Short inspirational for CEOs
I recently visited PAL-V, a highly innovative Dutch tech company that is on a journey to create a car that can fly. Although the concept puzzled me a bit at first, I was very impressed when I heard the full story. How they maximized the funding of their uncertain, long, and expensive development path has three key learnings for the CEOs of Life Sciences companies.
For over 100 years, since the beginnings of the automotive industry, mankind has dreamt of flying cars. Despite various prototypes being built over the years, this had never resulted in a viable concept. Then, in 2008, Robert Dingemanse and John Bakker founded a company to materialize this dream by realizing their envisioned Personal Air and Land Vehicle (PAL-V). During my visit, PAL-V’s CEO Robert Dingemanse explained that the prospect of developing the first successful flying car was quite a challenge.
Robert Dingemanse knew that the R&D and commercialization route would be long and extremely expensive. All that time, the company would not be able to generate revenues until achieving their goal of creating a high-tech vehicle that is allowed on the road and in the air. Quite literally, he had the task to convince investors and funding agencies to invest in a dream that to most people sounds like an impossible mission. Now, over twenty years since the conception of the idea, and at the cost of over €105M, the first flying car is about to enter the worldwide traffic network!
Taking a strategic approach
As with all R&D-intensive companies, the investor readiness of PAL-V strongly depended on their focus to advance the technological basis into the product: a flying car! This had to be combined with a credible strategic approach to position the business and open market access along the way. Robert Dingemanse took a very smart approach and got the company financed, while keeping steering power over PAL-V. Three key aspects of his approach stood out to me as being extremely relevant to CEOs of Life Sciences companies.
1. Positioning the idea
First, he positioned the concept of the flying car very clearly in the wider context of significant global mobility challenges. This made people understand that there is a clear and essential (read: costly) problem in society that could be solved by PAL-V. He then explained how he would do this; clearly showing the huge opportunity to potential investors.
2. Tackling regulatory approval
Second, he was aware of the enormous regulatory constraints on his route to gaining market access. He therefore opened communication with regulators right from the start and hired the best specialists for the job to pave the way for regulatory approval. At the same time, he provided a clear and validated picture to investors about the required steps and his approach to tackling the challenges.
3. Smart fundraising activities
Third, he made the fundraising activity a core part of his operational team, since it was obvious from the start that a lot of time and funding was required to be successful. Robert Dingemanse cautiously avoided starting semi-random investment rounds or funding applications on a ‘need basis’, which would have taken a lot of his time. Instead, he installed a Chief Funding Officer who was on a continuous quest to identify funding sources and build relations with investors and funding agencies to strategically secure and align all possible financing options. Ultimately, this paved the way for success, providing continuous financing and increasing the company valuation along the way to minimize the dilution of shares.
An inspirational and educational visit
To conclude, my visit to PAL-V was inspirational and educational, which are essential ingredients for success. As a CEO of an innovative company, you need to be aware that your energy, dedication, and perseverance are critical to getting your mission financed. Gathering a strong team around you helps to spread the word and achieve your goals: You will be found and recognized by investors more easily, and they will also be more convinced to finance your project. This approach has certainly paid off for the MT of PAL-V – which has shown us that even the ultimate engineering challenge of a flying car is no pipe dream!
How can FFUND help your venture?
Is your innovative Life Sciences company in need of funding and advice to attract strategic finance? We offer flexible financing management support to ensure the funding of your company is successful, both in terms of short-term cash and in building value to ensure that you keep a seat at the table until the exit or deal. Please feel free to reach out and set up a meeting with you and/or your venture.
Henk Viëtor CBO, FFUND