What are the unique hurdles that entrepreneurs encounter in the complex field of life sciences? In this episode of The Angel Next Door Podcast, Yaniv Sneor, co-founder of the Mid Atlantic Bio Angels, shares his extensive experience in angel investing specifically within the life sciences arena. As an expert in navigating the intricacies of this sector, Yaniv provides critical insights into the detailed processes and strategies required for successful investments in life sciences. During the conversation, Yaniv sheds light on how the Mid Atlantic Bio Angels evaluate life science opportunities. He explains the organization's focused approach, which includes thorough due diligence, a global perspective for sourcing deals, and collaboration with experts worldwide to make informed decisions. He discusses the foundational reasons behind the inception of the group, emphasizing the necessity for specialized knowledge in effectively navigating life science investments. This episode is invaluable for anyone interested in the specialized field of life sciences investing. Yaniv clarifies the complexities of the sector, transforming what often seems like an enigmatic venture into a comprehensible and approachable subject. This episode addresses both the hurdles and strategies in life science investments, making this a crucial listen for both budding entrepreneurs and seasoned investors keen on exploring the dynamic intersection of healthcare and investment.
What are the unique hurdles that entrepreneurs encounter in the complex field of life sciences? In this episode of The Angel Next Door Podcast, Yaniv Sneor, co-founder of the Mid Atlantic Bio Angels, shares his extensive experience in angel investing specifically within the life sciences arena. As an expert in navigating the intricacies of this sector, Yaniv provides critical insights into the detailed processes and strategies required for successful investments in life sciences.
During the conversation, Yaniv sheds light on how the Mid Atlantic Bio Angels evaluate life science opportunities. He explains the organization's focused approach, which includes thorough due diligence, a global perspective for sourcing deals, and collaboration with experts worldwide to make informed decisions. He discusses the foundational reasons behind the inception of the group, emphasizing the necessity for specialized knowledge in effectively navigating life science investments.
This episode is invaluable for anyone interested in the specialized field of life sciences investing. Yaniv clarifies the complexities of the sector, transforming what often seems like an enigmatic venture into a comprehensible and approachable subject. This episode addresses both the hurdles and strategies in life science investments, making this a crucial listen for both budding entrepreneurs and seasoned investors keen on exploring the dynamic intersection of healthcare and investment.
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Marcia Dawood
Well, hi, Yaniv. Welcome to the show.
Yaniv Sneor
Hi, Marcia. Thanks for having me on.
Marcia Dawood
Well, I'm excited to hear from you today about a lot of the things that are going on in the life science space. We haven't really talked that much about life science lately on the podcast, so this is going to be great. I know it's such an important topic, such an important space. I'm really excited to hear about the mid Atlantic bio angels and all the work that you're doing, but you're doing some very interesting and creative things, too. So we want to get into all that. So why don't we start, start out by having you tell us a little bit about how you got started in angel investing, how you knew about it, or how you started mid Atlantic bio angels, or how it got started from the beginning.
Yaniv Sneor
Yeah. So originally, two partners and myself started mid atlantic bio angels because we felt that the life sciences require a very specific and broad set of expertise in order to properly invest in them. It's a really difficult asset class, due diligence, and we felt that you really need a lot of expertise around the table to do that. So we thought that if we created a group that specializes just in life sciences, we might be able to attract a membership that's more interested or specifically interested in that type of asset class, and that would allow us to do better diligence and invest in these kind of companies. So my two partners have since retired, but, so I'm the last man standing. But we decided to create this group. We called it mid Atlantic bio angels, because the majority of our members in the beginning were from the mid atlantic area. But since the pandemic, we've removed all geographic restrictions on membership.
Yaniv Sneor
And since we went so narrow in terms of our specialization in terms of investing, we went very broad geographically. So from the beginning, in order to have enough of a deal flow, we went worldwide. We've always been accepting applications. We've been doing Zoom since before the pandemic because companies would always pitch to us from overseas. And so mid Atlantic became sort of a misnomer, but it's how we started, so we've kept the name.
Marcia Dawood
That's great. So tell us a little bit about how you find companies and invest in them overseas. How do you find investors from overseas? That's a something we don't hear about very often here in the US.
Yaniv Sneor
So we spend a lot of time at conferences for the life sciences, who more often than not welcome having investors as part of those conferences that we spend a lot of time meeting with potential syndicate partners, others maybe small VC's or family offices and other life science focused groups, groups from around the world. We meet with a lot of companies who are looking for funding from all over the world, talk to them about our investment criteria and what we're looking for, and we try to create a relationship for co investment and we try to increase our exposure to the world and to companies who potentially would be interested in having us fund them. And since we are so unique in our specialization, you know, there are maybe a handful of us over in the world who do only life sciences. There are many, many angel groups that also do life sciences, but they're usually generalists and, but we're specialists and we do primarily sort of the deep end of the pool. So more on the therapeutics and devices and a little bit on the digital health and diagnostics.
Marcia Dawood
Oh, that's very interesting. So how many members are there? How do people get involved? And then how do you deploy capital? Is it through direct investments? Everybody writes a check, or do you have funds or how does that all work?
Yaniv Sneor
So we have approximately 60 members. The majority of our members are from within the life science industry. Many of them are either people who are doing commercial work within pharma or device companies. Some of them are small CEO's, I mean CEO's with small companies, biotechs. Some of them are involved as consultants in regulatory or things of that nature or human resources, finances. But people who have an interest in or stomach for the life sciences, we can always, people can always write their own check if they want to. But a few years ago, we created an internal fund that we call a pool. And that pool votes, and the members of the pool and the majority of our members belong to the pool.
Yaniv Sneor
The members vote on how they want their assets deployed. And that creates actually a really nice environment within the group. It's very catalytic to a lot of engagement with members. And then several years ago as well, we created what we call a sidecar fund from people who told us we'd love, you know, we like the fact that you have all this expertise dedicated to life sciences, but we either don't have the time or the expertise in to be able to join the group. But is there any way we could possibly co invest with you? And for them, we have a sidecar fund. So for people who just want to basically index our investments, and that fund works on a rules and ratios base. So basically there are thresholds. If the thresholds are met, the sidecar fund automatically co invests with us.
Yaniv Sneor
And it invests with us on a ratio similar to us. So it's a bit complicated, but we have rules for the pool as well, in terms of diversification and things of that nature, which we maintain for the sidecar fund as well. And the goal, really, as you know, as an angel investor, is to create a portfolio of companies where you invest in multiple companies, and that's what the way the pool works, and the sidecar fund, where you have exposure to multiple companies. And so the diversification limitations carry from the pool to the fund as well.
Marcia Dawood
Oh, that's super interesting. So tell us about some of those rules or triggers that have to happen in order to get the sidecar fund to invest.
Yaniv Sneor
The sidecar fund invests in. So the idea behind what you consider a successful angel investment opportunity is where multiple people consider an investment and decide that it's a good idea when it's been discussed internally and there is more than one person involved. So we consider a Maba investment to be an investment where either the pool decided to make an investment, because by definition, it creates a plurality of opinions who had to vote for that thing to go forward, or if at least three members wrote an aggregate $150,000 or more in checks for the company. So in all cases, you have a plurality of people who did diligence decided to put in at least a threshold of a dollar amount for that to be considered a Mapa investment. When that happens, the sidecar fund automatically co invests, and it maintains, as I mentioned, ratio. So when we put in a capital contribution into the pool, the most the pool can invest on our behalf is 20% of that capital contribution. So we're guaranteed at least five investment from one capital contribution. If we like that company, we can also always write an additional check and increase our exposure to that company.
Yaniv Sneor
But at the maximum, on our behalf, the pool can only put 20%. And that rule is the same for the sidecar fund. If the pool puts in 20% of the individual's money, then the sidecar fund is limited to putting its maximum of 20% of the individual's money. So likewise, the sidecar fund would. The maximum it can invest is that fifth of each person's investment. If the pool votes to put in less than that maximum, then likewise, the sidecar fund would invest less as well, on the same ratio as us.
Marcia Dawood
Oh, I see. Oh, interesting. So talk to me a little bit about, like, the process of doing diligence, because I know I'm not a science person, but I am always fascinated and totally intrigued by all life science companies that I see, because I think, oh, my gosh, these companies are doing such amazing work, and they're really trying to solve some of the problems that we really need solved, like treatments for diseases and all kinds of wonderful things. But I mean, it sounds like you're, you have this amazing pool of members that have all of this different level of expertise, and that can help you then with the diligence process. Is that pretty much how it works?
Yaniv Sneor
Yeah. And that's actually the key to the group's existence. You know, I would never invest before I heard the opinions of all the other members in the group because there's just so much that you need to know, and it's so difficult to do it on your own and possibly impossible to do it on your own. So the idea is that you have all of these people with different levels of expertise in different areas, and all of them contribute to it. So to give you an idea of sort of our numbers, of every 100 companies that apply to us, only 22 make it through the pre screening process. So 78 are already pre screened out. And by the way, we do get back to all the companies with general reasons why we said no. Because we want to, we want to provide them with an understanding and with a reason or a tool to come back to us in the future if they have addressed it.
Yaniv Sneor
So of those 22 that present to us either over Zoom or in person, maybe a half or 13 or 14 companies will move into diligence. When we move into diligence, we create an internal room inside our communications platform. And everybody, and in order for us to move with the diligence, at least five person and a lead need to be there, need to say they're interested. So we create the room. We post all of our comments from the post invest or the post presentation discussion in that room. And within a week of the company's presentation, we want to send the company the first set of questions. And those are the go no questions. We want to be able to, if it's critical, we want to be able to address it upfront and not have to spend too much time in diligence.
Yaniv Sneor
So let's address those main questions first. And then if we get back responses and we like it, we go back and forth between us and the company. We could have multiple Zoom calls, etcetera. And in a few calls internally, we might reach out to other experts in the field that either we find or the company provides in terms of kols, or people who may be interested, who may be the adopters in the field. Field of that specific technology. And if, after we go through this process for a few iterations, we are still positively disposed about that company, we will bring in the remaining members of the group who are pool members, but are not already in that diligence team, so that the entirety of the pool membership has exposure to that diligence. We ask them. Then we write a short summary of what we've, what we've looked at, what we've already discussed, all the articles that were posted.
Yaniv Sneor
We asked them to review all the conversations that have been, that have been happening in the interim between us and us and the company, and then see if there's any additional questions that they have in preparation for a vote. We might have another internal call. We might have another call with a company, if need be. We may go through another set of questions, if that's required. And at that point, when everybody is ready, we go to a vote. The vote is open. So everybody knows, Marcia, how you voted. And at the end of the vote, we ask you to write a statement saying, why did you vote the way that you did? And that causes everybody to really get engaged with the diligence, consider all the facts, form an opinion, and write an intelligent, supported statement as to why they voted the way that they did.
Yaniv Sneor
And we show the progress of the vote on a daily basis. We keep it open, usually because our members all have day jobs. So you want to make sure they have the time to review the information and vote. So we keep the vote open for several days, usually through a weekend, and then we publish the vote. And if the pool has been able to exceed its highest threshold, it will invest 20% of each of the individual's members capital contribution. If we haven't reached the highest threshold, that we've reached the lower threshold, we'll invest 10% of each person's capital contributions. And if we haven't reached even that lowest threshold, we will make no investment. So, to give you an idea, our yield in terms of the number of companies receiving investment out of 100 currently stand at below one and a half percent.
Yaniv Sneor
So one and a half companies out of 100 receive money. Pre pandemic, we were just over two and a half percent. There are, for a variety of reasons, we are lower. We like to invest more, but it is what it is. The amount of applications we're receiving right now is pretty much at an all time high, but our yield is at an all time low. So it's an interesting dichotomy there.
Marcia Dawood
Yeah, the market has definitely been very, very challenging for entrepreneurs to fundraise in the last two and a half years. So I can imagine that your numbers, that makes sense that your numbers are up of applications and then maybe not so much on actual funding. So how many companies have you funded in total over the time?
Yaniv Sneor
So we funded 17 companies in total. We've had two exits. One company exited for nine x, another company exited. The early investors will probably get around 20 x. The late stage investors will may end up between probably around a five or six x, which this. So we, the latent stage investors came in until the last round of that company, and that round was in 2020. And the first part of that exit was in 2023, where one of our companies sold to Stryker for just over half a billion dollars. And so those late investors, which include both the pool number two and sidecar fund one, those investors are very happy putting money into a new sidecar fund, and they've already received a return on their investment and they will be receiving more over the next year and a half or so.
Marcia Dawood
Nice. And those 17 companies were invested over what period of time?
Yaniv Sneor
So that's over about a twelve year, actually more like a eleven year period of the other, the rest of the companies. So with two exits, we had one company that tried to make a shift in direction during the pandemic. They ran out of money and they shut down. We have one company currently a reorganization, and the remaining 13 companies are all still alive and well.
Marcia Dawood
So that's a pretty good track record. Yeah. And life science companies do tend to take a tad bit longer, right?
Yaniv Sneor
That's true. So when we invest, we hope to have an exit within five to seven years. The nice thing about the pools and the funds is that as people join in and as new investors come in, sometimes they are exposed to an investment that's brand new to us. But sometimes, like case of the company that just exited, they are exposed to an opportunity that is very late to us, that is a company coming back to us for a new. For its last round or a new round. And so you have a mix of both timing as well as how the risk levels and et cetera. So it's actually a nice mix.
Marcia Dawood
That is a nice mix. Now, you'd mentioned something before about that. As people are interested in becoming members, they can actually come into these. Is it both the pool and the sidecar fund at any point?
Yaniv Sneor
Right?
Marcia Dawood
Yeah.
Yaniv Sneor
Yeah. So we created a novel structure for both the pool and the fund. And the idea for the pools originally, which was one of our members suggested, is it's a way for the group to engage, you know, very active conversation and discussion. And so originally, pool one and two were closed ended pools, and new members would come into the group. They loved the concept of the pools, and they were like, great, we want to join the pool. And we found ourselves saying, no, wait for the next pool to open, which is exactly the opposite of the engagement thing that we tried to create with the pool. So we spent a while talking to our attorneys and figuring out how to create an open ended structure, which is a structure that we use for both the pool and for the sidecar fund. And so whenever we talk to people who are interested in joining us, either as members into the pool or as non members, as co investors into the sidecar fund, whenever they're ready to write a check, we're there to say yes.
Marcia Dawood
Interesting. So you mentioned earlier that if, like, if the trigger happens and 20% is invested in a company, let's just use that as an example. It would be 20% of each person's individual contribution. So is that kind of how you figure out that structure, that it's almost like everybody has their own little account within the pool, and then you're just taking off the pool? Did I get.
Yaniv Sneor
That's right. So it's whoever that membership in the pool is at the time, each one for them, it's the. It's the respective 20% or 10%, the ratio that we go by of their initial capital contributions. You add those all up, and that's what the pool and or the fund can deploy at any given amount to fund.
Marcia Dawood
Okay. That is an interesting structure I don't think I've seen before. Very cool. And I like how it allows you then to get that engagement that you're talking about, because I know with some of the annual fund, we called them annual funds, but it was kind of along the same idea about voting instead of writing a check. So if you're in a very traditional angel group where you see a company, people like it, okay, now a bunch of people are going to invest. Then they would have to write a check, you know, out of their own checkbook, kind of like right then and there. And I saw a lot of investors get very fatigued very quickly because they'd be like. And some.
Marcia Dawood
Some of them didn't even want to come to the meeting because they'd be like, okay, somebody's gonna ask me to vote and raise my hand and say, yes, I'm interested in this company. But then they're like, I don't really have money right now to invest. And so I love this concept of, you know, still having that same collaboration of the group and being able to calling the expertise, but also being able to not feel that pressure every single time you were looking at a company like, oh, my gosh, am I going to get asteroid check now? And having that type of dynamic.
Yaniv Sneor
Right. And from a management perspective, we just didn't have the bandwidth to handle the capital calls. And so from a psychological perspective, as you're saying, the members money is already there and they want to deploy it. And so now they need to vote on how to deploy the funds that they're already committed. They're already there, and they're already bank account. They don't have to. There's no capital calls.
Marcia Dawood
Yeah.
Yaniv Sneor
So it makes the discussion a lot easier.
Marcia Dawood
Yeah. Oh, that's great. Excellent. Well, Yaniv, thank you so much for coming on to the show and telling us all about mid atlantic bio angels. This is has been great, and I love hearing about what's happening in the life science space, so thank you.
Yaniv Sneor
Thank you so much for having me.