For those of you pitching to potential investors, you may have wondered what it’s like to be on the other side of the table. How do investors decide to invest their funds? And, most importantly, what can you do to make your pitch stand out? Marian Nakada, Vice President of Venture Investments for JJDC, shared how she evaluates pitches and identifies strategic biotech investments for Johnson & Johnson.
30 years in pharmaceuticals
Nakada began her career working on the lab bench at Centocor, a biotech company. She always loved science, so it was a major pivot and personal sacrifice to take off her lab coat and move to business development. Eventually, she transitioned to the world of corporate venture.
“Johnson & Johnson’s overarching mission is to change the trajectory of human health. That’s always been my guiding star, too. That’s why I’ve enjoyed working for the company for so long,” Nakada said. Johnson & Johnson Innovation – JJDC, Inc., the strategic venture arm of Johnson & Johnson, invests across all sectors and at all stages, from seed-level start-ups to Series B and beyond.
In her current role, Nakada works with roughly a dozen global investors to focus on three specific sectors: pharmaceutical, device and consumer. Given her background, she primarily focuses on pharmaceutical companies on the East Coast. (Biotech companies in the area – pay close attention!)
What sparks an investor’s attention?
COVID-19 brought a flood of biotech innovations and the creation of hopeful startups. When reviewing potential investments for Janssen (J&J’s pharmaceutical sector), strategy and fit come first.
“As a corporate investor, we consider ourselves to be super-strategic. Not all corporate investors are like us. Some of them are purely financial. We’re strategic first, so the idea has to fit,” Nakada explained. “Janssen has certain areas of interest. So, I need a strategic as well as a scientific fit.”
She doesn’t manage the research and due diligence on her own. There’s a team working with the investors to help define that “fit.” Namely, does it fall into Janssen’s top priority areas? These include neuroscience, cardiovascular and metabolism, oncology, immunology and infectious diseases, among others. The solution has to be both novel and credible. It needs a foundation based on science, a strong business model and a capable team.
Judging biotech pitches
Because J&J is a global healthcare company, it’s not surprising that Nakada often judges in pitch competitions. She said that she is happy to take part and give entrepreneurs visibility.
“It’s a great way to support the innovation ecosystem in biotech. A lot of the advice that we give can be taken advantage of by any number of entrepreneurs. We do our best to make sure that we’re providing constructive feedback,” she said. “It’s a great venue for folks to get in front of investors when they may not have the relationships that veteran CEOs have.”
When asked how many pitches she funds, Nakada said that roughly two percent of pitches knock it out of the park. There’s so much competition, even the smallest slipups can lose an investor’s interest.
How can you boost your chances of success? Nakada had plenty of tips.
Things to avoid when making your pitch
- Don’t make cold calls.
“If you can use your network to get a connection to an investor, that’s how you want to do it. We get inundated with opportunities. Oftentimes, you might be sending a pitch while I’m trying to get a deal across the line. I can’t look at anything because I am so immersed in that. Look at who you might know who can make a warm introduction for you.”
- Don’t take a rejection as a personal insult.
“If your pitch isn’t received well, or your email gets a ‘thanks, but not interested,’ don’t take that personally.” A rejection today doesn’t necessarily translate to a rejection in the future. Keep the investor updated on progress and milestones along the way.
- Don’t get overwhelmed.
“If you are in front of an audience, and there are a lot of difficult questions, don’t lose your confidence. Don’t hesitate or recoil. Stand firm, be confident and answer the questions. Don’t feel as if a challenge is something that should set you on your heels.”
Likewise, the best response to a question you don’t know the answer to is, “I don’t know, but I’ll get back to you.”
Try these instead:
- Be clear and concise.
“I’ve seen pitches where I don’t even understand what their idea is. Sometimes there’s a concern of giving too much information away on a non-confidential pitch. If you’re too vague, you’re going to potentially lose the opportunity to hook somebody on your idea. I’ve also seen folks run out the clock – hitting the time limit of 45 minutes and still having 15 more slides to do. That’s not a good use of time.”
- Always get feedback.
“Get input well in advance to the actual pitch and take that advice to heart. You can’t be wedded to every idea. If it’s not workable for investors, then you’re never going to get anywhere. You need to be open to advice.”
- Know your “ask”.
“Something I might see missing is your ‘ask’ – what you’re looking for specifically. We really expect that the pitch will say, ‘I’m looking for a $30 million Series A round and I need a lead investor’.”
Gender gaps in investment
When talking about funding, it’s impossible to avoid the elephant in the room. Women receive funding at a much lower rate than men. Why aren’t they receiving equal treatment?
Nakada explained that it’s a structural problem that extends far beyond female founders.
“Venture capitalists, the decision-makers at the top of those firms that deploy capital and sit on boards, are mostly men. And many of these VCs have deep, historical and trusted relationships with veteran CEOs, who are also mostly men. When women founders try to fundraise, they have to compete with this very tight network,” she said. “It’s not just private VCs – there’s the same issue with bankers and hedge funds.”
Nakada believes that more women will be able to find success over time, but it will require a massive shift in diversity within organizations. This will create a ripple effect across the entire industry.
In the meantime, Nakada was happy to share that JJDC is interested in creating a more equitable VC industry. Along with other investors, she wants to develop a diverse portfolio in biotech. Some of the potential approaches to accomplishing this include open office hours, mentoring, calls for diverse founder pitches and feedback sessions. Nakada will often direct founders toward other VC funding opportunities that could be a better match if they are not a fit for JJDC.
“I can listen to a pitch and introduce the founder to my other VC friends that would be a better strategic fit. It creates our own grassroots VC mentoring group for these folks,” she said. “As a community, we can really help to elevate these entrepreneurs.”
For more insider advice from Marian Nakada, be sure to watch the full interview.
Ramani Varanasi is the Biopharma/Life Sciences expert for Lioness Magazine. She serves as an adviser to entrepreneurs and biopharma executives and is a co-founder, and the former president and CEO of X-Biotix Therapeutics, a company focused on the discovery and development of novel antibiotics to combat the ever-increasing global issue of multi-drug resistance caused by “Superbugs”. She is an accomplished business executive, with over 25 years of biopharmaceutical industry experience. Being attracted to mission-driven initiatives, Varanasi has operated with an entrepreneurial vision and passion for launching, building and being part of successful organizations by integrating research and business strategies focused on innovative medicines and solutions having a global impact.
This is part of a series of interviews from Ramani Varanasi, focusing on the VIPs in the Life Sciences and Biopharma world. Meet Liz Gazda, Laurie Halloran, Dr. Liang Schweizer and Sue Nemetz. Learn more about Varanasi from her interview with Bobbie Carlton, Lioness’ publisher and Editor-in-Chief.