Our Investment Process

  • Online Application Submission

    First, you will submit your application through our site. Be sure to include your executive summary and investor presentation and be as specific, succinct, and explicit as possible. We will not consider incomplete applications.

  • Initial Review

    Once your application is submitted, we will perform an initial screening to ensure your company is within our scope of interest. A carefully filled-out application will help your progress immensely. Should we have questions, we will contact you.

  • In-Person Pitch

    Should your company pass our review stage, you will be invited to present in person at a screening committee meeting. At this meeting we encourage you to focus on the essentials in this pitch: financials, IP, goals for funds raised, and exits.

  • Membership Dinner Presentation

    If the committee decides to proceed, a series of due diligence exchanges with various members and the entrepreneurs will take place. If these exchanges go well, you will be invited to present to a larger body of LSA members at a special member dinner.

  • Due Diligence Luncheon

    Following the dinner, a due diligence luncheon is scheduled where members can go deeper into questions/answers. If there is sufficient member interest, LSA will proceed with financing, syndication and growth with your company.

LSA INVESTMENT PHILOSOPHY

LSA is a non-profit organization serving the early stage eco-system for healthcare and life sciences. We respect entrepreneurs and the difficult task they are undertaking. Whether or not you receive funding, we try to provide concrete feedback and are happy to help with insights and advice. We strive to treat entrepreneurs fairly and make your application process a value-added experience.

LSA connects high-quality entrepreneurs and business plans with our investor members. We help our companies with strategic advice, domain expertise, and access to our networks which offers help with recruiting, strategic relationships, and exit planning.

We build long-term relationships with entrepreneurs, and many of our members are executives from LSA-funded companies. We believe that the best relationships lead to win-win outcomes – both for entrepreneurs and our investor members.

LSA COMMITTEES – BIO, DEVICE, DIGITAL HEALTH

LSA has screening committees with dedicated members that review investment opportunities and manage due diligence activities: Bio, for biotechnology, genomics, and pharmaceuticals; Device, for medical devices and diagnostics; and Digital Health, for mobile health, healthcare IT and other digital solutions. Committees are comprised of 10-20 LSA members that are responsible for vetting opportunities prior offering them to the membership for investment.

You are welcome to apply for investment consideration. Criteria for investment are described below. For a step-by-step description of LSA’s deal flow process, please click here.

LSA’s investment process is data-driven. We encourage our entrepreneur partners to have familiarity with broad healthcare and life science fundraising trends and current best practices for early stage companies. Some reports from our sponsors and partners are available below:

The Entrepreneur’s Report and Life Sciences Report, Wilson Sonsini

Digital Health Funding Rankings, Startup Health

Criteria for Applicants

Focus & Location

  • Company focus in life sciences, especially healthcare
  • Near to LSA champion or co-investors
  • Outside CA: Strong local angel syndication lead

Investment

  • Up to $2M raise with $5M – $10M total to potential exit
  • Pre-money less than $5M. Higher premoney reduces probability of funding.
  • LSA investment “buys a milestone” that significantly de-risks the venture
  • Non-dilutive funding and grant availability is a plus
  • Underserved, disruptive market potential with large upside
  • Equity is strongly preferred vs convertible notes.
  • NO brokers or finders fees

Exit

  • 3-5 years at high multiple. Shorter exit a plus
  • High returns appropriate for high risk of early-stage investor
  • Applicants to provide exit comparables

Team

  • Experienced management team and ability to execute
  • Management seeks LSA domain expertise—not just money
  • LSA Champion on BOD or Observer, with company agreement; Information Rights
  • Although fundraising is the company’s responsibility, LSA can assist with fundraising, syndication, and exit.

Bio & Genomics

In bio and genomics, LSA members have the deep scientific knowledge needed to evaluate companies in this domain. Clinical trials, drug development, data analysis, regulatory pathways and intellectual property are familiar territories. From benchtop to market and/or exit, LSA members have been there for every step along the way.

  • Company Focus: Biotech, pharmaceuticals, diagnostic agents, cell tech, genomics, sequencing, etc.
  • Stage: Post-POC to Clinical. Concept-only considered.
  • Team: Strong scientific background
  • Exit: FDA: IND filing or clinical trials for exceptional deals

Devices & Diagnostics

In devices and diagnostics, LSA members include founders and executives from device and diagnostic companies. With unmatched operating experience, members have successfully developed and exited companies. Their professional careers include product development, regulatory and reimbursement, launching new products, building businesses, and more.

  • Company Focus: Med Tech, diagnostics, medical devices
  • Stage: Post-POC to Clinical with customer/market validation
  • FDA Path: No PMAs unless special circumstances reduces time/money to exit

Digital Health

In digital health, LSA members include founders and executives with varied backgrounds in digital health. All are active investors in the domain and collectively have reviewed more than 1,000 digital health companies. Members have deep expertise in healthcare, information technology, digital health innovation strategies, and more.

  • Company Focus: Information technology applied to healthcare, healthcare delivery, and other healthcare and life science applications.
  • Stage: Minimal viable product, effectiveness data, convincing customer ROI, and customer validation.
  • Funding to Exit: Total funds required to potential exit = $5M – $7M.

For thought-leadership articles, please click the links below:

Entrepreneur FAQ

How long does it take LSA to make an investment decision?

Typically, LSA makes an investment decision two-to-six weeks after an investment dinner. You can find the dates of our upcoming member dinners on our events page.
When you apply impacts your time to funding. If you just missed a dinner or are too close to an upcoming dinner, the review cycle is longer. You can shorten your review period with well-organized diligence documents, including financial statements, projections, go-to market plan, exit strategy, legal status, patents and/or other barriers against competitors, and customer validation/market research.

How many LSA screening meetings and investment dinners are held each year?

Throughout the year, each LSA screening Committee holds roughly two meetings per month. LSA holds 5 Member Dinner Meetings (aka Investment Dinner Meetings) – usually February, April, June, September, and November.

What is the LSA investment pipeline?

Each LSA Committee receives several hundred company submissions annually. From these, 2 – 3 companies are selected for onsite pitches at a biweekly screening committee meeting. During each investment cycle, each committee typically selects one deal to present at the investment dinner meeting.

How many investments does LSA make each year?

Typically, two new companies present at each of the 5 dinner meetings per year. Annually, LSA funds 4 – 6 new deals and 10 – 12 follow on investments in portfolio companies.

What can I do to improve my odds of receiving investment from LSA?

We strongly encourage you to review our due diligence checklist. Well-organized due diligence documents reflects well on your company and speeds its review for investment.

Companies referred to LSA from a trusted source receive greater attention. Without a referral, LSA must take more time to become familiar with you and your company.

You will also benefit from being familiar with angel investing in general. You can learn a great deal from the Angel Capital Association’s website.

Generally speaking, we are more likely to invest in companies that:

  • Meet our investment criteria (listed above)
  • Have defensible IP or other strong barriers to competitors
  • Have a clear go-to market strategy
  • Have a clear exit strategy (or series of exit contingency plans)
  • Have a product or service that offers significant impact within your market
  • Have compelling evidence that your target customers are likely to pay for and use your product or service once it becomes available
  • Have a team that demonstrates a solid mixture of technical and business acumen
  • Have a reasonable understanding of your company’s valuation, both now and at the time of your anticipated exit

What does LSA expect in terms of Intellectual Property?

For patents, we expect them to be granted, have received favorable office action, or at the very least, have been filed and published internationally. An IP portfolio only consisting of provisional patents is likely to be too early for LSA.

Digital health companies rarely have strong patents. Their barriers to competitors often are found in the business model, data, network effects, and elsewhere. It is important that you can articulate how you will defend against a well-funded imitator that may emerge after you pioneer the market.

How does LSA syndicate investments?

Angel funding rounds often require syndication, and LSA has a strong network of favored partners for syndication. A lead by LSA both paves the way for syndication and establishes credibility for follow on investments. Although the Company, not LSA, is responsible for fundraising, LSA can facilitate this process.

In turn, LSA is well-respected nationwide and receives numerous investment opportunities from other angel groups and through national syndicates such as the Angel Capital Association. All these sources, as well as our members, sponsors and partners keep our deal pipeline full, creating a high quality diversified pool of investments for our members.

What does a typical LSA Term Sheet look like?

For LSA’s convertible note financing terms sheet, click here.

For LSA’s equity financing term sheet, click here.

LSA does not invest with SAFE documents, but can co-invest under separate terms (see above).

What happens if LSA decides not to invest?

If now is not the right time for LSA to invest in your company, we will let you know what led to our conclusion. We do our best to provide details and hope that the LSA review process has been valuable and better equipped your company to succeed. LSA highly encourages resubmissions from companies who take action on our feedback and continue to keep us updated on their progress. Many successful LSA deals closed after the Company achieved new milestones based on continued discussions with LSA.

Have Questions? Contact Us.