Why we invested in VenoStent…again

In the dynamic landscape of healthcare innovation, few companies stand out as champions of change. As a venture capital firm deeply committed to addressing the rising costs of healthcare, we’re thrilled to announce our continued investment in VenoStent.

The stellar results from their feasibility study, their unwavering focus on clinical excellence and milestone execution, and the efficiency of their lean team have reaffirmed our unwavering belief in their path toward success. 

Our journey alongside VenoStent kicked off in 2021 when we led the Seed round that went toward funding their first-in-human feasibility study. The results have been nothing short of remarkable. VenoStent’s product, SelfWrap, designed to improve vascular surgery outcomes for hemodialysis patients, has shown exceptional potential in real-world patient scenarios.

Lining up the puzzle pieces

 As an early-stage startup, numerous things need to fall into place, and the order in which they need to happen is rarely straightforward. We have been incredibly impressed by VenoStent team’s ability to prioritize and strategize their milestones. 

The company has received staged IDE approval, prepared the first few clinical enrollment sites, diligently gone through regulatory compliance, and prepared to establish a manufacturing facility towards FDA auditability.

Given all the pieces in place, the latest Series A funding, led by Good Growth Capital and IAG Capital Partners, will get the ball rolling for the next key stage—the pivotal trial execution.

True to their mission

Our partnership with VenoStent over the past two years has reinforced our confidence in their mission. Here’s why we invested in VenoStent in 2021, and at the core, the market-driven opportunity in chronic kidney diseases, hemodialysis, and specifically vascular surgery has persisted. 

End-stage kidney disease is non-reversible, requiring patients to undergo dialysis or kidney transplants; the latter is not readily available and not always compatible. Hemodialysis makes up 90% of the dialysis in the United States and requires vascular access surgery to prepare the body for the rigors of dialysis. However, that procedure has a roughly 60% one-year failure rate—less than a coin flip’s chance of success. VenoStent’s device is designed to reduce vascular surgery failure rate for hemodialysis patients, improving the quality and length of life for patients,  while simultaneously reducing the cost of care. 

Having the privilege of working closely with VenoStent’s team, we have become even more convinced that the market is actively looking for a game-changing solution in an area that has seen little protocol changes over the years. As we tread this path together, we look forward to witnessing the profound transformation VenoStent has the power to ignite.

 

Supporting deep tech founders the right way, pt 1

After nearly a decade of investing in deep tech, it comes as no surprise that most investors know very little about how to support deep tech companies. 

Many simply adopt the same mantra from their software investments and hope it sticks: give founders money and stay out of their way. Though, if we’re being honest, the true underlying assumption here is actually, “If they are smart enough, they’ll figure it out.” After all, these investors are investing in teams. 

But a “great team” should never be an excuse to leave founders unsupported. Being an entrepreneur is hard, but a great founder is typically a resourceful one that will lean on every (useful) shoulder they can find. 

By understanding deep tech founders, the space they work in, and their specific challenges, however, we can surely help them see the light of day. 

Understand that deep tech companies think tech first, market later

In a nutshell, deep tech is sci-fi technology that comes to life. 

These technologies are usually based on decades of research and are often patented. They typically start off as academic projects and develop into business ideas over time.

This means deep tech companies are always going to be “tech first” companies. They’re going to start off with something “cool” and “breakthrough,” before they search for the right problems to solve and market to tackle. 

Deep tech companies (almost) never begin with something thinking, “Hey, here’s a cool market problem. Let’s spend the next fifteen years figuring out how to solve it”—no matter how much someone may insist the opposite is true.

Prepare to accept the founder you have, not the founder you’re used to

Most deep tech founders (and their early teams) are highly technical people who are often PhDs who love solving technical problems. They are engineers by training; professional problem solvers.

That said, deep tech founders are typically not great storytellers. Their fact-driven nature means they often struggle to paint a rosy, marketable picture. And until they are extremely confident, they might offer very unattractive propositions, such as their product not working yet because they have yet to solve three remaining corner cases while the product already functions 99.8% of the time.

While it’s true that some deep tech teams have a combination of industry and technical experts, this is really not common at the early stage. This means deep tech founders who are just embarking on their journey often don’t sell well, let alone have a commercialization plan or in-depth market insights to share. 

And, on the off-chance that they don’t come from a technical background, they tend to promise lofty outcomes that their tech teams are unable to deliver. 

Weather deep tech’s specific set of challenges, reap its rewards.

Building deep tech companies look completely different from building a SaaS company. Hell, it looks different than building any other company. 

Between the extended amount of time takes to develop a product, intensive capital requirements, and extended pilots and roll-outs…well, it’s a long and winding road
Still, once a deep tech company is in, they are in for the long haul. Deep tech business lock-in makes all the difference (not to mention the technological defensibility a deep tech company offers), but until your founder gets there, it’s an uphill battle not meant for just any investor.

Cutting through the hype of AI drug discovery

In the world of AI and biotechnology, everyone seems to be shouting, “drug discovery is the next big thing!” 

Do yourself a favor, and don’t get swept away by the hype train just yet. Teasing out those who are tackling critical challenges with plausible paths to market from ones that may be suited for therapeutic-focused funds (and from others that simply do not make sense) is what we do best at Creative Ventures, so let’s get into it. 

Unraveling the hype of AI drug discovery

Will AI drug discovery be the cure-all for the pharmaceutical industry’s woes? Some people sure think so. After all, faster, cheaper, better drugs sound like a dream come true. 

If only it were that simple. 

While generative AI does show promise in speeding up candidate identification, it’s no magic wand. In fact, an overwhelming proportion (~80%) of large pharmaceutical companies’ drugs were developed externally and later acquired. This is because beyond candidate identification, in vitro biochemical assays, animal safety tests, and a series of clinical trials are required to move the drugs through the development and approval cycle. It’s neither a simple nor inexpensive task. 

In a way, large pharmaceutical companies are taking full advantage of their large balance sheets and have the luxury of waiting it out; acquiring assets that are or close to FDA approval. They are also in the best position to manufacture, market, and conduct follow-up outcome studies if needed.

Only the most existing companies can compete

Given how most drugs are discovered and developed today, it’s more or less implied that AI drug discovery companies need to also be developing their own assets beyond the “discovery” and bringing them through clinical trials. A handful of companies may be able to successfully close a collaborative development partnership, though they make up only ~5% of pharmaceutical companies’ assets.

This is why we generally passed on traditional AI drug discovery opportunities. Their go-to-market strategy has a similar risk profile as that of therapeutic companies; something we believe makes the most sense for therapeutic-focused funds.

So, what type of drug discovery companies might have the winning tickets for collaborative development deals with pharmaceutical companies? My bet will be on mechanism-based discovery—the like of intelligence derived from the understanding of how potential drugs and their targets interact. One of the most relevant well-known platforms is Alphafold—an AI system for protein structure prediction, though the current status still seems too static to derive accurate prediction.

Finding opportunities in drug discovery and beyond

The excitement of identifying potential drug candidates can overshadow the challenges that come after. Some AI-generated molecules may pose difficulties in synthesis and purification, impacting their viability for further development. 

As beautiful as the candidates may work in silico, they still need to be physically made and tested to demonstrate their efficacies. We have come a long way in chemical synthesis for chemical API-based drugs, but biologics APIs (e.g. antibodies) are still quite troublesome to make. Traditionally, the process involves DNA synthesis, gene expression in relevant host cells, and protein purification–many factors could go wrong along the way. 

Given how biologic drugs accounted for 93% of U.S. net drug spending growth between 2014-2017, technologies that enable cost-effective, reliable, and efficient production of biologic drug candidates are the necessity and overlooked opportunities in the AI drug discovery realm.

Look past the latest trending topics

Buzzwords come and go. It’s essential to remain cautious of the hype and focus on solutions with solid scientific foundations and actual results that speak to their promises. More importantly, we believe that the most promising investment opportunities need to solve actual problems and provide economic incentives for customers to buy. 

AI for drug discovery hype might unwind in a few months or a few years, but providing cost-effective and high-quality care for human health is a long-term macro trend that’s here to stay. 

June & July 2023 portfolio round-up

Take a quick look at some of our portfolio companies’ most recent features during Summer 2023:

Exo® and Sana Kliniken AG partner to bring smart ultrasound to Germany

This partnership will bring Exo’s high-performance handheld ultrasound platform and artificial intelligence to more medical staff to enable real-time decisions that improve patient outcomes, streamline workflow inefficiencies, and lower costs.

Read more on Exo’s website.

Dry battery electrode process minimizes footprint, energy consumption

Dry processing for electrode fabrication has many benefits — and AM Batteries is already using it.

Read more on Battery Technology.

Harnessing synthetic biology to make sustainable alternatives to petroleum products

Visolis, founded by Deepak Dugar SM ’11, MBA ’13, PhD ’13, is working to decarbonize the production of everything from rubber to jet fuel.

Read more on MIT News.

Why we invested in C.Light

We continue to be optimistic and excited about the potential of C.Light Technologies, a groundbreaking company that specialized in the development of ophthalmologic lasers capable of accurately tracking microsaccades.

Our decision to invest in C.Light in 2021 was driven by the immense potential we saw in their technology to advance early diagnosis and management of neurodegenerative diseases—and the passion of its founder, Dr. Christy Sheehy.

Now, in 2023, we are even more convinced of the compelling nature of our investment, particularly with the recent FDA approvals of potential treatments for Alzheimer’s disease, such as aducanumab in 2022 and lecanemab in 2023. This further underscores the importance of C.Light’s technology in revolutionizing the field of neurodegenerative disease diagnostics and treatment.

Addressing the need for early diagnosis:

Early diagnosis has always been crucial in neurodegenerative diseases, and with the recent approval of potential treatments for Alzheimer’s disease, its significance has grown even more. Our investment in C.Light was driven by their focus on early detection in neurodegenerative diseases, starting with multiple sclerosis (MS). Their ophthalmologic laser technology, along with its ability to accurately track microsaccades, holds the potential to identify subtle eye movement abnormalities that may be indicative of neurodegeneration, allowing for timely interventions and improved patient outcomes.

Reliable biomarker for neurodegeneration

In our initial investment, we recognized the value of microsaccades as a reliable biomarker for neurodegenerative diseases. C.Light’s technology enables precise tracking and analysis of these small eye movements, providing objective and quantitative measurements. By leveraging microsaccades as a biomarker, C.Light aims to improve the sensitivity and specificity of early detection, facilitating timely interventions when treatments such as aducanumab and lecanemab can potentially have the greatest impact.

Potential for multiple neurodegenerative diseases

While our investment in C.Light initially focused on their application in multiple sclerosis, we always recognized the potential for their technology to extend beyond a single disease. With the recent FDA approvals of potential Alzheimer’s disease treatments, the broader potential of C.Light’s technology has become even more evident. By targeting microsaccade analysis, their innovative platform has the potential to aid in the early diagnosis and management of various neurodegenerative conditions, including Alzheimer’s disease and others.

Advancements in precision medicine and personalized care

C.Light’s technology aligns with the evolving field of precision medicine and personalized care. By enabling early diagnosis through microsaccade tracking, clinicians can intervene at the right time with tailored treatments. The recent approvals of aducanumab and lecanemab for Alzheimer’s disease highlight the importance of precise diagnostic tools like C.Light’s technology in guiding personalized treatment approaches and optimizing patient care.

Contribution to scientific research and clinical trials

Finally, our investment in C.Light extends beyond the potential for commercial success. We recognize the significant impact their technology can have on scientific research and the development of new therapies. By accurately tracking microsaccades, C.Light’s platform generates valuable data that contributes to our understanding of disease mechanisms and aids in the design of clinical trials. This collaborative approach to research aligns with our commitment to advancing healthcare solutions and driving progress in the field of neurodegenerative diseases.

We were and still are excited about the potential of C.Light

Our investment in C.Light in 2021 has only become more compelling in 2023, given the recent FDA approvals of potential treatments for Alzheimer’s disease. C.Light’s ophthalmologic laser technology, capable of accurately tracking microsaccades, remains a cutting-edge tool in the early diagnosis and management of neurodegenerative diseases. We are confident that C.Light’s groundbreaking technology, combined with the progress in potential treatments for Alzheimer’s disease, will continue to make a significant impact in the field and ultimately improve the lives of individuals affected by these challenging conditions.

How to prepare a hardware startup for raising a Series A (TechCrunch)

“At the Series A stage, VCs want to know that they can pump money into a product that will start going into the market.”

– Champ Suthinpongchai, How to prepare a hardware startup for raising a Series A

Read the full article on TechCrunch.

May 2023 portfolio round-up

Take a look at what our portfolio companies were up to in May 2023:

Researchers Led by WPI’s Yan Wang Develop Solvent-free Process to Make Better, Cheaper Lithium-ion Battery Electrodes

Batteries News shares insight into AM Batteries CEO & co-founder leading a team of researchers toward the development of a solvent-free process to manufacture lithium-ion battery electrodes that are greener, cheaper, and charge faster than electrodes currently on the market, an advance that could improve the manufacturing of batteries for electric vehicles.

Read more on Batteries News.

How 3eNano’s Window Coating Can Help Combat Climate Change and Save Energy

The Climate Confident Podcast hosts Steve Ferrero, CEO of 3E Nano, to discuss the game-changing technology his company is developing to revolutionize window insulation and energy efficiency in buildings.

Listen to The Climate Confident Podcast.

C. Light Receives Clearance for Retinal Eye Movement Monitor, Retitrack(TM)

The Retitrack stands alone as the first retinal eye-movement monitor cleared for use within the healthcare field.

Read more on Access Wire.

3 key takeaways from the 2023 SynBioBeta Conference 

SynBioBeta was back live in Oakland this year, and it did not disappoint! The event offered a healthy mix of company and service provider presentations, panel discussions, product demos, 1:1 meetups, and corridor catch ups with old friends.  It was a great gathering opportunity for industry partners, startups, and investors alike to discuss and learn how our ability to program biology may solve the world’s most critical problems.

Over the years, I’ve enjoyed attending and presenting or participating as a panelist. This year, I had the pleasure of discussing “Investing in Our Future: How can Climate Tech Investment Have a Greater Impact?” along with Tom Baruch (Baruch Future Ventures), Maryanna Saenko (Future Ventures), and Shuo Yang (Lowercarbon Capital).

A few takeaways from the conference and some food for thought:

1. We’re starting to focus on the right elements of SynBio

Looking back on SynBioBeta, it’s refreshing to notice there’s been a shift in the space toward this understanding. More and more people appear to be focusing on the products and the problems they intend to solve. 

2. Lab and manufacturing automation are on the rise

The exhibition hall this year was filled with various robotic and/or other solutions that could help reduce the manual and tedious tasks for researchers, ranging from compact adjustable multichannel pipettes and automatic high throughput plasmid purification to high throughput protein quantification. While an older and bulkier version of similar machines has been around for some time, they were often left to gather dust in a corner room. In the past, most researchers wouldn’t trouble themselves with the training and the hassles of setting them up unless they were looking for a truly high throughput one-off type of experiment that really would have been excruciatingly painful without. 

Today, combining skilled labor shortages in certain specialties and the fact that automation systems have become more affordable, reliable, compact, and easy to use, lab automation solutions are rapidly becoming integral to R&D lab setups.

3. We’re still talking scale

Scale continues to be everyone’s favorite topic of discussion. Given that the conference had a heavy implication on commercialization, it was hardly surprising. Various solutions are being developed and deployed, such as monitoring solutions for traditional biological processes, AI-assisted scale-up, and cost estimation, to tools that may fundamentally change how we think about scaling biology processes. 

While scale was certainly in the limelight, equally important remarks were raised about how important it is to know why you’re scaling to begin with. Scaling a process that yields products nobody is willing to pay for now (or never) is like pouring capital into an empty bucket with a hole in the bottom.

SynBio holds great promises, but it’s a tool

As always, it was great to attend SynbioBeta. While Creative Ventures strictly invests in companies addressing existing market problems by using advanced technology-based solutions, synthetic biology remains a powerful tool with the potential to enable biological system manipulation and controls. We look forward to speaking with founders who are solving the world’s most critical problems with defensible technological solutions–synbio or not.

3 Steps to take before asking a potential investor to sign an NDA

As an early-stage technical founder, the idea of an NDA sounds appealing. After all, you’ve invested a lot of time and energy into developing your specific solution. The thought of someone else scooping it up from underneath you is unbearable. 

In the world of venture capital, however, there is a right way and wrong way to go about NDAs during the pitching process. In fact, requesting one too early in the process can leave a lasting negative impression on potential investors, ultimately thwarting your ultimate goal: to raise funds and move your company forward. 

Before you jump the gun and ask a potential investor to sign a non-disclosure agreement, be sure to take the following three steps. 

Step 1: Determine whether the investor is trustworthy

Taking the time to perform due diligence on potential investors can help ensure that you find the right partner for your technical startup. By asking tough questions and seeking out additional information when necessary, you can help safeguard your company’s future success — well before the topic of an NDA even comes up. 

But conducting due diligence on potential investors can feel daunting. This challenging but critical task should be a regular part of your pitching process. 

While some questions may be easily answered through your own research or experience, others may require additional information from third-party sources. Don’t be afraid to touch base with mutual LinkedIn contacts to discreetly ask other founders to share their experiences. And while it may seem tempting to ask for these references from the investor themselves, you run the risk of tarnishing your relationship with them early on. 

Your right to be informed about the investors you choose to work with is equally as important as their right to be informed about your technology and its defensibility. Just make sure you handle this tactfully and without looking like an amateur detective on the hunt for ominous and incriminating evidence.

Step 2: Analyze their portfolio to identify potential competitors 

Actual NDA violations aside, there is an inherent risk of overlap when it comes to present and future competitors. The truth of the matter is your ideas are not unique — at least not given a long enough timeline — and it’s normal for many people to have similar ideas. Stealing your idea is not the only way for someone to come to the same conclusion you did. 

That said, before asking a potential investor to sign an NDA, it’s worth your time to critically examine their portfolio to identify potential existing competitors. If you find any potential conflict of interest, go back to question one and further your diligence to make sure you feel confident in their ability to manage competing companies. Ask them direct questions, such as: 

  • What prior experience do you have investing in and managing competing portfolio companies? 
  • If none, how do they plan to handle the potential dynamic? 
  • If they do have experience managing competing companies, what has their experience been like, and how do they handle the actual dynamic?

Step 3: Consider whether there is a real risk to your IP

If you’re an early-stage technical cofounder, it’s very likely that you covet your IP. It’s not uncommon for founders like yourself to feel like this aspect of your company is the most precious jewel at this stage.

But, in the words of GP Champ Suthipongchai, “At the end of the day, any technology can be reversed or replicated with enough time and money. Even with IP protecting a technology, a determined and well-funded competitor will eventually figure a way to achieve similar results through different means.”1 So, while you may be inclined to withhold access to your IP, there is a simpler way to determine how much information should be shared and avoid putting your potential investors off with too much red tape; leverage what you learned in steps one and two, and apply it to the likelihood your potential investors and their investments with benefit from access to that knowledge. 

No investor has the time (or the desire) to go out and recreate what you’ve spent years researching and developing. The only real risk you run with sharing “too much information” is the chance that they’ll somehow break best practices and share it with a later-stage competitor. Still, based on the information you gleaned in steps one and two, this answer will likely come organically and without a doubt. 

The best NDA is not needing one at all

Protecting your company’s intellectual property is undoubtedly an important step in the early stages of your company, but requesting an NDA too early in the pitching process can leave a negative impression on potential investors.2 Even still, a well-timed NDA is still likely to be “late” when both parties are already heavily invested in discussions. 

Beyond that, enforcing that NDA becomes an entirely different — and difficult — task. It’s much better to do your due diligence on risk and think about what to disclose than rely on enforcement. 

By lessening your focus on worrying about how much you can withhold while you meet with potential investors, open yourself up to the steps you can take to share the right amount of information at the right time with the right investors. Perform due diligence on your potential investors, including analyzing their portfolios and determining whether they are trustworthy. Don’t be afraid to ask direct questions and seek out references from mutual contacts or their existing portfolio companies. Remember that any technology can be reversed or replicated with enough time and money, so it is essential to leverage what you learned in your due diligence and determine how much information should be shared.

By taking these steps, you can help safeguard your company’s future success and find the right partner to move your technical startup forward.

References:

  1. Suthipongchai, Champ. “Software investors must (re)learn these 3 ideas before getting into deep tech.” TechCrunch+
    April 19, 2023, https://techcrunch.com/2023/04/19/software-investors-must-relearn-these-3-ideas-before-getting-into-deep-tech/
  2. Wang, James. “One Definite Sign of a Bad Startup.” Weighty Thoughts
    October 9, 2021, https://open.substack.com/pub/theta/p/one-definite-sign-of-a-bad-startup?utm_campaign=post&utm_medium=web

Funding breakthrough technologies to solve crises (Builder Nation)

“Ironically, as a deep tech VC, we don’t care about technology. It’s not a technology that makes or breaks a deep tech company. It’s not even the thing we spend 20% of our time looking at. It’s all about the market.“

Champ Suthipongchai, via Builder Nation

In this interview,  brought to you by Builder Nation, the community of Hardware leaders developing world-changing products, and sponsored by ControlHub, the procurement software for hardware companies, Creative GP and co-founder Champ Suthipongchai sits down with host Elisa Munoz to discuss Creative Ventures, investing in companies across the world, the power of market-driven investments, and more.

Watch the interview below, or read Elisa’s recap on Builder’s Nation’s website.