Introduction

At Nuvantta, a significant part of our work involves helping founders prepare for fundraising while supporting investors as they evaluate investment opportunities. Working alongside both groups has given us the opportunity to observe the same process from two very different perspectives. One question sits at the centre of almost every fundraising and diligence conversation:

What makes someone believe an opportunity is worth backing?

The answer to this question usually centres around familiar topics, and there is no shortage of frameworks, templates and diligence checklists built around them. Yet we continue to see companies with many of the same ingredients produce very different outcomes. Some raise capital with relative ease. Others struggle to move beyond diligence despite having strong science and well-prepared materials. That naturally raises another question.

If the fundamentals appear to be in place, what separates the companies that move forward from those that don’t?

We found ourselves returning to two observations after reflecting on this:

• The purpose of diligence is often misunderstood – diligence is commonly approached as a process of validating an opportunity and identifying risks. Both are essential parts of the process, but they are only inputs into the decision. The purpose of diligence is to build enough conviction for both parties to decide whether the opportunity is worth backing.
• Founders and investors evaluate conviction through different lenses – founders naturally focus on demonstrating why the company deserves to be backed by highlighting the science, the market opportunity and the strength of the business. Investors build conviction by testing whether those strengths are sufficient to justify the risks involved. When each side approaches diligence through a different lens, they naturally prioritise different questions, different evidence and different conversations, making it harder to build conviction together.

The companies and investors who navigate this process most effectively recognise both realities. They understand what diligence is trying to achieve, and they understand how the other side reaches conviction. The three principles that follow are the common ground we have repeatedly seen help bridge those perspectives and build conviction more effectively.

Principle 1: Honesty is the Best Policy

This is arguably the hardest principle to put into practice, yet when done well it can materially accelerate the diligence process. Convincing someone to invest in a biotech company is no small feat. As a result, founders naturally want to present the strongest possible version of their business, often highlighting the strengths while downplaying the weaknesses. The reasons are understandable:

• Discussing risks too early may spook investors.
• Disclosing sensitive information may expose intellectual property, strategic plans or competitive positioning.
• Fundraising is already time-sensitive, and difficult conversations may slow the process or jeopardise the round.

One point that is often overlooked is the information asymmetry between both parties. Investors spend a few weeks evaluating an opportunity that the founding team has spent years building. They simply cannot know the business to the same depth as management. As a result, the burden of building conviction through transparency naturally falls more heavily on the founders.

The second point is that experienced investors already assume every biotech company carries risk. They are rarely looking for a perfect business. Instead, they are trying to determine whether management understands where the risks lie, has thought carefully about them and has a credible plan to address them. More often than not, discovering an undisclosed issue causes greater damage to conviction than the issue itself. The following are some of the practices we have seen consistently work:

Founder’s Perspective

• Stage-gate disclosure by matching the depth of information shared with the progress of the diligence process.
• Be open about material risks that could affect the company’s next major milestone.
• Pair every major risk with a mitigation plan so investors understand how management intends to address uncertainty.

Investor’s Perspective

• Use diligence to understand risk and determine whether it can be managed, reduced or justified.
• Encourage transparency by creating an environment where difficult discussions strengthen the investment process.
• Respect appropriate confidentiality by recognising that commercially sensitive information should be shared progressively as trust develops.

Principle 2: Don’t Judge a Book by Its Molecule

Founders naturally spend years refining the science behind their platform or lead molecule. It is the foundation of every biotech company, and it is therefore natural that fundraising conversations begin with the asset and the evidence supporting it.

One of the biggest shifts we have seen in successful companies is knowing when to stop thinking like a research programme and start thinking like a company. The difference is subtle but important.

A company-first mindset changes the questions management asks. Instead of focusing only on advancing the asset, it begins thinking about the organisation required to sustain it. Partnerships become long-term strategic relationships rather than individual transactions. Manufacturing becomes part of the competitive advantage rather than a future problem. Governance, regulatory strategy, suppliers, capital allocation and patient access become deliberate capabilities rather than activities that can be solved later.

Ultimately, this is what investors look for. They are evaluating whether the company has been built to sustain, develop and create value beyond a single programme. The strongest companies understand that lasting value is created by building the right organisation around the science, not by focusing exclusively on the science itself. The following are some of the principles we have seen consistently strengthen that mindset:

Founder’s Perspective

• Build the company with the same discipline as the science.
• Make decisions that strengthen the business beyond a single programme.
• Develop long-term capabilities rather than solving only today’s milestone.
• Think about partnerships, operations, governance and capital allocation as strategic assets, not future tasks.

Investor’s Perspective

• Evaluate whether the organisation can create value beyond the current asset.
• Look for management teams building durable capabilities, not just advancing programmes.
• Assess whether the company’s strategy creates a sustainable business rather than a successful financing round.

Principle 3: The Three-Legged Stool

One of the most common patterns we see is founders treating commercial strategy as something that comes later, once the science has been validated. In reality, the commercial case should begin taking shape from day one.

Healthcare is fundamentally different from most industries. The person who benefits from an innovation, the person who prescribes it and the person who ultimately pays for it are often three different stakeholders, each with their own priorities and incentives. A common analogy we like to use is a three-legged stool:

• Patient – Does it meaningfully improve outcomes or quality of life?
• Provider – Can it be realistically adopted into clinical practice and existing workflows?
• Payer – Does the value justify reimbursement and long-term affordability?

If either one leg is weak, the entire commercial case becomes unstable.

This is precisely why commercial thinking should not wait until launch planning or market access discussions. Thinking through these questions early shapes everything that follows. It influences clinical trial design, evidence generation, product design, pricing strategy, regulatory planning and ultimately where a company chooses to invest its limited resources. The following are some of the principles we have consistently seen strengthen the commercial case.

Founder’s Perspective

• Build evidence that matters to all three stakeholders, not just regulators.
• Engage clinicians, patients and payers earlier than you think you need to.
• Let commercial realities shape development decisions rather than simply validating them afterwards.

Investor’s Perspective

• Evaluate whether management understands the complete adoption pathway.
• Assess whether commercial thinking has influenced clinical and regulatory strategy from an early stage.
• Look for companies that balance patient impact, provider adoption and payer value rather than optimising for only one.

Conclusion