Savara Pharmaceuticals needed several million dollars to take its inhalable drug for troublesome infections in cystic fibrosis patients through Phase 2 clinical trials. So CEO Rob Neville, naturally, began talking with venture capitalists. But in the end, he didn’t end up needing any of their money.

Over the course of about a year, Savara raised a $16 million Series B round – in two tranches – led by a quartet of angel groups from central Texas to southern California.

It’s a case study on the burgeoning influence of angel investing networks, which are moving across state lines and outside of their own networks to piece together bigger deals. They’re also enabling angel investors to move upstream and fill funding gaps opened by more risk-averse and tapped out life science venture funds.

“(Our) story had resonated well with first groups that we raised money with, and we found that we had traction and momentum in the angel groups,” Neville said. “It wasn’t a decision from the outset to go one way or the other; that was just the path where we had the most success.”

Neville said he first recognized that the company had traction among angel groups when it raised a $1.4 million Series A round from members of the Central Texas Angel Network in 2009. Although he talked to venture capitalists when it came time for the Series B, he said his team also went through a disciplined approach of identifying angel groups, looking at which ones were active in the industry, and prioritizing them. Then he began presenting to groups – a process much more complex and tedious than it sounds.

“Once you’ve gotten through the screening, you get to present in one chapter. Then, if you get traction, you get to present to another chapter,” Neville said. “Then they do due diligence, which usually takes about two months. Then you go back to those same people and say, ’remember us?’ and present again.”

To get to the scale of a $16 million round, Neville said he talked to somewhere around 15 networks. In the end it worked out for Savara: About half of the 220 investors who joined the Series B were individuals outside of the life science industry who likely would not have looked at the deal if they weren’t connected to the network.

Angel groups are enabling networking on a larger scale, too. Sergio Gurrieri, who owns a life science business consulting firm and invests in startups through Tech Coast Angels, said the group reaches out to other networks when they feel they have a strong company on their hands. Tech Coast Angels joined investors from the Keiretsu ForumCentral Texas Angel Network and North Texas Angel Network in Savara’s Series B.

Neville had high praises for all of the investing groups he works with, but had one work of caution for entrepreneurs: “As much as this is a process that is footing the gap for the venture firms, this is by no means a simple process,” he said.

In fact, that commitment of time and effort is one thing that’s kept other life science startups from pursuing a similar path.

By Deanna Pogorelc

This is the first of a two-part series on the evolution of angel investing. To read part two, click here.

[Photo credit: Flickr user AdamSelwood]

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