4: Series B, Scaling Connected to Your Customers

[Music] Welcome to the Early Bread Podcast. I'm your host, Louis Beaumont. Today is all about series B funding, but with a twist. We'll be looking at this phase with a focus on the Medtech and Digital Health Industries. Now, as of 2021, there were over 33,000 medical technology companies in Europe, and that's a 140 billion euro market. When a company has impact at its core and its business model, how can they use a series B funding round to expand that effect? Today, I'll be speaking with three fantastic leaders from Early Bread Health. Kai Ebahart of Aweeva, Philips Stevens from Nascendo, and Susan Trent of Innovo, about how funding enabled them to improve the lives of their customers in new ways. We start with our deep dive conversation, and joining us from his office in Zurich, Switzerland, is Kai Ebahart, the CEO of Aweeva. Hello, Kai. Hello. It's a pleasure to be here. And then from Duceburg in the west of Germany is Philips Stevens, the co-founder and CEO at Nascendo. Hello, Philip. Glad to be here. Thanks for having me. Before we get into it, why don't I quickly share a little bit about our guests? Kai has his PhD in physical chemistry and was an associate principal at McKinsey before joining Aweeva as their CEO in 2014. Aweeva is a patient-centric dietary change therapy supported by digital technology. The founding idea for Aweeva came from a physician who worked with Abyss Adolescence, and he saw how the therapy he was prescribing, like going to a dietician and learning more about health eating, just wasn't reaching them. They didn't enjoy the face-to-face therapy, but they were comfortable behind their phones, so he sought a way to deliver the therapy via a medium and in a place where they preferred to be. Philip was a research scientist and PhD student before co-founding Nascendo at the start of 2017. Nascendo uses technologies like next-generation sequencing and cloud computing and brings completely new concepts into the medical sphere. Their technology is dedicated to the identification and assessment of bloodstream associated pathogens and other infections. Basically, it allows for thousands of microbes to be identified from a single blood draw. Thank you so much for being here. What both Aweeva and Nascendo deliver is a product that's highly personalized both in the diagnosis and then in the treatment of the issues at hand. This is something that has a real potential for scalability so that it can have a greater impact for more people. I can really see why investors wanted to invest, especially at the series B stage when you've already proven that the technology and the market fit have great potential. When you got that investment, how did it give you a bigger opportunity to make an impact? It mostly just greatly increases the speed and the scale we can reach. We can invest a lot more into our indeed resources, our technological and clinical research, to find out faster what helps patients and what situations better. Then it also from a commercial perspective allows us to expand to many more patients and countries than we could have without it. Philip, what about you? What about that impact of raising this round? What does it mean? It basically goes down the same same route. Where's the money raised? There is substantial investment in our indeed from our site because at the moment we offer it for blood-ethocated infections, which the most prominent one is sepsis. However, there is more to infections than just sepsis, especially nowadays everyone knows how deadly and how contagious, for example, viruses can be and pneumonia is a disease which is often triggered by viruses. Therefore, we expand, for example, into other bodily fluids, we expand into other geographical regions and basically the fundraising and the last round is the foundation where all this is going to be built on. What about your definition of impact? If you were thinking about your definition, go back in time to your preceded stage of what you thought impact really meant to you. How has that changed? How does it feel different? Or does it? Is there a difference? Well, it feels much more tangible to me at least in that we just reach many more patients where we're initially we started and there was one or two patients or a week or something like that and now we're treating tens of thousands a month, new patients a month and hundreds of thousands actually across period. I think that's a massively changed. Our ambition hasn't really changed. If you want to help patients live healthier and happier lives and we want to help the health system reduce the cost and the burden of these diseases to society. But now we're actually doing it. Initially, it starts out as a vision and compared to that scale of that vision you aren't achieving very much but now it's getting more tangible and certainly more significant. We're still very small compared to the problem. That's an interesting phrase. It's still a really small compared to the problem but it's gone from being a vision to becoming a reality. You're changing people's lives. Surely that's an impact for you. Yes. And how does it feel for you and Nassandra when you're thinking about how you thought about what impact meant to you when you're at the preceded stage and what you think about what it means to you now? Is it just that? It's the same ambition but now we're making it happen or was it different for you? So when we started it and I think that's true for most of the, say, tech Athene startups in the medical space, it all was basically a scientific idea which got traction in the clinics and what you have in mind more or less as a scientist at the beginning is we are going to help people to get out of their hospital life. That's basically it and the impact we had right from the get-go was you guys helped tremendously saving those patients' lives. What becomes more and more apparent is that if we can scale, obviously we can scale the solution we offer meaning we can help even more patients and what we are experiencing is that through the impact we had in clinics now more than pre-seed or even pre-serious A there is way more endorsement coming our way from health insurances, from the whole health ecosystem because people recognize that tech and even if it's cloud-based technology isn't always evil. It can actually help people experience better lives so it can even help people save lives so that's a big change for us. So technology isn't evil it can actually help. Kai, maybe you could weigh in here. How do you help people understand that there are new ways to fix old problems? I mean so the general awareness for the issue is largely there and there is of course then a lot of government driven or health system driven initiatives to make much more awareness for the impact of obesity and type 2 diabetes and we generally we support those initiatives by mainly providing a better solution than it was there before so making those initiatives more cost-effective for the system so that more patients can be reached with the same resources or bigger effects can be reached with the same resources. So I see it's much more unenabler to those bigger government driven programs. Of course we do have to reach in particular in our case the health care professionals so we have to reach doctors and I think we do that in all the means that we possibly confined to reach them. They're not they're not easy to engage always but a lot of it is about just education that this new format is there especially in COVID webinars we're really helpful in affecting them. Lots of scientific publications and being present at conferences and engaging with them in any way they want to so by mail by face-to-face interaction and by offering them a good service something that they have to know before. Switching tack a little bit now how do you balance your dedication to the research your dedication to the science your dedication to having that societal and health impact for the end user with the need for financial success which your investors may be quite keen on as well. I think for me largely it goes hand in hand I mean the better product we can offer the better results we get the more response it'll get from the market and the bigger financial success it will be. I think it's you know engagement and success in the product is the key indicator you look at in terms of the longer term financial success. Obviously it doesn't mean next month you'll be financially successful but that's why we also raised the money because we have that kind of length of view to not look from quarter to quarter even month to month to what the numbers are but to be able to look a little bit further out on what the technology can achieve what kind of impact we can have on the patients and see that then being taken up in the system even though it's through a lot of barriers sometimes that you have to make that happen. Yeah exactly right I think if you get your drop down in R&D and this kind of has a conversion into customer satisfaction or in some cases patients saved the next metric that will follow is commercial success because if customers are keen on using your product there is no way around at some point paying for your product so you have to engineer or to design a product that patients or that users want to use. And that's me saying as a German who are more than known for over-engineering problems and products. So at some point of time you have to get it out there, obviously. But I think in the medical space, you can get it out there once. And if it doesn't fit the bill, it will also not fit it in the second time. Because most probably you don't have a second chance. And how do you maintain your connection to the end consumer, that patient, when your role through all of these rounds of investment coming into the business, your role becomes ever more managerial? How do you keep that driving light in your mind? For me, it's pretty easy. I just block out one and a half days a week to just meet with people who are using the product. That's how you do it. You go see them. Yes. And I literally just drive around seeing them. It sounds crazy, but at the end of the day, you want to get it as close as possible with the customers. And for me, that's the way to do it. You go and see them. What about you, Kai? So I don't engage with patients on a day or week to week basis anymore. But what I do, where it's a digital product, there's so many ways that you get feedback from everyone who works with it. From I get all the ratings that patients send in to us, there's a range of indicators that we track, and I read, and I ask people what's going wrong if there's low ratings. And then every once in a while, we have, I am still involved in some product developments, and then we have patients come in, and we talk to them on what they value and what not. We do lots of interviews with patients, so user experience interviews, and those are recorded. I can wash those on the weekend. So there's a lot of ways that you can easily stay engaged and close to the consumer. In this day and age, especially with digital products. We talked about the impact that you can have out there in the world through the investment that you've raised. What's it like for your business internally? So what I can tell is from our team, it's a huge emotional payoff. Because at the end of the day, everyone is doing it to kind of follow the vision of helping patients and doctors making the right decisions or getting the adequate treatment. And even though we get feedback on a day-to-day basis from clinicians, it still validates everyone's work if you're able to raise such a round. And to some extent, it's just again a motivational booster of putting an extra 10% after the round to get it even to a better position for the next round. Because as most of us know, after a financing round is just before the next financing round. So I mean, I agree with the point that it's just a huge validation of what we're trying to do. And it's not as if you never have questions. Because if we were all, you know, in a perfectly stable position and a company that would be generating a lot of cash flow and profits, we wouldn't be raising funds, right? So we actually need to continue on this mission. And we invest so much in our growth that we don't have the profitability. So we're dependent upon further investment. So that's obviously also a good point of relief that you can even continue on the mission first off. Continue on at a much greater scale. And maybe just for more point to this, I think what it also is, at least for me and my co-founders, is with every step, meaning every round you raise, it's also more validation to the back-end-the-day crazy idea of doing it. Because if there is more people coming in and supporting you, means there is more people believing, first of all, in the idea, but secondly, in the things you do and how you are going to do it. And this, again, gives a positive feedback loop, because this can then, you know, transform into what your team is perceiving and how they are working on it. And so every round, obviously, is quite some work, but it also gives a lot back if it's successful. Perfect. Perfect answers. Thank you very much. Thank you so much for having us. Yes. Thanks a lot. Thanks again to Philippine Kai for sharing their insights with us. I particularly enjoyed learning about how important continued research is, not only for customers, but for the industry as a whole. Coming up, I'll be speaking with Susan Trent of Innovo, about how disruptive technologies change and challenge the healthcare industry. Every day. We're going to see. Over half a million medical technologies I use every day. Very clearly, it's incredibly important that these brilliant new technologies that we're bringing are addressing a very big, unmet consumer need. Medical technology is transforming and innovating healthcare. With our medical technology, our systems would simply come to a halt. Susan Trent has worked in the fields of consumer healthcare and pharmaceuticals for more than 20 years. She's collaborated with companies all around the world, and her areas of focus include business development and strategic planning. She's the CEO of Innovo by Atlantic Therapeutics, which is developed to non-invasive and clinically proven solution to bladder leaks. The company's mission is to help customers restore their pelvic health so that they can have the confidence and control to lead active lives. I'm so glad to have Susan joining me for our entrepreneurs insight segment all the way from the United States. Hello, Susan. Hi, Louise, nice to talk to you. Susan, you've worked all over the world and in lots of different roles. What made you think, Innovo, it's the one for me. Why did this product speak to you? When I first started talking to the team at Innovo, I got this real sense of mission, and that is exactly what they wanted to do with this remarkable brand. This is a brand that did have a prescription approval in the US. But when the team had been looking at how women were relating to this particular issue of stress-earning-rein-continence, what they realized was, the vast majority were not going to visit a doctor to get some help about their bladder leaks. They were ignoring the condition, and they knew that they needed to bring the brand to life in the consumer space. So I was really motivated by the opportunity to build a new brand in the US, bring a brand that was really backed by incredible science, with my background in GSK, bringing the science to the fore was very important. So fundamentally, it was about this opportunity of bringing a brand to life at the place where women, especially really needed to have access to it. So, when you heard about this product, and you thought about the goals, the purpose, the principles of the organisation, it clearly resonated with you. You could take it out of that medicalised space, and put it in the space where women could understand it was something for them. There was no barrier between them accessing something that was going to help make them better. So clearly, these goals, that purpose, that mission really spoke to you. Is this important for you when you're joining a company? Yes, I identified with that goal of the company to build this new brand, this very disruptive brand in a huge market, and then have the opportunity to globalise that brand. On a personal level, of course, like all women, I talked to my friends, and I told my friends about this opportunity, and it was amazing to me how many of them said, "Oh, you know, I've never told anybody, but I have that issue. I leak when I laugh or I cough or I run." And so for me, it was a personal mission as well. I think when I think about what we're doing for women, I think about my friends, I think about my family, I think about the women that this is impacting. So very important to me, yes. And also, we all know working in this startup environment, you have great days, you have terrible days, it is a rollercoaster way more than working in a large organisation that's very well established. And I know the whole team that work in Atlantic Therapeutics field is saying, "Every day what gets you out of bed in the morning is what we're doing to disrupt a category that is right for innovation and is right for telling women the truth about what they can do to fix a problem." And it's incredibly important as a team, we all feel that sense of mission and that's what really drives us. So this spoke to you at a personal level and it spoke to you at a professional level. What skills do you feel you bring to an over at this crucial series B stage? In a large organisation, you have almost an embarrassment of choices, you have many brands, you have many opportunities. What I always had to do in my roles in those organisations was focus. And it's really important when you can do a lot of stuff, is make sure you focus on the right stuff and execute that well. And what I have enjoyed so much about bringing this to Nova brand life is we have one thing to do, let's do it really well. So I think what I've brought to the organisation as well is that the ability to focus, the ability to set this vision for the organisation as what we want to achieve. And now everybody is aligned behind that. So we're a small organisation, everybody has to be contributing to the mission. Everyone has to be able to do their own work and get on with it. There's no fat in this organisation. So I think that was an important part of the skillset I bring, focus, make sure everybody's crystal clear. about their past in the role and drive it forward. - How do you define impact? I mean, it can't just be about the bottom line in return to your investors, as much as those things are critically important. How do you define impact for you, for Innova, for your brand? - I mean, at a very ambitious level, impact to me is literally being able to transform a category and that relies on being able to transform consumer behavior. So if you think about what women do now, the vast majority are using pads, liners, leak proof underwear to mask the symptoms of this issue. And they're spending about $9 billion a year in the US alone on that. So to huge economic cost to women, and they are gonna do this now if they think there's no solution for the rest of their lives. And it's the problem is gonna get worse. So the opportunity to bring women a solution that will literally stop this issue at the root cause, it'll strengthen their pelvic floor. To me is a completely category changing and behavior changing impact. - I'm wondering, have some impact in your experience change around the world? I mean, you've worked in the UK, you've worked in Latin America, you've worked in Japan and Southeast Asia. And of course, what you are now in the US, does this definition of impact change wherever you go in the world? Where is it most interesting to you? - I think when you have such a universal condition that has such a universal solution, then clearly you can have an impact everywhere you go. This isn't cultural, this isn't demographic, this is an issue that women everywhere in the world will face. - Are there any hints or tips you can offer about staying true to your end consumer during what is an incredibly exciting round of funding? It sounds like one of the things that you do is you have that woman, that universal woman at the center of your thoughts at all times. And that's kind of your guiding principle, your guiding light making her this universal woman, her life better. But that's just my interpretation. - No, it is exactly that. It starts with the consumer and all the time. We're in this very fortunate position, of course, our business is an e-commerce business. So we literally have a direct connection to every person who buys our brand. And that feedback loop is incredibly important to us. And it builds our knowledge, our experience, not understanding of that consumer. And I think that's why we've been able to stay really true to what we want to do. And I have to say our investors, including early bird have been incredibly supportive. And I would say that they have come on this journey with us. I think when they first invested in this brand, they saw it as a bit of a classic life sciences, medical device, medical technology, which would go through the regular channels. It's really understanding that consumer behavior that led us to this model. And so I think staying true to the model, believing in the model, believing that that is the most friction-free route to consumers accessing this brand technology is all founded in consumer behavior. - Your relationship to the larger issue clearly helps you to understand the consumer. How else does it help? - I've seen one of the benefits of being able to talk about a condition like this has been in terms of attracting talent into the organization. And I think that's something that I feel personally, when I can speak with real passion and conviction about what we're doing as an organization with a mission. We've been able to really punch above our weight in terms of recruiting great talent into the organization. We have a really strong team who've been on this mission for a long time. When you exactly the gaps we had to fill in terms of bringing in new talent. And I've been absolutely delighted with our ability to bring in really, really top-class talent into a small organization who help us deliver on our goals. - Well, I look forward to those 180 precise kegels per session. It's kegel like you mean it, right? (laughing) - I love that. We might use that. - You're a delight. And you're going in my dress book as season marvelous trend you are. - Great stuff. Thanks a lot. Take care, though. (upbeat music) - Series B is certainly the stage where brand has the opportunity to ramp things up. I mean, as of February 2022, the average series B in Europe was roughly 43 million euros. That kind of funding brings many choices and many opportunities. So as our guests reminded us, it's really important to focus. You can't be all things to all people everywhere. Prove your impact in one place and then go from there. We also learned that if you're looking to make a larger impact, the problem you're trying to solve is really good place to start. A universal issue will amount to a universal solution and therefore a universal impact. And what about success? If customers are keen on using your product and you have internal success, the next thing that will naturally follow is commercial success. So our guests and their companies have and continue to make a clear impact in their industry. But who do they see making a real impact on society? Who do they admire? For Kai, it was people like Steve Jobs, Jeff Bezos and Elon Musk. In his words, founders who. Had big visions and an are not afraid to make them happen and to change the world. For Philip, it is quite simply the many hidden champions within your niche. I obviously admire to some extent the work that has been done in cancer diagnostics using next generation sequencing, et cetera, and the companies that have been created in this area. But to be quite honest, I think it's hard to pin it down to just one individual. Susan had two individuals who she saw making a really authentic difference to the world. First, Joan London, an American TV host, award-winning journalist and best-selling author. Joan was the anchor on Good Morning America through the '80s and '90s. She's an incredible health advocate for women. She's a breast cancer survivor. And she's recently written a phenomenal book about the process of aging. She's actually called one of the chapters of the book. Sometimes I laugh so much, tears run down my legs. So when we saw this, we thought, there is a brave woman who is prepared to address some of these issues that all women are facing. Heidi Zach is another founder that Susan believes is making considerable impact in their field. Heidi is the co-founder and CEO of Third Love and an advisor to Atlantic Veriputics. It is a lingerie brand. And what Heidi did when she established the brand was, she looked at the way Victoria Secrets was marketing bars to women and said, that's not us. We're not angels. We wear bars for comfort, support. We want to forget about them when we're wearing them. And we have a much more authentic way to help women buy the underwear that is going to work for them. And I love to incredibly disruptive voice in this category. She went up against a giant, which was Victoria Secrets very aggressively. And she has made fantastic headway. And she has incredibly loyal consumers. And ultimately, your consumers become, obviously, your best promoters. And so I'd say she is one of the people that really inspire us. Beyond the connection to their consumers and disruptive tone, Third Love have donated more than $50 million worth of products to women in need and support the broader community through its TL-effect program. Created to encourage and support early stage companies run by female entrepreneurs of color. Zach herself is an active angel investor in female founded companies. And she's committed to advancing more women in tech. Thank you to Philip Kai and Susan for joining us in this episode. Coming up in the next episode of the Early Mode podcast, we talk about how a series C funding round can bring all new opportunities for impact. We'll get into how founders can embolden their employees to become entrepreneurs, how the startup ecosystem can change from within, and what founders can do to create a balance between their personal and professional lives. And now all of a sudden, they wake up on day and the company is complaining, "Where are we going? You don't communicate." The people who were their early stage think you're creating a corporate and the people who are coming in are saying, "This is a kindergarten. Like, how are you going to solve this?" This podcast was produced by Bear Radio. For Early Bird, I'm your host, Louise Benwold.