Stephen Lee, Director of New Ventures at Johnson & Johnson Innovation, Asia Pacific (JNJI from here on) sat down with Nathan Millard of G3 Partners to answer startup questions on how big corporations engage with companies and what startups can do to prepare for their first meeting with innovation corporations like Johnson & Johnson Innovation.

This session is one of Seoul VC Connect’s five Bootcamp sessions. Operated by the Seoul Metropolitan Government and G3 Partners, Seoul VC Connect supports Seoul-based startups in their international fundraising goals. 

Q. How much do you communicate with the startups?  How many emails, messages, calls do you get per week, on average?  Assuming a larger number than you have the time for, how do you decide who to respond to?

When I read startup emails, the first thing I look at is how relevant their field of work is to what we do at JNJI. I’ll then look at their development stage. We were set up specifically to look for early stage external innovation. I cover three sectors together with my colleagues at J&J Innovation Asia Pacific – pharma, medical device and healthcare. For us early stage in pharma means up to Stage 2A, which is before human proof of concept. But of course we’ll also be interested if you’re developing something really innovative.

In the first email that you send us, we don’t need to know in detail about your patents. That’s something we’d want to know at a later stage in communication. At a very high level, you should be able to tell us in our initial interactions about your target, your growth stage and whether you’re interested in a partnership or want to raise funds. So basically you want your first engagement to be a quick summary rather than a 50-page presentation.

You can have a great pitch but at the end of the day we’re a data-driven company. So for us the science behind your solution would speak louder that any other words. And this science would need to be relevant to the areas or fields we’re focused on as a company. At the same time we know that there may be transformative tech that external partners are developing and we don’t want to miss out on that.

Another very important thing startups need to know about and avoid doing is sending in slide decks with confidential information and/or naming it as such. Unless there is a certificate of deposit in place don’t send us confidential information. 

Check out the full Bootcamp session with Stephen Lee here

Q. What are key things you’re looking for in a first call?

It depends. In some cases, the calls can be exploratory and I’d try to learn more about the technology to see if it’s something I’d bring to the relevant internal R&D team’s attention. Other times, I find that the external I’m communicating with is very relevant to us and is a high priority target. In such a case, we invite the relevant R&D stakeholders to participate in the call, and of course, before such crucial meetings we coach start-ups on how to approach the call.

Also startups should have the person from their company with knowledge of the science behind their solution, like the CTO or the CEO be part of the call. This ensures that the call is valuable for all the persons involved.

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Q. Broadly what does this call/meeting process look like? How long does it take?

So as I mentioned, once I find something interesting I communicate with the relevant R&D members in the Innovation center. And prior to this, we execute a Confidential Disclosure Agreement (CDA) with you. This can be done quickly as we have a template but sometimes the other side has its own ideas on what to include on the CDA. So reaching an agreement from all sides when creating a CDA can take a few weeks. 

When we see that there is more interest at the Innovation Center level, we put together a Deal Team. This team would ideally include a transaction person, a finance person and a legal person at minimum. There’s a lot that goes behind bringing together this team so the startup needs to be patient with us during this process. 

Once the team is put together we’ll be discussing issues related to the deal structure. For instance we consider whether to focus on straightforward licensing, a research collaboration, a research collaboration with an option to license or a Materials Transfer Agreement with the startup.

If we agree to do a research collaboration, our discussion will now concentrate on topics including what’s the research plan, who’s doing what, what’s the budget, what’s the timeline, what’re the deliverables etc. This is followed by a series of internal approval processes to share with the startup a non-binding term sheet. If the startup agrees with the terms, we again go through a series of internal approval processes before sharing the final agreement with you. 

There are many more steps involved but this is how the whole process looks like on a high level.

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Q. How much do you feel the culture / personality of the startup matters to you? And what makes a good cultural fit?

I think the biggest one is that things move slowly in a big corporation as compared to a startup where things proceed quickly, as they need to. While corporations may be relatively slow, we add value to your business by helping you develop your technology and accelerate the process externally as long as possible. 

We deal with this at JNJ, not at just the business level but also at the science level. For example, when you prepare your ID documents, there are certain things you need to do or you’re not going to reach the desired standards when, say, you file for the FDA. At JNJ we have 130 years of experience with such things. So as partners, when we advice startups on what to do, it is in the startup’s interest.

Another point that startups need to understand is that it is a crucial juncture when JNJI gets involved. And we can really speed up the development of startup technology. So it is a critical milestone for startups.

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Q. What do you tend to see that’s good/bad when speaking to Korean startups?

Nothing distinctly comes to mind when I think of Korean startups in that regard. It all comes down to science like I said before. So it doesn’t matter which country the startup is from. 

But of course, language is a barrier and you are dealing with a U.S. company so you need to be able to communicate with us in English. This can be both an issue and a non issue as we have translators.

Q. What should startups do during COVID-19 to progress their overseas / corporate opportunities?

Hopefully COVID-19 goes away soon but we want to make sure your research can continue. And for big pharmas and startups that’s the area where they have been impacted most heavily. Many are leveraging CROs and if they’re shut down as a result of COVID, then startups can’t do their research. So we want to know from startups about what mitigation programs they have in place to deal with this situation.

Stephen Lee has over 20 years of experience in the life science sector. Prior to joining Johnson & Johnson, Stephen was the Managing Director of Kybora EM (formerly Torreya EM) where he was responsible for Asia Pacific business development focusing on licensing and M&A advisory services.

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