways, and it's the sideways round that wipes everything out. So being less greedy, taking more, and building a buffer might feel like it's chipping away at whatever you have, but if you can preserve that story and not have the side and down rounds, you will do better, and you keep the integrity of the story intact.

Roger Brooks 32:28
So why doesn't everybody do that? It seems to make a lot of sense. You've got your group of investors. They believe in you. They believe in the company. Tranching is common.

Dave Marver 32:37
It's definitely true. Tranching is common.

Aidan Crawley 32:40
Yeah, okay.

Dave Marver 32:40
Yeah, there are negatives for tranching as well. If it's not clear what the next gates are, if you do think you have an event that could massively increase your value, tranching becomes a bit of a constraint on valuation. It's never as straightforward as I've said. What if we run over a time period for a tranche? But it was the right mechanic for this deal and the stage that we're at.

Roger Brooks 33:00
Okay. Maybe you can all comment on this. It's about the different investor types and their different roles in figuring out who's going to be a lead investor. What does that mean versus co-investors, and how do you size up when you're raising money? Who plays which role?

Dave Marver 33:24
I'm interested. What have you done with strategics?

Aidan Crawley 33:28
Yeah. I mean, I think if you maintain relationships with strategics, there has to be a good fit. The real calculus when it comes to strategics is: what do they want in exchange for their investment? Is it purely a financial investment for them, or do they want rights? Are those rights going to inhibit your freedom to shape the business you want or pursue the exit that is optimal? That's the calculus.

Roger Brooks 33:49
Do you have a strategic?

Dave Marver 33:51
No, I don't in this company. I think I have a better version of a strategic, and that is the Christopher Reeve Foundation. This is their first-ever investment in a for-profit company.

But I met with strategics at this conference. I think that's just good CEO-ing to make sure that those businesses are aware of you, to make sure that bankers who are like the pollinators are in the C-suites talking about you and your prospects. All of that is smart. You always want to cultivate the fields and make sure that there are as many possible investor types as you can garner.

We haven't talked about family offices and ultra-high net worth individuals either, which I think is also a place to go if you're not getting any traction with the large VCs.

Roger Brooks 35:09
Joe, I was just speaking with a venture investor earlier today about family office money. One of the things at this conference, I think about how many amazing companies are here. Not everybody is going to get funded. A lot of these great ideas might just disappear because of lack of funding, but the more we can get, I think a family office is really good at that seed stage. The more family office money we can get involved in our industry, the more we can get these companies to play out at least some early clinical trials that will allow all the institutional investors to come in.

Dave Marver 35:46
I disagree a little bit. Let's say accredited investors or wealthy individuals play in the seed stage, but you increasingly see ultra-high net worth individuals and family offices at every stage. They don't typically lead, but they will follow, for example, one of Aidan's investors because they'll draft behind that extensive diligence.

Aidan Crawley 36:12
They could be so helpful, I think. Also, I think there's a distinction. High net worth individuals, particularly if they're relevant, can be almost more powerful than a board member in terms of how they can help you if they put significant capital in. Family offices often are very large, and where they can help is sometimes they invest more mission-driven. They can be very passionate about a space and care about that as much as their return.

Again, that's why, to Dave's point, they don't often lead. But having that type of patient, mission-driven capital can be a really nice asset to have in a mix. I think you always want a reputable, almost venture lead sometimes to be the one because that tells everyone in the market this has been vetted by the best.

My final part on strategics is I totally agree with you, Dave, but I think the strategics are getting better and better at trying to distance their core business from their venture arm. It's never perfect because if one strategic is in your business, the rest of the market is going to think you're with them. But they're very good at actually trying to put in the right rules in place and make sure they're looking at this obviously not totally independently because they will have an interest with their main business.

Roger Brooks 37:23
Well, Sandrine, why don't you build on that, especially around the strategics? When do you want to get the strategic involved? And then also follow it up with the family offices. How do you, if you're a CEO looking to pull in some family office money, how do you find it? Where do you go?

Sandrine Cailleteau 37:41
Yeah, maybe on the strategics. I fully agree it's important to talk to them early on because all the venture funds talk to the strategics. They want to be sure there is appetite from strategics to invest in companies. So indeed, it's important to speak to them from the beginning.

Having worked a lot in business development, strategics also have some important milestones or steps to consider. I think it's also good learning for CEOs to understand where they should focus their efforts and the questions they will have to address as they grow. With family offices, one of the challenges is managing valuation because sometimes high net worth individuals invest in companies, and they have a sense of the value of the company. You need to navigate and make sure the venture funds obviously have a different view towards valuation.

It's about balancing and making sure everybody is aligned because that can, at some point, become a big hurdle as they grow and need more money.

Roger Brooks 38:52
How do you find those family offices?

Sandrine Cailleteau 38:54
As an investment bank, I'm always on the lookout for great companies and investors. It changes a lot, so it's constantly looking. There are conferences, relationship connections, Roger.

Roger Brooks 39:27
You've got, just like Aidan said, network. Your board should have some wealthy people on it, and your wealthy people know other wealthy people generally. Unfortunately, that's the way we are in society. But then also, get creative. If you can't network, what is the area in which you're operating? What group of people are you helping find a wealthy person who might have a family member? Search the media and make the one call. If that call doesn't bear fruit, ask for introductions to other people. You just have to scrap.

Roger Brooks 40:02
Yeah, we all say it's the warm introductions.

Dave Marver 40:02
Yeah, it's warm introductions. One thing I do is always look at all the investors. You can go to PitchBook and see who's been investing. If they're interested in that space, this group here, if they're just that, they're probably interested in this. Things like that.

Roger Brooks 40:21
Use your network to help you get a different board.

Dave Marver 40:30
Yeah, I didn't mean to interrupt you, but that's why they were there. Okay, go ahead.

Roger Brooks 40:30
Okay, any last tips in 20 seconds or last words for a group of people trying to raise money?

Dave Marver 40:43
Good luck. Work hard.

Sandrine Cailleteau 40:43
I think also, again, I can say this because I have dual citizenship, I would add an American or two to your management team, advisory board, or board. You had a very key technical co-founder who is American and incredibly well-respected, right? I think a lot of these European companies are not adding Americans, but you need somebody who can credibly give comfort to investors that you can commercialize in the US.

Roger Brooks 41:09
Yeah, that's great, and that's interesting because our firm is built on being that bridge between Europe and the US around investors, around people, talent. The ecosystem in Europe is thriving. It's neat to see. It's really combined. I think it's all altogether in my world.

Aidan Crawley 41:30
Yeah, and have a US strategy early on.

Roger Brooks 41:32
Yeah. Okay. Thank you very much, guys.

All Speakers 41:35
Thank you, Roger. Thank you.