Read the summary and watch or listen to the interview here: https://www.crowleylawllc.com/podcasts/biotech-investments-insights-from-walter-greenblatt/
Introduction to the Podcast
Voice-Over: Welcome to From Lab to Patient, Garage to Market, with your host, Phil Crowley. In each episode, we discuss professionals serving the tech startup market and issues of importance to those companies. You can find the show on YouTube, LinkedIn, Facebook, Apple Podcasts, Spotify, and our website, CrowleyLawLLC.com. Now, here’s your host, Phil Crowley.
Phil Crowley: Welcome, and thanks for tuning in. On this podcast, we bring executives with experience in biotech and technology, along with those who support them, to share insights from the front lines.
Meet Walter Greenblatt: Biotech Investment Expert
Phil Crowley: Today, I’m pleased to welcome Walter Greenblatt, Managing Director of Walter Greenblatt and Associates, an investment banking firm focused on biotech investing. For over a decade, Walter and his team have been prolific financiers of early-stage biotech companies.
Walter is not just an investor and banker but also an experienced entrepreneur, having successfully built and sold a company with over 100 employees. Walter, welcome.
Walter Greenblatt: Thank you. It’s a pleasure to be here.
Phil Crowley: Walter, you’ve had an impressive academic and professional journey—Yale undergraduate, Harvard Business School with distinction, a master’s in economics from Oxford, and a career that included Bain & Company, founding and selling your own business. Many would have retired after such accomplishments, yet you chose to dive into the challenging world of biotech investing. What inspired that decision?
The Journey into Biotech Investing
Walter Greenblatt: It felt like a natural continuation of my previous experiences—a great way to keep learning, though not always easy. Education, as they say, is always expensive in some way. I’ve always enjoyed learning and entrepreneurship, and biotech is a combination of both.
When I sold my business after 10 years, I was living in Princeton, New Jersey, surrounded by life sciences companies. I connected with people in the field who encouraged me to get involved, and I embraced the opportunity.
Phil Crowley: Your expertise offers invaluable insight to entrepreneurs seeking funding. Could you explain your thought process when evaluating potential biotech investments? What strengths do you look for, and what turns you away?
Evaluating Biotech Investments
Walter Greenblatt: First, I want to hear a compelling story. For example, someone might say, “We’re developing a therapeutic targeting solid tumor cancers, which have been difficult to treat. Here’s how we’re addressing this and the evidence supporting it.”
Since I’m not a domain expert in every field, I rely on my network of specialists to evaluate these claims. For instance, I’d consult an oncology expert to assess a proposal and identify key questions. We call this “testing the waters.” Before formally engaging, we present the idea to trusted experts and investors to gauge interest and validate the science.
Phil Crowley: So solid science is a non-negotiable?
Walter Greenblatt: Absolutely. The science must hold up under scrutiny by experts. In addition, there must be strong intellectual property protections, such as a solid patent portfolio, to safeguard the innovation and justify the long development timeline, which can take five to ten years or more.
Funding Stages and Strategies
Phil Crowley: At what stage do you typically invest? Do you fund companies at the in-vitro stage, or do you wait until there’s proof in animal models?
Walter Greenblatt: It depends on the product and the company’s needs. While we’re primarily intermediaries connecting companies with investors, we only work on opportunities we would invest in ourselves. Biotech investments usually progress through in-vitro studies, in-vivo proof of concept in animals, and eventually human clinical trials.
For example, we’ve supported companies at the in-vitro stage to raise funds for animal proof-of-concept studies. Reaching such milestones often creates a significant value inflection point, which increases the company’s appeal for subsequent funding or acquisition.
Phil Crowley: So funding is incremental, tied to achieving milestones?
Walter Greenblatt: Exactly. Each financing round is designed to reach the next key milestone. For instance, proving efficacy in animal models might cost $3–4 million, while human proof-of-concept studies could require $10–15 million.
This phased approach benefits both investors and companies. Investors see value grow as milestones are achieved, and companies avoid unnecessary dilution by raising funds strategically. It’s important for entrepreneurs to align with investors who understand and support this process.
Phil Crowley: That also underscores the importance of choosing patient investors who are prepared for the long haul, given the extended timelines of biotech development.
Walter Greenblatt: Absolutely. Biotech investing is a long game, and having patient, informed investors makes a huge difference.
Crowley Law Overview
Phil Crowley: Let’s take a short break. At Crowley Law, we’re passionate about helping life sciences and tech entrepreneurs turn their ideas into impactful innovations.
As a former research physicist turned attorney, I understand both the challenges of discovery and the legal hurdles of commercialization. Our firm is dedicated to protecting founders’ interests and ensuring they benefit from their hard work.
For more resources, visit CrowleyLawLLC.com or email us at [email protected]. Check out our free book, The Top 10 Causes of Failure for Technology Startups and How to Avoid Them.
Phil Crowley: Walter, let’s return to the conversation.
The Role of Investors Beyond Money
Phil Crowley: We need to conduct due diligence with our investors, but investors bring more than just money. They offer networks, advice, and strategic thinking. What are the benefits of carefully selecting investors for an entrepreneur and a company?
Walter Greenblatt: You’ve touched on much of it. Investors with good judgment and networks can help fill gaps in a company, especially those who’ve been through it before. While their feedback can sometimes be challenging for new entrepreneurs, the best entrepreneurs know how to take valuable coaching—and when not to.
That wisdom—knowing which advice to take—is crucial. Experienced investors, like you, can help companies position themselves early to avoid predictable pitfalls. This is also why we value diverse investor groups, including pharmaceutical executives and IP specialists.
Some companies that start with angel investors grow to have large investor groups. For instance, one company I worked with had over 150 investors. However, not all advice is equally useful, and it’s important to build a “kitchen cabinet” or rely on a strong board of directors for strategic input.
Phil Crowley: Can you identify key traits of successful companies and, conversely, red flags that signal potential failure?
Walter Greenblatt: There isn’t a strict checklist, but flexibility and adaptability are crucial, especially in early-stage life sciences. Founders need deep knowledge of their field but also the ability to pivot when things don’t go as planned.
A major red flag is tunnel vision—founders dismissing competition or overestimating their technology without considering the broader market. Understanding competitors and knowing what makes them formidable—or not—is essential.
Phil Crowley: Regarding market analysis, what do you look for to gauge market size and the company’s understanding of the marketplace?
Walter Greenblatt: For us, the focus is on ensuring investors can achieve a 10-20x return. This involves understanding funding needs for current and future rounds, as well as potential exit scenarios.
Most companies we invest in exit through acquisition rather than going to market. For example, one company we worked with exited after successful preclinical results, delivering a 10x return to investors.
Understanding market size is important, as it influences acquisition value. However, acquisition is more common than IPOs for smaller biotech companies. Strategic buyers, like large pharmaceutical companies, often seek acquisitions to integrate products into their existing infrastructure—marketing, sales, manufacturing, and regulatory affairs—rather than having small companies build those capabilities themselves.
Phil Crowley: It’s also critical for entrepreneurs to think ahead about potential buyers and develop relationships early. These deals often take years to materialize.
Walter Greenblatt: Exactly. Entrepreneurs should build relationships with potential buyers long before discussing acquisitions. In my experience, the people negotiating deals often know each other well in advance.
Phil Crowley: Similarly, investment bankers and investors appreciate seeing progress over time. When entrepreneurs return to show they’ve met or exceeded milestones, it builds confidence in their ability to deliver.
Walter Greenblatt: That’s true. While we often work with companies from inception, it’s important to keep investors engaged and informed. By demonstrating success over time, you ensure they’re ready to invest when the opportunity arises.
Conclusion and Final Thoughts
Phil Crowley: Walter, thank you for sharing your insights. It’s been a pleasure discussing how biotech investors evaluate opportunities and what entrepreneurs can do to attract investment.
Walter Greenblatt: Thank you for having me, Phil.
Voice-Over: You’ve been listening to the From Lab to Patient, Garage to Market podcast with Phil Crowley. Find us on major platforms like YouTube, LinkedIn, Facebook, Apple Podcasts, Spotify, and at crowleylawllc.com. If you found this helpful, please like, subscribe, and share.
