So you can expect interested investors to conduct thorough IP due diligence. Also, keep in mind that IP is usually not enough. Your choice of business model also helps investors understand the current management team s strategic skills. At the same time, many early-stage VCs don t put as much emphasis on business model as they do on the other three criteria described here. Amgen and Genentech are well-known examples of the product company business model.
Patients are the ultimate customers of a product company.
Typically, a tools company s customers are pharmaceutical companies. Millennium is the classic example of the hybrid model. Once you have demonstrated that your company has a strong team, unique technology and a potentially robust business model, there remains the basic question of market size. Not surprisingly, investors look for opportunities that address large and growing markets. For instance, a drug that has an opportunity to dominate the large congestive heart failure market would clearly be interesting.