So you're developing a groundbreaking medical device or a life-saving drug. You've assembled a brilliant team of scientists and researchers. But there's a hurdle you can't ignore – securing funding, especially before your product hits the market.

For life science startups, this is the make-or-break challenge. Traditional investors often shy away from the lengthy R&D cycles, regulatory hurdles, and the sheer capital required in this field. They see years of clinical trials and FDA approvals, with no immediate promise of revenue.

But what if you could unlock the secrets of successful pre-revenue fundraising in this specialized sector?

• Securing funding for medical startups is challenging, especially when traditional revenue models don't apply. But even pre-revenue, life science companies can attract significant investment with the right approach.
• Building a compelling narrative that transcends financial metrics is crucial. Investors need to understand the long-term potential of your scientific innovation and your vision for the future.
• Loyal CEO Celine Halioua reveals how she raised $125 million pre-revenue for her dog longevity drug, sharing her insights on the funding process.

Celine Halioua, CEO of Loyal, a company pioneering lifespan-extending drugs for dogs, knows how to raise venture capital. Despite navigating the strict regulations of the pharmaceutical industry, Celine managed to raise a staggering $125 million even before her product launched.

"It's all about understanding your milestones and how they translate to reduced risk in the eyes of investors," Celine shared on a recent episode of the How I Raised It podcast.

This article delves into Celine's fundraising playbook, extracting key strategies and insights from her journey. Consider it your guide to understanding the investor mindset, crafting a compelling narrative and ultimately securing the capital you need to turn your life science vision into a reality.

Step 1: Craft a story that goes beyond the balance sheet

Imagine walking into a pitch meeting and telling investors, "We won't have revenue for five years." In most industries, you'd be laughed out of the room. But in life sciences, especially when dealing with novel drug development and FDA approvals, this is the reality.

Life science investors understand your journey. They're looking for companies tackling big scientific challenges with the potential to transform healthcare. Celine Halioua recognized this early on. Her pitch for Loyal didn’t just focus on extending the lives of dogs; it also talked about tapping into a fundamental biological link between growth hormones and aging — a discovery with implications far beyond the canine world.

“I couldn’t really kill the idea,” Celine shared, reflecting on her initial vision for Loyal. “Every time I dug in, it made more and more sense.” This conviction in the scientific potential of her work became a driving force in her fundraising efforts.

This is where your narrative becomes your most powerful asset. Your job is to connect the dots between your science, its potential impact, and why you and your team are uniquely positioned to make it happen. Instead of hiding the challenges, make them part of a larger story of ambition and potential. 

Ask yourself:

• What critical problem are you solving? Frame your research within a larger societal need.
• What is the potential impact of your solution? Paint a picture of a future where your innovation has made a real difference.
• Why are you and your team best suited to bring this to market? Highlight your team's expertise, passion, and any unique advantages you hold.

Remember, investors are not just funding research; they're investing in a vision for a better future. Make them believe in your story.

Step 2: Seek out investors who understand the long game

Not all investors are created equal. This is especially true in the life sciences, where traditional metrics like quick revenue growth and short-term ROI don't always apply.

Remember that "We won't have revenue for five years" conversation? Some investors will hear a death knell, while others will hear the opening notes of a symphony. Your goal is to find the latter — investors who recognize the potential of your science and the long-term value it can create.

Celine Halioua understood this from the start. She knew that securing funding for a first-of-its-kind drug aimed at extending lifespan, even in dogs, required a different approach. "A lot of founders really struggle," she observed, "because they don't understand the economic model and incentives of the people they're working with."

She strategically avoided traditional biotech investors who typically focus on later-stage companies with proven human clinical data. Instead, she targeted venture capitalists with a track record of supporting pre-revenue companies, aligning her pitch with their expectations for long-term growth and market disruption. "The economics post-approval and the market size and the commercialization actually all fit perfectly into their model," Celine emphasized.

How to find your ideal investors:

• Analyze their portfolios: Look for investors who have backed companies in your sector (life sciences, biotech, medtech, etc.) and at your stage (pre-revenue).
• Read their investment thesis: Does their philosophy align with your company's mission and long-term vision?
• Leverage your network: Warm introductions are gold. Tap into your existing contacts to connect with investors who might be a good fit.

Remember, choosing the right investor is about building a long-term partnership with someone who believes in your vision and can provide the guidance and support you need to navigate the unique challenges of the life sciences industry.

Step 3: Define clear milestones that demonstrate progress (even without revenue)

When you're building a life science company, traditional business metrics like revenue and customer acquisition often take a back seat to scientific progress and regulatory approvals. But that doesn't mean you can't show investors a clear path forward.

This is where well-defined milestones become crucial. They provide tangible evidence that your company is moving forward, even in the absence of those familiar financial indicators. "Just designing your milestones really well," Celine emphasizes, "it becomes easier the better your company is."

For Celine, these milestones were critical in proving Loyal's viability and attracting investor interest. "We had proof of concept of the drug," she explained, "we had de-risked the regulatory pathway, and we just had a way better understanding of the commercialization and the go-to-market for what we were doing."

Think of milestones as checkpoints on your scientific journey, each one demonstrating a significant achievement that de-risks your venture and brings you closer to your ultimate goal. 

These milestones become your investor's yardstick for measuring progress and building confidence in your ability to execute. "If you believe we're going to hit the milestones," Celine points out, "and you believe that those matter, you should invest because we're going to be worth more in six months."

Examples of milestones for life science startups:

• Pre-clinical data: Positive results from in vitro or animal studies that validate your scientific approach.
• FDA approvals: Securing Investigational New Drug (IND) or other regulatory clearances to proceed with clinical trials.
• Key hires: Attracting top talent in research, clinical development or regulatory affairs, demonstrating your ability to build a strong team.
• Strategic partnerships: Collaborating with established pharmaceutical companies or research institutions can add credibility and accelerate your progress.

By setting achievable but ambitious milestones, you provide investors with a clear roadmap for the future and demonstrate your commitment to execution. This builds confidence in your ability to navigate the complex world of life science development and ultimately achieve commercial success.

Step 4: Surround yourself with the right people

Life science startups are unique beasts. They demand deep scientific expertise, and it's rare to find all the skills you’ll need in a single individual, especially in the early stages.

Celine Halioua, reflecting on her early days at Loyal, acknowledges this truth: "I was technically trained... but I also was aware early on that I didn't think I was going to be a Nobel prize scientist." Her strength lay in identifying opportunities and building a vision, but she knew she needed a team with specialized knowledge to execute it.

"I hired people better than me," she states frankly, "and they were like, 'That's wrong, let's do this instead.'" This willingness to embrace diverse perspectives and trust the expertise of others was key to Loyal's success.

Beyond your core team, cultivating a network of advisors and mentors can provide invaluable guidance. Celine's mentor, Laura Deming, for example, provided both scientific and investment expertise, helping to shape Loyal's strategy in the crucial early stages.

Remember, building a successful life science company requires a collective effort. Assemble a team with the diverse skills and experience to navigate both the science and the business, and you'll be well-positioned for long-term growth.

The journey of a thousand milestones begins with a single step

Building a life science company is not for the faint of heart. It requires a unique blend of scientific brilliance, unwavering determination, and a deep understanding of the complex world of investors, regulations, and market dynamics.

But as Celine Halioua's story demonstrates, even the most ambitious goals are achievable with the right strategy. By crafting a compelling narrative that goes beyond traditional metrics, targeting the right investors, setting clear milestones and building a strong team, you can overcome the challenges of pre-revenue fundraising and secure the capital you need to bring your life-saving innovations to the world.

"If it's a really good idea," Celine advises, "and you're one of the best people to start the company, that combined with a strong foundation — it can work out." Remember, your passion and belief in your vision will be contagious.

"Don't build boring shit, build important things," Celine urges. Let your commitment to solving meaningful problems drive your fundraising efforts and inspire investors to join your journey.