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case study

Entrepreneur Robert Foldes knew that raising venture money would take time, but he also knew that cold calling could helpstokkete/Getty Images/iStockphoto


Experience told Robert Foldes, CEO of Viteava Pharmaceuticals Inc. that he would need to raise $30-million to move his company's drug discovery through human proof of concept clinical trials.

While Mr. Foldes had raised money for a startup ten years prior, he soon realized that the majority of investors he had tapped earlier no longer existed, and the venture capital community for life sciences in Canada had all but disappeared. At the same time, some of the incentives offered for investing in startup companies via labour sponsored venture funds were also gone, creating a large hole in the financing ecosystem that has not yet been filled.

Facing this new reality, Mr. Foldes had to come up with a plan to raise the much needed funds to get the Toronto-based company moving in the right direction.


A Montreal native, Mr. Folders moved to Toronto after high school and earned a science degree from University of Toronto in 1982. He completed his doctoral work in pharmacology from the University of Nebraska Medical Center in 1986. Initially pursuing a career in cancer research, he completed a post-doctoral fellowship at Fox-Chase Cancer Center in Philadelphia and another fellowship at the Samuel Lunenfeld Research Institute in Toronto. His interest soon gravitated to the biotechnology sector and he joined first ADI Diagnostics and then Allelix Biopharmaceuticals in various research roles. After completing a part-time MBA from the Schulich School of Business in 1994, Robert moved full-time to the business side at Allelix and later accepted an appointment as the Director of Research Business Development at The Hospital for Sick Children in Toronto.

In this new role he was responsible for intellectual property management, licensing, startup company creation, and industry partnerships involving basic and clinical research. This background provided Mr. Foldes with a solid base for his entrepreneurial ambitions later in his career. In 2000, he was approached by an investor and recruited as the first full-time CEO for Cytochroma, a Queen's University spinoff. In that capacity Robert raised over $22-million for the startup company and led the firm's first drug candidate from discovery to human clinical trials. In 2006, he joined York Biotech Regional Innovation Network as their executive director and continued to promote partnerships amongst various parties in the life science sector.

With his rich background and experience in commercializing technology in the biotech sector, he started to explore opportunities for commercializing new technologies from university-based research. His search led to McGill University where he was introduced to a well-developed intellectual property portfolio involving novel bioactive compounds related to green tea flavonoids. Many years of research had established the health benefits of green tea, but its potential therapeutic use was limited by the poor absorption of these flavonoids in the human body.

Prof. Bill Chan's laboratory at McGill had discovered and characterized new chemical modifications of these flavonoids resulting in better absorption, pharmaceutical, and antitumor properties than the natural compounds found in green tea. The initial disease to be targeted for the first of these drug candidates is symptomatic uterine fibroids, a form of benign tumor which leads to over 200,000 hysterectomies in the U.S. alone. The market for this treatment is large and well-aligned with the properties of this new class of drugs.

As the IP was shared by five universities spread across Canada, the U.S. and Hong Kong, it was no small task to negotiate all the necessary agreements that eventually allowed the incorporation of the startup venture in April 2013.


Mr. Foldes knew that raising venture money was a relationship-building exercise which would take time. The company, however, needed funds now to get things moving. It was also felt that starting operations and generating results would be helpful to getting investor attention. To feed the research and development in the short term, he tapped various government sponsored programs which support commercialization of R&D. All of these programs require matching support from the company, and fortunately Viteava was able to scrape together the needed funds from founders and family. In particular, the company would not have been able to get started were it not for its success in leveraging funds from the Canadian Institute of Health Proof-of-Principle (POPII) program.

Despite the shortage of risk capital in Canada, various government programs have supported the creation of a plethora of organizations that are designed to assist entrepreneurs in new venture creation. Selecting those organizations that provide real value is a daunting task. Mr. Foldes' goal was to partner with those organizations that could enhance his networks in the financing community as well as increase Viteava's visibility.

Two of these programs in particular were considered to be the most helpful: 1) the Ontario Biosciences Innovation Organization and its Capital Access Advisory Program (OBIO); and 2) the Canadian Technology Accelerator (CTA) program of the Trade Commissioner Service. These programs allowed him to build relationships with various mentors and advisors who were able to get the company investor ready and provide current intelligence regarding the VC landscape. There is no substitute for research and interviews to identify potential investment groups whose investment objectives are best aligned with Viteava. Together with these mentors and advisors, Robert developed a target list of potential investors to approach.

One of the most challenging parts in this process is in identifying intermediaries who are willing to provide warm introductions to potential investors on behalf of entrepreneurs. Organizations such as OBIO and CTA lead in the value-add for entrepreneurs but still have a long way to go in order to be truly effective in this regard. He found it useful to tap into CEOs of companies that had recently raised money in his industry and who were a couple of financing steps ahead of Viteava. Other life science executives with financing experience were also very helpful. A major tool was Linkedin which Mr. Foldes used to identify connections in his network that were connected to targeted investors and funds. He used this approach to validate the relationship and assess the contact's willingness to make warm introductions.

Mr. Foldes' advice to entrepreneurs is not to be shy and even use cold calling to make the connections when other avenues are not accessible. In fact, several investors that he attracted to Cytochroma were through cold calls. His counsel to entrepreneurs who are afraid of pursuing and following up with VCs is to point out that one of the traits admired by VCs is perseverance. Although entrepreneurs should use discretion as there is a fine line between perseverance and being a nuisance. He suggests bringing value to each and every interaction opportunity with investors. Another tool to raise money, which may also be considered when appropriate, is to retain the support of financing intermediaries such as investment banks. There are pros and cons to the use of such groups and it's important to assess their track-record and reputation.

Mr. Foldes considers all these as options in an entrepreneur's toolkit for raising funds. His advice is to prioritize these tools and use all that are necessary to get the job done.


Implementing the above strategy is a work-in-progress. He's been able to increase his connections in the VC ecosystem and has found traction with a few that could form the beginnings of a financing syndicate. Identifying a lead investor is the next step required to move the transaction to a successful closure. Looking at the future, Mr. Foldes is continuing to refine his clinical development strategy in order to generate the most robust data set and allow for a solid foundation for partnering with a major pharmaceutical company.

This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They now appear every Tuesday on the Report on Small Business website.

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