January 24, 2020

MotionHall Executive Call Series Q&A: Enhancing Company Valuation for Venture Financing

Enhancing Company Valuation for Venture Financing

Q&A excerpt from transcribed notes lightly edited. Executive Call Series: Leveraging OutMatch to Drive Deal Value. All Levels. December 11th, 2019, 8:00 - 8:30 AM PST

Question:

Host: This question comes from our audience today,“Making realistic and probable scenarios for strategic partnering and/or M&A is one approach to enhancing pre-market valuation for venture financing. Outside of cancer immunotherapy or gene therapy where values are invariably lofty today, can you discuss how OutMatch has performed?”

Answer:

Rachael Craig, CEO at MotionHall: This is a great question, and there's a lot of nuance here. When people think about the OutMatch tool, the first piece that comes to mind is running either a sell-side M&A or an out-licensing cycle, whichever is imminent, but actually, the ideal applications are much earlier and preparing for venture financing is one of them.

We have a number of very successful members who use the OutMatch and Deal Comparables tools to inform their venture financing cycle. Like the question says, an accurate and plausible analysis of the partnering or M&A market, how you're going to approach it, and realistic value expectations - that's absolutely leverage in your venture conversations for driving up the deal value. You’re building up investor confidence.

Our performance here as a tool is the same as it is across the board, you are going to get the same quality results and a very comprehensive workspace, irrespective of your specific science or disease area. This is a place where companies can get a lot of leverage. And again, the most successful companies are going to understand and do the work to look at this information before they have those VC conversations. If the market situation is highly auctionable, you could bet on a VC to recognize that, but I would recommend you lay it out plainly for them instead. And I would say that this work is even more advantageous in a situation where the market is trickier, because you want to be really prepared to show the VC that you understand and have a plan, so you can say with confidence, “The market is going to be trickier to transact here but I've thought about it, I've done this thoughtful analysis, I've looked at my OutMatch workspace and I have a strong plan to transact successfully in this situation even though it may not be the hottest market, or there may be few potential partners to consider”. Every VC knows that they've lost money investing in deals where the transaction situation was harder than perhaps the CEO and the investor hoped for when the round closed, and so if you've done that work and can speak intelligently to your plans, this really does help drive deal value.

Host: I know a number of MotionHall members are looking for venture financing, or potentially considering out-licensing or venture investment. It's the stage that many of our members are at, and I know I'd be a lot happier if prepared with this information. It really puts that person in the driver's seat, right?

Rachael Craig, CEO at MotionHall: Absolutely. It's always better to control that conversation and show that you're prepared. And again, it’s important to understand what MotionHall does is inform, but the rest is up to you, the dealmaker to make sure you understand this information, have your plans together, and are prepared to speak accurately and intelligently to the state of the market: how you're going build company value and ultimately, build value for your company and for the VC.

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