Hey {{first_name|default:there}}, it’s Vadim 👋
Most fundraising conversations focus on finding investors and presenting your science - and rightfully so.
But what if you actually have an interested party that wants to invest?
You've done the work. The calls are going well. And then the term sheet lands at half your expected valuation.
Suddenly it feels like you're speaking completely different languages.
Most founders assume this is where things get personal.
It isn't. It's structural, and once you understand the structure, the conversation changes entirely.
Today we're popping the hood on what actually drives early-stage biotech valuations: how investors build your number, where the market stands right now, and how to walk into that term sheet conversation prepared.
🧭 HERE’S WHAT WE’LL COVER TODAY:
Why founders, VCs, and pharma value the same company differently
How investors actually arrive at your number
The levers that move your valuation up or down once a baseline is set
A 4-step framework for walking into the term sheet conversation prepared
And more!
Quick heads up: this issue is a bit more technical than usual. I’m assuming some baseline knowledge of funding mechanics, but if anything's unclear, just reply and let me know. I’m happy to go deeper on any of these topics.
As always, a strong ☕ is recommended :)
FOUNDER STORY
The valuation gap
What happens when you get a term sheet - but it's half your target valuation? This is the situation a founder I know found herself with a dream investor.
She had a strong pre-clinical package.. clean tox data, a $4B validated market... all the boxes checked.
The investor was bought in and engaged, and the due diligence went smoothly.
As the days went on, she found herself thinking.. this. is. it.
And it was - the term sheet came.
But it came at $8M pre-money. She was expecting $15M.
We had two parties looking at the same science, same company, same data. Yet arriving at two completely different numbers - why?
The tricky part is that neither of them was wrong. They just weren't solving the same problem.
She was valuing what the drug could be worth. The investor was pricing the probability of getting there.
That gap - between what you think you're worth and what they're willing to put on paper - is the hardest part of closing a biotech raise. And it has almost nothing to do with your pitch.
From my experience, this isn’t a negotiating problem. It's a framing problem.
And once you understand how investors are actually modeling your company, you stop fighting the gap and start closing it.
Let’s take a look.