The Marsa Corporate Finance deck, presented to the baselarea.swiss DayOne Accelerator in April 2019, functions more as an educational resource than a traditional startup pitch. It provides a comprehensive overview of funding facilities for early-stage companies, with a heavy emphasis on the life sciences and biotechnology sectors. The deck outlines the progression from initial idea to market maturity, categorizing financing into equity, loans, and non-dilutive grants. Notably, it provides specific Internal Rate of Return (IRR) benchmarks for various investor types, such as early-stage VCs (ta…
Key takeaways
- The deck defines initial share capital requirements for Swiss entities as CHF 20k for a GmbH and CHF 100k for an AG on slide 7.
- Early-stage funding rounds (Seed/Angel) are categorized as ranging from CHF 50k to 500k on slide 8.
- Biotechnology life cycles are mapped across safety, dose, and efficacy phases, with a 'Breakeven' point typically occurring between years 8 and 14 on slide 6.
- Early-stage VCs typically expect an IRR of greater than 10% for investments between CHF 0.5m and 5.0m as shown on slide 13.
- Private Equity investors target the highest IRR at >12-16% for large-scale investments on slide 13.
- Non-dilutive funding sources listed include EU grants, Innosuisse, and patient organizations on slide 12.
- The deck identifies 'Option Debentures' as a special form of convertible debt that is 'rather unusual in early stage startups' on slides 9 and 11.
- A complete fundraising document set is defined as including a pitch deck, a 3+ year business plan, IP strategy, and use of funds scenarios on slide 16.
Overview
The presentation titled 'Financing of Early-stage Companies' by Marsa Corporate Finance is a pedagogical deck designed for the baselarea.swiss DayOne Accelerator. Dated April 2019, it serves as a roadmap for founders in the Swiss ecosystem, particularly those in the life sciences and biotech sectors. It does not pitch a specific product but rather pitches the methodology of corporate finance for startups.
Slide 1-4: Introduction and Strategy
The deck opens with a clear title slide identifying the presenter as Marsa Corporate Finance GmbH, based in Basel, Switzerland. Slide 2 provides a table of contents, signaling a structured approach covering development stages, life cycles, financing means, and investor expectations. Slide 4 establishes the 'Fund Raising Strategy' by posing seven critical questions every founder must answer, including the round of financing, development phase, investment size, and the specific 'offer' to investors. This section sets the stage by emphasizing that fundraising is a strategic exercise rather than a desperate search for capital.
Slide 5-6: The Life Cycle of Young Companies
Slide 5 provides a generic J-curve graph illustrating the transition from 'Business/Product Idea' (no revenues, operating losses) to 'Start-up companies' (increasing losses) and finally '2nd stage companies' (moving towards profits). Slide 6 is significantly more detailed, focusing specifically on the biotechnology sector. It maps the R&D phase through Pre-clinical, Phase I, Phase II, and Phase III trials. It notes that the chance of success is less than 5% at the pre-clinical stage, rising to approximately 80% at the registration stage. Crucially, it identifies that costs peak during Phase III, and breakeven typically occurs between years 8 and 14. This slide also introduces valuation methods, suggesting Risk-Adjusted Discounted Cash Flow (rNPV) for early stages and Multiples for mature stages.
Slide 7-8: Equity and Investor Types
Slide 7 addresses the legal realities of the Swiss market, stating that a GmbH requires CHF 20k in initial capital while an AG requires CHF 100k. It mentions the possibility of 'Teil-Liberierung' (partial pay-in of 50%). Slide 8 categorizes equity investors by stage. 'Early Stage' (CHF 50k - 500k) includes FFF (Friends, Family, and Fools), Seed Investors, and Business Angels who provide 'soft money' like contacts and support. The 'Expansion Phase' is the domain of Venture Capital, while the 'Late Stage' introduces Private Equity. Other types mentioned include Crowd Funding, Corporate Ventures, and Family Offices.
Slide 9-11: Debt Financing and Loan Characteristics
This section explores non-equity financing. Slide 9 lists straight loans, convertible loans, option debentures, and warrants. Slide 10 goes into detail on 'Straight loans' (interest-bearing, balance sheet liabilities) and 'Convertible loans.' The deck highlights that convertible loans are vital because they can be converted into equity, which is useful for avoiding over-indebtedness on the balance sheet. Slide 11 defines 'Option debentures' as unsecured debt instruments that rely on the issuer's creditworthiness and 'Warrants' as rights to buy stock at a specified price, which cause dilution upon exercise.
Slide 12: Non-dilutive Funding
Slide 12 is a checklist of capital sources that do not require giving up equity. It lists governmental grants (EU, Innosuisse), foundations (Gebert Ruef, Hasler), donations, patient organizations, and refunds or reductions of development costs (EMA, Orphan status). This is particularly relevant for the biotech audience targeted by the Basel-based accelerator.
Slide 13-15: Investor Expectations and IRR
Slide 13 is perhaps the most valuable for a founder, providing a table of 'Typical Investment Size' and 'IRR Expectations.' It notes that Early-stage VCs (CHF 0.5 - 5.0m) and Late-stage VCs (CHF 5m+) both look for an IRR > 10%. Private Equity looks for > 12-16%. Slide 14 provides the mathematical formula for Return on Investment (ROI), using an example where a 50 Euro investment yielding 70 Euro results in a 40% return. Slide 15 provides a comprehensive example of calculating IRR for a $500,000 equipment purchase over 4 years, resulting in a 13% IRR, which exceeds a hypothetical 8% hurdle rate.
Slide 16-17: Presentation and Contact
Slide 16 lists the 'Fund Raising Document Set,' emphasizing that consistency across the pitch deck, business plan, and IP strategy is paramount. It advises founders to 'Be reliable and deliver' and 'Communicate important events in a timely manner.' The deck concludes on Slide 17 with contact information for Andreas J. Schulze, CEO of Marsa Corporate Finance.
What Marsa Corporate Finance Does Well
The deck excels at setting realistic expectations for the biotechnology sector. By explicitly stating that breakeven might not occur for 14 years (Slide 6) and that pre-clinical success rates are under 5%, it forces founders to confront the high-risk nature of their ventures. The inclusion of specific Swiss capital requirements (Slide 7) and clear IRR benchmarks (Slide 13) provides actionable data that is often missing from more 'inspirational' pitch decks. The breakdown of different loan types (Slide 10-11) is also a strong technical addition, explaining the balance sheet implications of debt.
What is Missing from the Deck
As this is an educational overview rather than a company pitch, it naturally lacks a specific 'Ask' slide, a 'Team' slide, or a 'Competition' slide. However, even as an educational deck, it omits a deep dive into 'Valuation Caps' or 'Discount Rates' for convertible notes, which are standard features in modern early-stage financing. It also does not discuss the nuances of 'Liquidation Preferences' or 'Anti-dilution clauses,' which are critical components of the equity negotiations mentioned on Slide 8. Furthermore, while it mentions 'Crowd Funding' on Slide 8, it does not provide metrics or expectations for that specific facility.
What a Founder Should Copy
Founders should emulate the 'Fund Raising Strategy' questions on Slide 4 to ensure they have a coherent narrative before approaching investors. The 'Document Set' checklist on Slide 16 is a perfect template for a data room structure. Most importantly, founders in the life sciences space should use the life cycle chart on Slide 6 as a benchmark for their own development timelines, ensuring their financial projections align with the industry standards for R&D duration and registration costs. The clear distinction between 'soft money' (contacts/support) and 'pure money' (Slide 8) is also a useful framework for evaluating potential board members or lead investors.
Frequently asked questions
- What are the specific capital requirements for starting a company in Switzerland according to this deck?
- Slide 7 specifies that for a GmbH (Limited Liability Company), the initial share capital is CHF 20k. For an AG (Stock Corporation), the requirement is CHF 100k. The slide notes that these funds are typically paid in by founders at inception and are 'rapidly consumed' by the business operations.
- How does the deck differentiate between early-stage and late-stage VC expectations?
- According to slide 13, early-stage VCs typically invest between CHF 0.5m and 5.0m with an expected IRR of >10%. Late-stage VCs invest larger amounts, starting at CHF 5m+, but maintain a similar IRR expectation of >10%. The primary difference lies in the check size rather than the targeted percentage return.
- What does the deck say about the biotechnology development timeline?
- Slide 6 provides a detailed timeline for biotech companies. It shows a Research & Development phase spanning approximately 8 to 14 years before reaching registration. The 'Return Phase' begins after this period, with companies moving from 'Star' to 'Cash Cow' and finally 'Mature' status over a 20-year horizon.
- What types of loans are available to early-stage startups?
- Slide 9 lists four main loan constructs: straight loans (typically for later stages), convertible loans (used when valuation is difficult), option debentures (unusual for startups), and warrants. Slide 10 further explains that convertible loans are preferred because they can 'switch side' on the balance sheet in cases of over-indebtedness.
- What documents should a founder prepare for a professional fundraising round?
- Slide 16 outlines a 'Fund Raising Document Set' which includes a Pitch Deck, a Business Plan with a 3+ year financial plan (PnL, Cash Flow, Balance Sheet), an IP Situation and Strategy document, a Use of Funds breakdown with scenarios, and a timeline for next financing needs.
