In aesthetics, competition for funding is fierce
Today’s aesthetics industry is one of the most dynamic sectors in medicine. Potential new breakthroughs are emerging constantly, along with countless new companies seeking to nurture those innovations into healthy downstream valuations.
In this fiercely competitive funding environment, new aesthetics ventures face two critical challenges. First, identifying and developing differentiated products — but then also distinguishing their business in the busy market for capital investment.
So what are today’s aesthetics investors looking for in companies they decide to capitalize? Blossom Innovations founder and CEO Dr. Irina Erenburg recently discussed that important question with a panel of top investors and fellow executives at the 2019 Aesthetics Innovation Summit.
Top takeaways: What aesthetics investors are looking for
For Dr. Erenburg and her fellow panelists, 3 key features differentiate companies that attract funding for their innovations.
Solid, proprietary science
Today’s aesthetics market is booming with therapeutic breakthroughs. For Craig Drill, head of Craig Drill Capital and a long-time investor in aesthetics, it’s one of the most exciting times to be in this sector. “even after 25 years,” Mr Drill notes, “the current science is very alive.”
As a result, according to Adele Oliva, founding partner of 1315 Capital, “the days are gone for me-too potions and lotions.” Today, investors are setting a higher and higher scientific bar for capitalizing new innovations. They expect new products to be robustly grounded in relevant tissue biology and skin metabolism, with clearly identified therapeutic potential backed by robust models and high-quality research.
And not only do VCs expect groundbreaking science, they also expect it to be thoroughly, sustainably moated. Investors are “looking for breakthrough science, not incremental steps,” says Craig Drill, “surrounded by global IP.”
For Bob Rhatigan, CEO of Merz Americas, scientific integrity is essential. But it’s only one element of the unique value proposition that investors are looking for in emerging innovations.
While new ventures need “a really sound scientific basis” for their products, Mr. Rhatigan makes it clear that “the only way we will invest is if we believe the product offers a point of differentiation versus what exists in the market today.” To attract funding, new medical aesthetic platforms need to deliver more than marginal improvements: Investors are looking for technologies and therapies with game-changing potential for patients, medical professionals, and the marketplace.
What’s more, market-shaping innovations signal more than a good early-stage investment. For VCs looking at the lifetime of their investment, breakout discoveries can be the seeds of a highly profitable future exit. Even in a highly competitive M&A market like aesthetics, Dr. Erenburg notes, “bigger company acquirers are willing to pay top dollar for true transformational technologies.”
While solid science and differentiated technology may still command high valuation on their own merits, the people behind them matter just as much — if not more. As Adele Oliva of 1315 Capital notes, “Really the most important factor for us comes down to management and the management team. They create massive upside for us.”
Craig Drill of Craig Drill Capital agrees: When assessing new opportunities, investors like to “stick with people who are proven.”
Investors want to see that clinical breakthroughs are backed by leadership and management teams with the experience, foresight, and strength to successfully manage their assets through the many different stages in their lifecycle between inception and acquisition or commercialization.
Most importantly, VCs are looking for corporate leadership with a deep understanding of the science behind their innovations, the risks that need to be mitigated throughout the product development cycle, and the need to maximize capital efficiency at every step — especially with early-stage capital from the critical first stage of value creation.
Aesthetics investors are excited by what they’re seeing
With fierce competition for funding, a high bar for differentiation, and new ventures being launched around the world, VCs are optimistic that the already hot aesthetic medicine sector is on track to heat up even more.
“I don’t think there’s a better time to be an aesthetics entrepreneur,” says Craig Drill. Adele Oliva of 1315 Capital agrees: “We’re in the infancy [of medical aesthetics] and there is massive amount of momentum and opportunity.”
At Blossom Innovations, we’re excited to be part of this dynamic sector — and to be pursuing transformative new breakthroughs in the science of skin. Learn more about the world-class team of innovators who lead us and our growing pipeline of sustainable innovations in dermatology and aesthetics.
Watch the entire roundtable discussion above, or listen to the whole podcast free on Apple Podcasts.