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A business is an instrument.
That instrument has needs and requirements to function effectively. · A desirable product or service · Experienced management to develop, manufacture and distribute that product or service to clients · Adequate and timely financing (ransom) to keep the army moving
Experience, derived from the Latin, experiri, meaning to try. Service, derived from the Latin, servus, meaning slave. Financing - Raising revenue to pay for a good or service. (Worldbank 2000). The term Finance is derived from the Old French finer, meaning to pay ransom.
Financing Questions
1. What does the business need funding for? 2. How much does the business need? 3. When does the business need it? 4. Where can Management get those required funds?
It all depends on:
What stage of growth is business in? · Start-up – Research phase (R) – revenue minus · Development Stage (D) – revenue minus · Manufacturing and/or Distribution –revenue generating
Research, derived from the Old French researcher, meaning to search closely.
Development, derived from the Old French, desveloper, meaning to bring to fulfillment.
What type of product / service is being provided? · Drugs and therapeutics - $364 B · Medical devices and procedures - $190 B · Clinical and Molecular Diagnostics - $26 B · Biotechnology - $28.5 B · Tool Companies (hardware, software and reagents) - $9B.
Pharmaceutical, derived from the Greek, pharmakeutikos, being a medicinal herb
Diagnostic, derived from the Greek, diagnosis, meaning discernment.
Where is the business located? · East Coast – Boston to Bethesda, MD · West Coast – San Diego to Seattle (California is best). 60% of all the biotech companies in the world are in California. They are here and the Investors are here. · And anyplace else.
Why is location important? · Intellectual Critical Mass - Near a University. According to the University Of California, one in three U.S. Biotech companies is located within 35 miles of a U.C. Campus. U.C. Scientists are credited with founding one in four California Biotech firms. · Trained and competent workforce - Especially for high technology oriented companies, a trained work force that is already competent in the fundamentals of your technology will reduced training times and error rates. · Where the Money is - Big-time investors are a risk adverse lot. They generally stick close to what they are familiar with. They usually fund the same types of technology companies. They usually stick with a specific geographical region or regions. A very important question to the Money people is "Where are you located?"
Each answer has an impact on the overall Valuation of the business. |
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