The Life Sciences in New York State

Entrepreneurs struggling to raise capital

This is quite consistent with my experience here in New York...

Angels clip wings of entrepreneurs

As the market grows, angels -- especially angel investor groups -- are moving upstream, looking to dole out more money and take fewer risks. Meanwhile venture capital firms anchored by huge funds are increasingly looking to invest larger rounds of cash. Entrepreneurs say that combination has made tapping into angel capital, once fertile ground for early-stage funding, trickier in recent years.

Nice way to make a living

Essentially force a company to take on debt, then force the company to pay you from the proceeds. Slick.

Gluttons At The Gate

"It feels a lot like 1999 in venture capital," says Steven N. Kaplan, finance professor at the University of Chicago. Indeed, it shares elements of both the late-1990s VC craze, in which too much money flooded into investment managers' hands, as well as the 1980s buyout binge, in which swaggering dealmakers hunted bigger and bigger prey. But the fast money--and the increasingly creative ways of getting it--set this era apart. "The deal environment is as frothy as I've ever seen it," says Michael Madden, managing partner of private equity firm BlackEagle Partners Inc. "There are still opportunities to make good returns, but you have to have a special angle to achieve them."

Greed is Good - Counterpoint

Ben Stein on MBOs...interesting argument, although I don't think it will ever fly.

On Buyouts, There Ought to Be a Law

To my mind, these deals should be illegal on their face. That is, they should simply not be allowed at all as a matter of law.

Greed is good

While many in the press howl at the paydays afforded to company execs and private equity investors, the fact is that in some cases, "going private" makes a lot of business sense. Not having to respond to quarterly expectations can be liberating, as noted below.

The LBO Gang Storms the Valley

Executives insist that what excites them, more than riches, is the chance to focus on such long-term decisions as selling off divisions or cranking up research and development, which may be needed to spark their companies but would spook Wall Street. The private-equity crowd encourages that mindset. "Most of these companies are very good companies, and we're setting them free from the 90-day management process," says John Marren, a partner at private-equity firm Texas Pacific Group. "How much of a CEO's day is spent worrying about the latest government investigation, or talking to some hedge fund manager about whether orders are going to be up 0.1% or 1% this month?"

Of course, the debt load can create a whole host of new problems, i.e., having to report to bondholders instead of stockholders. But for the right situation, it makes a lot of sense.

I'm seeing some PE shops look at LBO/MBO opportunities in the life science space as well. Public companies who are generating sufficient cash to service the debt are beginning to attract the attention of PE shops. Might we see a LBO of a Covance or Invitrogen or Sepracor in the near future?

Debt?

I've received a few inquiries on the debt capital I mentioned the other day. The most common question surrounded the definition of debt capital, and the types of transactions that I can facilitate.

Basically, I have access to a wide array of debt capital-based products. Examples include:

Accounts Receivable Financing (especially Medical Accounts Receivable)
Factoring
Real estate financing
Warehouse financing
Contract monetization
Many Others...

My relationships can develop very creative solutions in cases where the transaction is complex.

Why do this?

Basically, I'm executing a strategy whereby I hope to deliver "soup to nuts" services to companies, from business planning to transactional support. I'm still working on the precise marketing message for all this, but there is a strategy here, even though it may not seem obvious from the initial post!

Email me with any questions...or deals!

Need Capital? Maybe I can help...

As part of my consulting practice, I have developed several strategic partnerships which enable me to access both debt and equity capital. Specifically, I am looking for investment opportunities in any of the following categories:

1. US-based companies (private or public) in any industry with tangible assets, accounts receivable, or other collateral, who may be seeking $2 million or more in debt capital. Debt restructuring transactions are also of interest.

OR

2. Global companies in any industry (public or private) holding signed, multi-year contracts with their customers and who may wish to monetize the future cash flows from these contracts in exchange for capital today. Contracts must specify date and amount of cash flows.

OR

3. Global life science or related companies seeking $10 million or more in equity financing, preferably companies already generating revenues.

OR

4. Late stage or commercialized products in the following areas: non-invasive imaging, pharmacogenomics, cardiovascular disease diagnostics, ultrasound imaging, imaging products and services.

Please note that these financing options I am offering are not appropriate for raw start ups. Service companies are acceptable.

If you work for a company, or represent a company that has any of these criteria, please let me know via email or Skype. There may be opportunities to share in fees resulting from successful transactions.