Behind the Curtain: Opportunity Assessment at VIC

Ask ten people how best to assess the value of a new technology, and you’ll likely get ten different answers. Google "opportunity assessment", and you will find hundreds of different templates, worksheets, and frameworks. Most of these start with some version of the same basic questions. What’s the value proposition? What is the target market and market size? How does this product fit within the competitive landscape?  These questions are all critical. Still, when there are countless prospects across the spectrum of life science technology opportunities, I’ve found that there are three essential things that investors should consider at the start.

First, embrace your inner pessimist. 

While no one wants to be the person who passed on investing in what turns out to be a unicorn, a successful assessment  strategy requires the ability to rapidly identify which technologies should be a “no” and which warrant continued investigation. To do this, it is critical to identify a technology’s weak spots as soon as possible and answer questions relating to those weaknesses first.

For a medical diagnostic, that may be understanding how it would fit into the standard of care and whether there is a reasonable path to reimbursement. For a medical device, it may be asking how to persuade customers to adopt the product and how long it would take for them to do so. Weak points are different for each technology. Sometimes you know what they are because you’ve seen the same problems elsewhere. Other times, inventors will tell you what the issues are...if you ask. It is always a red flag if the same question comes up repeatedly when talking to experts in the field or potential funders; those questions often point to problems that are not easily resolved on their own. By training yourself to see weaknesses first, you should be able to avoid rationalizing your way to a “yes” just because you want a technology to be a good opportunity. To use a wild but real example, Theranos should have been a “no” long before it became a public spectacle.    

Second, know your investment philosophy.

This will help you decide when to say yes and when to say no, even though the assessment process is not black and white, but rather, full of gray. Years ago, I came across a technology disclosure for a device that was basically a flat iron that colored your hair while you straightened it. My colleagues and I at VIC could immediately see the massive market potential, but it was a two-minute discussion that led us to pass before we even looked at whether the technology was feasible. Our mission statement is to form and grow life science and emerging technology companies that shape the future by advancing innovative discoveries from research labs towards commercial deployment. Despite the obvious market potential for a magical hair wand, this technology simply didn’t fit with our investment philosophy of creating technology solutions for a better world. 

Finally, remember that each member of the team who will need to agree on a compelling opportunity will view technologies through a different lens. 

Many of the things we think about during opportunity assessment, such as proof-of concept and value-added, can mean different things to the different stakeholders during the development process. A critical component of any opportunity assessment is crafting a reasonable, clearly communicated path to success. Ensuring a common understanding of that path is critical.

A personal example of this can be found in my work with BiologicsMD, a preclinical therapeutic development company focused on highly targeted or 'smart' therapies for hair loss and bone disorders. One of our major early accomplishments was the development of a manufacturing platform to produce our lead therapeutic, BMD-1141, for the treatment of alopecia areata. Many drugs fail to progress to human clinical trials because of issues with manufacturing. Therefore, it made sense to our team that the successful development of a manufacturing platform would be a significant value-adding milestone. However, while development of the manufacturing platform is essential to eventual success, the relative value-add of this approach was not as clear cut to subsequent investors. If we had taken a different perspective on what value-add would mean to the later stage investors who were a key component of our development strategy, we might have prioritized our initial use of funds differently.

Bonus Tip: Be flexible. Evolve. 

No opportunity assessment plan will work perfectly across all technologies and sectors. There will always be “could have, should have” moments. Learn from them, and you will find that the assessment process becomes more intuitive over time: it's part art,  part science. In my experience, striking that balance is the best way to stay ahead of the competition in a crowded market.