Conversations around cap table resets have come up with more company founders than you might think over the last year.
Here’s the situation: The company has raised capital from investors on terms reflecting the broader funding environment and are typically favorable to investors. Everyone aligns on a set of milestones, knowing that while they’re ambitious, they represent the company’s best path to increase valuation and attract future funding. Fast forward 18 months. The company has made meaningful progress, hitting some milestones, though not all.
With the board’s approval, the founder starts conversations for the next fundraising round. But the feedback quickly turns from product and market strategy to cap table complexity. Some typical comments: “Your cap table is messy.” “Founders should hold more equity at this stage.”
That’s when the dilemma sets in.
There’s a strong temptation to “fix” the cap table proactively. That is, to align equity stakes with what new investors expect before the next round. It’s within the founder’s control to do so and seems like it could set up the next raise for success.
But here’s the unpopular opinion: changing the cap table ahead of a funding round can be like a “Field of Dreams”—if you build it, they might come. The illusion is that a reset will make the company instantly more attractive, but without fresh capital or a value inflection point, it’s often just a cosmetic change.
So what’s the path forward?
Transparent Board-Driven Discussion. Before resetting equity, boards and founders should align on whether these changes genuinely impact the company’s ability to reach its next value milestone. If not, they risk sending mixed signals to investors.
Timing Is Everything. The true value of a cap table reset often comes in tandem with a funding round, reinforcing both the new capital and the refreshed structure as a cohesive step toward growth.
Clarity for Future Stakeholders. Rather than a field of dreams, investors want a clear path to ROI. Cap table structure should reflect the company’s growth story, not a rebalancing for the sake of optics. If a new investor wants to pursue an investment because they have conviction in the opportunity, they will work with the founder to create a solution concerning the cap table.
Over the next 18 months, more founders and boards will face this choice: to simplify their cap table now or wait until new capital validates the reset. While the appeal of a clean cap table is undeniable, timing and strategy matter more than aesthetics.
Ben Pidgeon is the executive director of VisionTech, a position he’s held since 2016. During this time, Ben has grown member in the angel investing group to 130+ members, the portfolio to 72 companies, and led VisionTech to nearly $4.3 million in deployed capital.Past president of the Venture Club of Indiana, serves on the board of directors for several early-growth companiesand does speaking engagements on angel investing and startup capital.
Last year was a very good year for VisionTech. Applying strict criteria, we completed 18 deals worth $2.88 million. We’re continuing our thesis this year, looking hard at leadership, the unmet needs being met, milestones achieved, and deal terms. We’re also leaning into syndication partners for deal flow and diligence. Early this year, New World Angels of Boca Raton, Florida, suggested we look at a pioneering biotech startup called Aegle Therapeutics. Last year, both of our groups invested in NuvOx Therapeutics, so I was open to reviewing Aegle and its novel platform therapy for severe burns and other rare and challenging skin conditions.Impressed with CEO Shelley Hartman, her “EV” technology’s potential impact on lives and traction, I invited her to present at our February 29 pitch events. Here’s a preview.
Ben Pidgeon, Shelley Hartman
BP: Before we get started, I heard you are the proud mom of a former high school football player. SH: (Smiles) That would be my daughter Sofia. During her senior year in high school, she was a starting running back for the boys’ varsity team. Before the season started, the coach took me aside and said, ” Do you know why she is so good? She can see the hole and run through it.” And so she did. All season.
BP: That’s a great story. Your background is in banking. How did you get involved with a biotech startup out of the University of Miami? SH: You must be reading my LinkedIn profile, Ben. Yes, I spent nearly 20 years with First Boston and Goldman Sachs. In both cases, my focus was life sciences and healthcare services companies: advising, raising capital, mergers and acquisitions. In 2004, I was recruited to Fort Lauderdale, Florida, to run LifeSync Holdings, a corporate incubator developing biopharma, medtech and diagnostic products. We were funded by TGP, Medtronic, 3M, and other large investors; it was a great experience. I wrapped up that role in 2013, but because of my daughter’s football, weightlifting and lacrosse career, I wanted to stay in Florida. So I became an entrepreneur-in-residence (EIR) for the University of Miami Miller School of Medicine.
BP: How did you get involved with Aegle Therapeutics? SH: I was introduced to Bob Williamson in the tech transfer office at the University of Miami Miller School of Medicine. He’s a serial life sciences entrepreneur and was looking at licensing some technology around stem cells and wanted my help on it. That tech came from the lab of Dr. Van Badiavas. Van had found a way to harness the poer of stem cells without using the cells. This was the foundation of what would soon become Aegle Therapeutics. I reviewed it and thought the science was brilliant and very elegant. We ended up licensing the technology and I came onboard with Aegle full-time in 2019 as CEO.
BP: You mentioned something called “EVs” in an earlier conversation and all I could think about was Tesla. Can you explain, in layman’s terms, what you’re doing with Aegle and EVs. SH: The science does get pretty deep, but here’s the elevator version: Aegle is developing novel, extracellular vesicle (EVs) therapies in the form of a topical medication to treat rare and severe dermatological disorders with significant unmet medical need. Our initial targets are severe second degree burns and a rare pediatric, skin condition called dystrophic epidermolysis bullosa.
You’ve probably heard of stem cells being used to treat cancer and other diseases. Well, we are taking EVs, which are secreted by stem cells, and using them to influence the immune system, accelerate healing, support blood vessel growth and neuronal regeneration, and minimize inflammation and scarring . Using EVs, we are harnessing the body’s own power to heal itself faster and more completely.
BP: Share an example. SH: Think about someone who’s experienced severe burns in a fire, a work or recreational accident or on a battlefield. Burn wounds are extremely difficult for patients and physicians. They’re painful, they swell, they’re slow to heal, and cause terrible scarring. It can cost millions per patient to treat. If skin grafts are required, that’s another layer of complexity, pain and cost. We recently treated our first patient whose foot was charred in a boating accident. Withing seven days of one dose of our EV-based topical, his burn wound was closed, there was a significant reduction in swelling, and no sign of ischemic reperfusion injury. In four weeks, his pain was gone, and in 12 weeks, his foot was completed healed.
BP: That’s impressive! I can see why the military would be interested in this. SH: They are! We have $1.5 million in non-dilutive funding through the Congressionally Directed Medical Research Program, specifically for biotech innovations like ours.
BP: Why hasn’t this been addressed before? SH: Our overall approach is novel, but it’s our manufacturing approach that truly differentiates our platform. Our lead product, AGLE-102™, is a natural composite of EVs; it’s not engineered. Our method of isolating and collecting the EVs is very precise, safe, and does not damage or modify the EVs. The end product mimics the body’s own natural production.
BP: We always want to know about IP to ensure companies’ moats are deep and wide. SH: We’ve definitely got that covered. We have 85 patents of which 55 have been granted. Many of these are around our manufacturing and composition of matter. Our patents cover all major markets, including the United States, EU, Japan, Australia, and Canada. We’ll continue adding to our IP as we add to our pipeline.
BP: What round is this? SH: This is a $5 million Series A preferred stock round. Right now we have commitments for $2.8 million and would like to close on $3 million by the end of February.
BP: What’s the planned use of funds? SH: Basically to continue our momentum. We plan to use the proceeds to generate strong clinical data in both our burn and dystrophic EB clinical trials, which we hope shows AGLE-102 as a new modality to treat other inflammatory and immune-based dermatologic disorders.
BP: Give me three reasons why VisionTech Angels should invest in Aegle. SH: First, it’s the perfect time to get behind our company. We recently completed the proof of concept in our burn trial and the results exceeded expectations. We are moving forward with our second clinical trial, dystrophic EB, which is a major inflection point. Third, our manufacturing process is unique, challenging and the IP behind it is extensively protected. We have successfully completed multiple GMP manufacturing runs. Here’s a fourth reason: we all know it’s a challenging time for biotech startups to be fundraising. We’d like to close the round quickly, so our pre-money valuation is very favorable to investors.
VisionTech Angels’ Virtual Pitch Events will be held Thursday, February 29 at 12 Noon and 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page where you’ll find the RSVP links. You can also email Ben Pidgeon at bpidgeon@visiontech-partners.com.
I first met Diana Caldwell when she was the co-founder and CEO of Pearl Pathways. Pearl was among VisionTech’s corporate sponsors and an invaluable commercialization resource for our life sciences portfolio companies. It didn’t take long for Diana to become a member of VisionTech Angels, giving us deep bench strength as a subject matter expert in drug development and FDA regulatory paths. When she co-founded a new diagnostics startup with pancreatic cancer as its first target, Amplified Science, I was eager to learn more. Pancreatic cancer is the third most deadly cancer, killing 74 of 100 patients within a year of diagnosis, largely because it is rarely discovered early enough to treat successfully. I invited Diana to meet with the VisionTech Angels Screening Committee earlier this month. The group was impressed with Amplified Sciences, its novel technology, progress to date, and invited her to present at our April 27 virtual pitch events. Here’s a preview.
BP: Tell me a little about yourself. Is this your first startup? DC: This is actually my second startup. I was also a co-founder of Pearl Pathways. After earning an MBA at the IU Kelley School of Business, I joined Lilly where I held commercial and cross functional roles for the next 16 years. Lilly really gave me a broad foundation of experience in leadership and developing teams in the biotech space. Eventually, a desire to be an entrepreneur and get back into product development for unmet clinical needs brought me to the startup space.
BP: What’s the backstory on Amplified Sciences? How did you connect with your co-founder, Dr. V. Jo Davisson? DC: I was working at the Purdue Foundry as an entrepreneur-in-resident, helping a half a dozen startups and shopping for IP for my next startup. While I was there, I met Jo, a Purdue faculty member and biochemist with 30 years of experience in drug and diagnostic discovery and development. He had invented a chemistry reagent platform for the early detection of debilitating diseases, had founded the company, and was looking for a CEO with deep business experience. For the next nine months we had the opportunity to work alongside each other—Purdue has this great knack of pairing entrepreneurs with scientists! In the summer of 2019, I became a co-founder and CEO with Jo as our CSO, and we got to work.
BP: What is your product and how is it different?
DC: Our lead product is a diagnostic reagent for accurately detecting a biomarker that is an indicator of potential malignancy for pancreatic cancer. Amplified Sciences’ chemistry reagent platform is a suite of patented reporter dyes that amplify biomarker signals. What’s novel about our technology is the ability to detect indicators of disease at a much lower concentration – up to 10,000 times improved limits of detection – than comparable technologies. Our ultrasensitive dye probes work particularly well when there is a low abundance of the target biomarker and when there is a low volume sample involved. These features are important when you’re working with low volume samples such as with a cyst or when a disease is in its very early stages.
BP: Let’s discuss your lead assay, PanCystProTM. Why pancreatic cancer? Where are you in its development? DC: We chose pancreatic cancer for our lead assay for several reasons. First, because of the deadly nature of the disease—roughly three out of four patients are dead within a year of diagnosis—and the unmet medical need for early-stage diagnostics to help increase survival rates. Pancreatic cancer is a “silent cancer” in that symptoms don’t show up until late stage if they show up at all. By then it’s too late to treat effectively. Early detection is the only way to significantly change outcomes.
Here’s an example for you. Supreme Court Justice Ruth Bader Ginsburg had colon cancer. It was caught early, and she survived. Later, when she was undergoing a full body scan, an early-stage cyst was found on her pancreas. She was treated with a surgical removal of that cyst, and survived for years. It was only by chance that her pancreatic cancer was found when still treatable.
Why is it so hard to find? For one thing, the pancreas is deep within the body, behind the stomach, so it’s hard to see in imaging. Most of these cysts are found by imaging incidentally meaning they are found in a cat scan or MRI when doctors are looking for something else .
Our PanCystPro™ assays test the fluid from these cysts, which are very small so fluid sample sizes are small. This works in our favor because of the ability of our technology to operate with very small sample volumes. Our initial PanCystPro assay is a minimal sample assay for protease biomarkers and is a “rule out” test to determine if the cyst is benign. At +90% sensitivity and specificity, it is more accurate than competing tests.
We have additional assays in this disease state in development. I’d also like to mention that we were just awarded a Phase 1 SBIR grant of $400,000 from the National Cancer Institute. This will help accelerate development of our second assay for pancreatic cancer. The award validates the huge clinical need for this test.
BP: Where are you in development?
DC: We are making steady progress. The PanCystPro test has been used in clinical samples and is ready for translation to a clinical lab and to enter the regulatory process. Our team, which includes three Ph.D. scientists, is set to expand soon. Research and development on additional assays are underway and this includesactive institutional review board (IRBs) studies with three premier research universities.
BP: What is your total addressable market? DC: The in-vitro diagnostics market is huge, about $88 billion. For initial market entry, we are focusing on the pancreatic cancer diagnostic market, which is $2.2 billion including imaging. Drilling down to our real value proposition, more accurate diagnosis of patients with pancreatic cysts, the market is $300 million with a potential market share of $80 million. Pancreatic cancer in-vitro diagnostics is just the start so keep in mind, this is a platform technology that will be leveraged to other disease states.
BP: What kind of intellectual property protection do you have? DC: We have a suite of global composition of matter patents exclusively licensed from Purdue. We are adding patents on our individual products.
BP: What round is this? DC: This is our Series Seed Preferred Round. We completed a previous Series Seed convertible note round in early 2021, raising $1.78 million. In this round, our goal is to raise $3-3.5 million. We have two co-leads, Elevate Ventures and OCA Ventures, that have done their due diligence. They, alongside two other venture firms, closed $1.5 million in Wave 1 of the open round on March 3, 2023. We’d like to raise another $1.5 to $2 million so there’s still plenty of room for VisionTech Angels.
BP: What is your planned use of funds? DC: The largest portion will be directed to research and development on two additional assays, followed by CLIA regulatory approval, targeted launch with key opinion leaders, clinical utility and trials, sales and marketing, and capital equipment.
BP: Give me three reasons why VisionTech Angels members should invest. DC: First, this is an opportunity to help us build a great diagnostics company focused on earlier, mor accurate detection starting with pancreatic cancer. Second, others believe we are up to the challenge. We already have two respected investors leading the round, Elevate Ventures and OCA Ventures, both of which have invested in diagnostics companies in the past and are familiar with the space. Third, we are a clinical stage company making measurable progress and are planning our commercial launch by end of year. I’m going to sneak in a fourth: we have identified multiple paths to exit and are working hard on the milestones needed for a near term exit.
VisionTech Angels’ April Pitch Events will be virtual on Thursday, April 27 at Noon and at 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page where you’ll find the RSVP links, or email Ben Pidgeon at bpidgeon@visiontech-partners.com
On Friday, March 10, 2023, Silicon Valley Bank (SVB), the flagship of the startup banking world, collapsed, causing the FDIC to take over the bank. The failure is the largest since 2008, and it caused a firestorm among customers, the startup and venture ecosystem, policy makers, and politicians. Fanning the flames were media and social platforms, raising the bar on histrionics. It was no wonder that many people dreaded the Monday after. And yet SVB reopened on Monday under the control of the newly created Deposit Insurance National Bank of Santa Clara. Insured depositors with up to $250,000 in their accounts were able to access their money.
So what next? Although the fallout from SVB’s failure is still unfolding, VisionTech turned to Stock Yard Bank’s Denelle Key for insight. She offered five reasons why startups should go local with their banking and return to personal banking relationships. – Ben Pidgeon, VisionTech Executive Director
BP: How are you handling Friday’s news of Silicon Valley Bank’s crash? DK: First off, this is nothing like the Lehman Brother collapse in 2008. My head is still spinning by how quickly SVB went into receivership. I think it’s the direct result of social media commentary, fearmongering and politicization that the FDIC felt it had to move quickly to avoid more devastating consequences. All weekend long I got calls from fearful bank customers and providing reassurance that Stock Yards Bank is sound, and their accounts are protected. Fortunately, the right people are stepping in to manage the immediate crisis of SVB and avoid the collapse of more banks.
BP: You’ve pointed to the media’s role, but is there another big difference from the financial crisis of 2008? DK: Absolutely! There is a huge generational difference in how young startup founders and their teams – particularly those in the tech sector – have approached banking and the financial side of their businesses. I call them debit card kids. They’ve never handled real money. They don’t see it or deal with it. And they don’t understand the basic fundamentals of banking. They rely solely on the convenience of the Internet and apps for banking services. Most have never stepped foot in a bank. With everything moving so fast in the digital world, it’s easy to lose track of banking and money basics. When a startup CEO has a problem, they head back online as they have no idea what it means to pick up a phone, call their banker and get a real, thoughtful answer from a knowledgeable banker.
BP: You’re right about that. So what are the five reasons why startups should go local and return to personal banking relationships? DK: Reason One is Experience. When you work with a local community bank, you’re working with people who have years of experience advising businesses on the fundamentals of banking, lending and growth. Startups often don’t know what they might need from a banking perspective, and in this environment, the needs change often. Utilizing a small bank allows you to find someone who has working with startups, has experience in your industry, and can speak to the needs of your business. Oftentimes, a startup thinks they need to go to a national bank as they’re going to be doing business on a national or international scale. The reality is that local banks such as Stock Yards is no different than a Bank of America in terms of having the experienced people, products, and services needed to doing business around the world.
BP: It seems like people automatically think large banks are too big to fail. DK: That’s the assumption. Which is why Reason Two is Security. You need to know that your bank, regardless of size, is sound. Take SVB. Its 40,000 customers are mostly tech companies; big companies alike Shopify, Teladoc and ZipRecruiter. They provided services to around half of all U.S. startups. So if you are a startup CEO, it was pretty safe to assume SVB was a good, secure choice. Now we know that wasn’t the case, but why would you think otherwise?
A CEO of a startup or any other stage company should understand the strength of their bank and expect that their personal banker can speak to the bank’s performance. With a community bank, it’s more likely that you’ll find a well-capitalized, balanced bank with strong loan-to-deposit ratios. And if you don’t know why this is important to you as a startup, that’s okay! Ask questions! You want to ensure that your bank is sound, and your money is safe, as both are critical. You don’t want to come to work on Friday, looking forward to the weekend, and see your bank and accounts crashing.
BP: We’ve kind of gotten away from relationships with our bankers. Is that a fair assessment? DK: That’s point three: We need to get back to connected relationships with our bankers. And I don’t mean connected in the LinkedIn sense. I mean pick up the phone, let’s have lunch, can you help me out here, I have a question kind of connection. Real relationships!
Startups, regardless of the age of their founder or CEO, need more than just an ATM, the internet, a debit card, and mobile deposit. You may think that banking and the services they provide are commodities, and you can get by with a digital relationship. However, the last three years have taught us that a relationship with a bank will save your company when hard time happen. During the COVID-19 pandemic, Paycheck Protection Program (PPP) funds distributed through large banks took weeks and weeks to process. Many companies didn’t receive funds simply because they were pushed to the end of the line. Community banks like Stock Yard were able to quickly take care of our clients’ needs because every client had a relationship with their banker. No stone was left unturned by bankers to help their customers. People and their businesses matter. While banking online is convenient, it’s also faceless. And that’s a real problem when problems crop up. A chatbot won’t cut it.
BP: It really get down to that human connection, right? DK: Yep, human connection. So reason four is the ability to communicate with a person, and to trust that person. When you have an engaged banker, someone you’re comfortable talking things over with, this person knows your business and is prepared to problem solve for you. Bankers want to know your business, so we understand where you came from and where you want to go. There’s also a big difference between an employee who works at a bank, and a banker that is a true advisor to your startup or business. Your banker should also be accessible to you, and available to listen to your questions and issues. Having one person to be able to contact to troubleshoot and also brainstorm is a huge asset to a business owner and help you through them. Your job as a business owner is to generate revenue, not spend your time managing customer service issues with a bank. You should be able to easily reach your banker and trust their counsel.
BP: And the last reason to go local? DK: Personal service from a bank and banker with whom you have an open, honest connection. Find a bank that makes you feel comfortable as a client. Even better, find one that makes you happy and valued to be there! Providing outstanding service in all of the ways I’ve mentioned help create and build strong, engaged relationships. You should feel great about the service you are receiving from your bank, know and trust your banker, know they are interested in helping you succeed, and feel comfortable having them as an advisor to your business. If any of these items fall short, it’s time to consider a new bank!
ABOUT STOCK YARDS BANK
Stock Yards Bank’s impressive history began in 1904. Since then, Stock Yards Bank has earned a reputation for personal service, financial strength, and a commitment to the highest standards of business ethics. We have a full range of financial services to meet the needs of each of our customers, regardless of the size or complexity of their needs. We’ve built our business in the simplest and most straightforward way possible: one account at a time, relationship by relationship.
Our mission statement calls for providing unsurpassed service to our customers and a great place to work for our employees. Our commitment to this philosophy is a key reason our parent company, Stock Yards Bancorp, a publicly traded company (NASDAQ:SYBT), has consistently ranked among the country’s top-performing community banks and recognized as one of the “Best Banks to Work For.” Learn more here.
I first met Lydia Zeller, CEO and president of Pelvital (dba Flyte) a femtech solution for stress urinary incontinence in women. If you are unfamiliar with femtech, it is a category of software, diagnostics, products, and services that use technology to focus on women’s health. While VisionTech Angels has invested in a wide range of life sciences companies, this is our first femtech company, a sector that’s recently begun experiencing a lot of growth. I invited Lydia to meet with the VisionTech Angels Screening Committee earlier this month. The group was impressed with Flyte, how they are addressing a significant unmet need, the investment opportunity and Lydia, and we invited her to present at our February 23rd virtual pitch events. Here’s a preview.
BP: Tell me a little about yourself. Is this your first startup? LZ: No, I’ve actually been an entrepreneur for 25 years and have a lengthy background in digital health. The last company I founded and where I served as CEO was Kiio, a digital health company in the musculoskeletal space, which exited in late 2021. I was brought onboard at Flyte in 2022 to take a fresh look at the go-to-market strategy. Outside of Flyte, I’m the board president of the Wisconsin Startup Coalition and a member of Women Business Leaders of the U.S. Health Care Industry Foundation.
BP: What’s the backstory on Flyte? LZ: First, 60% of women suffer from some form of urinary incontinence, so it’s a big problem. Flyte was originally developed by researchers, physicians, and physical therapists at the Arctic University of Norway. They were frustrated by the fact that nothing worked for patients who came in with stress urinary incontinence. Mechanotherapy was being used to treat astronauts who’d lost muscle strength in space. The question was asked, “Can we use this healing modality to revitalize the pelvic floor of women?” That started the effort at Arctic University to develop the technology that became Flyte.
BP: I didn’t realize incontinence was such a big issue. LZ: Most people don’t. And one of the reasons is it’s embarrassing for women to talk about even though one in two have stress or mixed urinary incontinence. It happens when a woman laughs, coughs or bounces during exercise. It can develop after pregnancy. Athletes suffer from it. Incontinence is also part of the aging process. As common as incontinence is, more than 80% of women just put up with it without treatment. Some wear pads or absorbent undergarments, which are expensive. Some do Kegel exercises at home to strengthen muscles. A very small percentage, less than 3%, opt for surgery. That’s expensive, there’s the risk of complications and it doesn’t always work. A lot of women are frustrated and end up living with leaks.
BP: How is Flyte different? LZ: Flyte is a safe, non-surgical, bladder leak treatment for stress urinary incontinence in adult women. It is the only product to apply mechanotherapy to pelvic floor. It is a quick, easy treatment patients can do for just five minutes per day to strengthen their pelvic floor and realize dry or near-dry results in just six weeks.
Now here’s how the “magic” of mechanotherapy works. The Flyte device is a wand made of soft, medical-grade silicone that is placed in the vagina. During treatment, it delivers a series of gentle pulses while the patient contracts her pelvic floor muscles. This amplifies the benefits of each squeeze—commonly called Kegels—by 39 times. This promotes the healing response in the pelvic floor muscles and restores strength and bladder control. Length of treatment is six weeks. Women can continue to use Flyte to maintain pelvic floor muscle tone if they like.
BP: You’ve done clinical trials in Norway and the United States, and the results are impressive. LZ: Thank you! We have done the largest clinical trials of stress urinary incontinence in the world, with a total of 179 participants. The first trial was done in Norway at one center with 60 women. After six weeks, 83% of the women were continent. After two years, 77% will still continent. A second study was done in the United States with multiple centers and 119 women. After six weeks, 81% had improvements and at 12 weeks, 91% reported improvements. Overall, 71% achieved dry or near dry in two to 12 weeks.
BP: What are the barriers to adoption and how are you addressing? LZ: Among consumers, there’s a lack of awareness that there’s something new available to them and that it works. We’ve also found that women are a little leery. Surprisingly, incontinence is a noisy space. A lot of people are selling snake oil. And even traditional treatments aren’t that effective. Many women who have tried something that didn’t work give up. Being new, we have to create awareness and educate women that our treatment works, and it’s quick. Some women achieve total dryness in two weeks, for others it’s six weeks of more. Increasing our presence on social media and through digital healthcare companies will help us increase awareness.
B2B partners get it, particularly clinicians who see the problem day-in and day-out, know their patients struggle with current options and are not solving the problem. They are impressed with the results of our clinical trials. Our price point, $395 per device, would be more attractive if covered by insurance or Medicare/Medicaid. So we are working on getting a reimbursement code.
Interestingly enough, we also have to overcome barriers with potential investors. Femtech is a new category of investing. Men often don’t realize what a debilitating issue incontinence is for women because women hide it so well. Unlike back surgery or a cancer drug, it’s not always easy to explain our return on investment. Incontinence ROI is more complicated. It’s been linked to depression, urinary tract infections, withdrawal from various activities in professional and personal settings, stopping exercise—the list goes on.
BP: What is your go-to-market strategy and where are you seeing traction? LZ: To date, B2C has been our primary focus, and we are making a small profit here. Last year, we concentrated on reducing our customer acquisition cost and succeeded in cutting it in half. Once we close this round, we will be more involved in our B2C outreach through social and digital channels. Where we’re putting more effort is B2B. In the virtual healthcare arena, we are in advanced discussions with multiple partners and have signed a contract with a large Minnesota healthcare system. B2B deals take more time to develop and close but will allow us to scale more quickly.
BP: What kind of intellectual property protection do you have? LZ: Our technology is very well protected, and we did that intentionally. We have 17 patents in all: seven in North America, four in Europe, four in Asia, and two in Australia.
BP: What round is this? LZ: We are currently in our seed round and the goal is to raise $4.5 million. Boomerang Ventures is leading the round through their fund.
BP: What is your planned use of funds? LZ: Our priorities include securing a reimbursement code so we are accessible to more women through private insurance and Medicare/Medicaid; building out our next generation product, a connected device that will enable Cloud capture of data, a mobile apps for users, and features for virtual healthcare companies, health systems and clinicians; and making key hires in sales, marketing and business development that support commercialization. We will also be building our inventory in anticipation of increased demand.
BP: Give me three reasons why VisionTech Angels members should invest. LZ: Do I have to limit it to three? I have five.
BP: Sure! Go ahead. LZ: First off, women’s stress incontinence is a huge market with an unmet need. Second, Flyte is the right product at the right time. At long last, women’s health has become a priority, and this coincides women finally realizing it’s okay to talk to taboo topics like incontinence and demand for solutions for all women. Our timing coincides with the rise of digital health, which thanks to Covid, became mainstream.
Third, we have a differentiated, patent-protected, novel approach that has been de-risked through clinical trials and has regulatory clearance for over the counter and prescription sales. Fourth, our business model aligns with direct-to-consumer retail and digital health, with women and partners looking for a real solution to stress incontinence. We are that solution. Fifth, we have a great team!
VisionTech Angels’ February Pitch Events will be virtual on Thursday, February 23 at Noon and at 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page where you’ll find the RSVP links, or email Ben Pidgeon at bpidgeon@visiontech-partners.com
Zach Booker, the co-founder and CEO of ADHD Online, was referred to VisionTech Angels by the Michigan Capital Network. The Grand Rapids, Michigan-based venture capital firm is the lead investor in ADHD Online. With $24 million in annual revenue rate, ADHD Online has far more traction than our typical investment opportunities. Obviously, this is very attractive, but their mission to help the mental health community is well timed. In 2020, the National Institutes of Health reported that one in five adult Americans live with a mental health condition. It’s easy to imagine those numbers have swelled since the global pandemic and resulting social isolation and economic struggles. As the VisionTech Screening Committee delved into ADHD Online, we were even more impressed with ADHD Online and invited Zach to present at our September virtual pitch events. Here’s a preview.
BP: Some founders have a personal connection to their startup. What’s yours? ZB: I have ADHD as does my co-founder and chief innovations officer, Dr. Randall Duthler. Dr. Duthler is a family physician and on the faculty of Michigan State University and has a deep understanding of the challenges ADHD causes for parents, their children and adult patients. Our personal experiences drive our desire to make diagnosis and treatment of ADHD faster, easier and simpler.
BP: How does someone know they have ADHD? ZB: They likely don’t know and that’s a big part of the problem. In adults, you may have a hard time focusing your attention and tasks. Kids with ADHD are more fidgety, impulsive, talk or move excessively. ADHD becomes more apparent once kids go to school because of the structured environment. It’s hard to sit still and be quiet! But these characteristics may not be ADHD. You really need a professional assessment to be sure.
BP: How are you connecting with potential patients? ZB: Patients can be referred by schools, their doctors and health systems. More importantly, people can self-refer. We market across all of our social media platforms along with search engine optimization.
BP: Tell me about ADHD Online and the problems you’re solving. ZB: If you think you or your child has ADHD, you face a bunch of hurdles. First, it will take you about seven months to start the process. That’s an incredibly long time to wait if you or your child are struggling. The system for diagnosis and treatment is very hard to navigate. The complexity of taking time off from work or school for multiple appointments can be challenging. Imagine how tough it was during COVID when in-person services were shut down and telemedicine alternatives were few and far between. It’s also expensive. Expect to spend about $2,000 out-of-pocket even with insurance.
ADHD Online launched in 2018 as an online assessment tool. For the first two years, we bootstrapped and worked on our platform. During COVID, we expanded our services to assessments, consultations and ongoing treatment. Our clinical assessment tool requires patients answer some 250 questions, which can take 60-90 minutes to complete in one sitting. The patient has an unlimited amount of time to complete the assessment with the option to start and stop as they wish. That, coupled with the dynamic experience of the questions changing as answers are submitted ensures not everyone has the exact same test. The questions vary based on the patient’s answers. We use doctorate level psychologists for the diagnosis. Patients receive their diagnosis in an average of three days. Think about that. You think you might have ADHD. You get online, do our assessment, and in that same week later you have professional results. That’s huge.
ADHD Online provides congoing consultations via synchronous visits with a board-certified physician or patients can choose to take their assessment to their physician. Either way, the complexity is gone.
BP: What’s been the patient response to ADHD Online? ZB: Whether it’s parents of a child who is having issues at school or an adult, people simply want to know what’s wrong. Once they’ve used our service, the reviews are overwhelmingly positive about the process, the quick results, and the compassion of our psychologists. I would encourage people to visit our website and read some of the reviews.
BP: What are your competitive advantages? ZB: From the patient perspective, it’s the ease and immediacy of access, how quickly they get their diagnosis, the ability to choose how they receive ongoing care, whether it’s through our physicians and telemedicine or through a local physician in a traditional face-to-face setting. Also important to patients, schools, employers, and health systems accept our assessments so people can get special accommodations at school or work.
For obvious reasons, what we do is highly scrutinized. There used to be multiple competitors in this space. However, in 2022,the U.S. Department of Justice and the Drug Enforcement Administration shut several of them down. Today, there are no other practices that do what we do or use the model we use. We stand alone in the market.
BP: What kind of intellectual property do you have? ZB: we are currently working to secure a process patent for our diagnosis model. Our dynamic assessment questions changes based on answer given, making it a unique product in the mental health system.
BP: What is your total addressable market? ZB: For ADHD, we estimate the total addressable market to be $170 million. However, half of America has something going on with their mental health. We’re front line with our business model and as we expand the platform to include other mental health issues, the market becomes much, much bigger.
BP: What is your revenue model? ZB: It’s pretty simple: fee for service and self-pay. We charge $149 for the assessment, $199 for a 30-minute medical treatment appointment with a physician, and $99 for the follow-up appointment 30 days later. ADHD is a chronic condition, meaning it does not “go away.” Patients can schedule 50-minute teletherapy sessions with a psychologist on a regular or as-needed basis for $99 per session. We use board certified MDs and DOs for our telemedicine services. This is the standard of care for ADHD. Many insurance companies reimburse patients for their care.
BP: Where are you in terms of commercialization? ZB: These quick facts demonstrate where we are. ADHD Online currently serves as many as 650 patients a day. To date, we have assessed more than 90,000 people. More than 35,000 physicians have accepted our diagnosis and continue to treat our patients to this day. We have processed $27 million in credit card payments to date.
BP: What is your planned use of funds? ZB: This is a $5 million bridge round, and we are looking at a fast close. We intend to use the funds to drive growth in three areas. First, we plan to add more dynamic questions in our assessment so that we can identify additional mental health disorders, including anxiety, bipolar, depression, and PTSD. Second, we’d like to establish more partnerships with health systems. There is a tremendous shortage of mental health services, including diagnostics. Partnerships with health systems would allow us to refer patients as well as co-manage with local health systems. Our technology is API first and can easily integrate with electronical medical record systems like EPIC, which is used widely in health care. Finally, we want to establish partnerships with payors, which will support patient access and reimbursement.
BP: Why should VisionTech Angels invest in ADHD Online? ZB: Three words: opportunity, demand and growth. We have great traction, and we need to continue to keep the gas pedal down. We are beginning to dramatically change the mental healthcare delivery system by giving more people more access to care, rapid diagnostics, and more convenient ongoing care that is the standard of care. We have proven demand among patients, health systems and schools, and our assessments are profitable. The growth opportunity extends beyond the United States to Canada and the United Kingdom, where there is a two-year backlog for services. We can plug into their systems quickly.
VisionTech Angels’ September Pitch Events will be virtual on Thursday, September 29 at Noon and at 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page where you’ll find the RSVP links, or email Ben Pidgeon at bpidgeon@visiontech-partners.com.
Have you seen the 1990’s comedy with Bill Murray called Groundhog Day? In the movie, his character Phil is caught in a time loop. Everyday, he wakes up to the same day, in the same hotel bed, to the same song on the clock. The only things that change are who he meets and the trouble he gets himself into.
I sometimes feel a little like Phil in Groundhog Day – I’m constantly having the same conversation with startup founders about cap tables. There’s a general lack of understanding about how to structure a cap table for investors. And our conversations typically center on dilutions, valuations, and the potential loss of control of company ownership. I always stress how critical it is to have a detailed understanding of who owns what at each stage of the business. Investors like VisionTech Angels look at that.
Investors also have questions about cap tables and how it changes with each funding round and the addition of new investors. Angel investors are particularly sensitive to changing cap tables because as early investors, we shoulder much of the risk of a startup.
In talking with Jason Schpok at Elevate Ventures, we agreed it would be a tremendous benefit to startup founders and investors to host a webinar on cap tables. So on Wednesday, July 20th, we did just that, presenting “Creating a Cap Table with an Investor’s Perspective in Mind.” Forty people joined the hour-long presentation and discussion and gave it high marks when surveyed after the event.
The content in the webinar is timeless – plus I’m sure I’ll have a few more of those Groundhog Day conversations on cap tables – so we’re posting the webinar here so more founders and investors can listen and learn at their pleasure. If you have additional questions, please reach out to me here.
Living in Indiana, I haven’t thought much about the issue of biofouling of ships and recreational boats and unless you’re a boat owner, it’s likely you haven’t either. Consider the beautiful cruise boats we see on ads. It’s a constant and costly challenge to keep the hulls white and free of barnacles, mussels, and other grunge. Buildup of these unsightly freeloaders causes drag, which slows the ship and increases fuel costs. Typical solutions are not environmentally friendly. Adaptive Surface Technologies (AST) led by CEO David Ward has additive and coating solutions for this and other sticky problems. ASTis benefiting from strong global interest in more sustainable solutions. The VisionTech Screening Committee was impressed so we invited David to present at our May virtual pitch events. Here’s a preview.
BP: Tell me about your company and what unmet need you saw in the market(s) you serve? DW: Adaptive Surface Technologies (AST) is an industrial technology company that produces additives and coatings that repel biological fouling we see in the marine industry plus other fluids, food, contaminants, and ice. Our products can be used for a wide range of aviation, consumer, industrial, marine, and medical applications—any applications where you don’t want material to stick.
A universal unmet need in consumer and industrial applications is better performing, environmentally friendly additives and coatings that keep material from adhering to and/or building up on a surface. You mentioned the marine industry. Current solutions to deter fouling often include biocides such as copper, which are not environmentally friendly. In the packaging industry, recycling is a top priority. Consumer products companies have to be careful not to add something to a package to improve performance that renders it nonrecyclable. Our products solve customers’ problems while protecting and improving the environment.
BP: What’s your solution (products) and what are the benefits? DW: So far, we have brought two distinctive product groups to market: “Wet” SLIPS® liquid surface coatings and “Dry” AST repellent coatings and additives. We have SLIPS coatings for industrial and consumer packaging applications that deliver better non-stick properties than Teflon®. SLIPS coatings create a fully liquid surface that is ultra-smooth and super-slippery so unwanted fluids and biological foulants slide right off. One example is our SLIPS® ZERO™ coating for plastic food packaging that allows for the complete emptying of the container and does not interfere with recycling once the package is empty. With our coating, you can easily get all of the toothpaste or viscous food product out of the packaging. There are some videos on our website that demonstrate exactly how SLIPS® Zero works.
The “dry” AST products are based off of proprietary Surface-Active Polymer additives, which stratify to the surface and create hydrophilic domains within a hydrophobic matrix. These additives were developed to repel marine biofouling and have been commercialized as SLIPS® Foul Protect for marine applications. One product we currently have on the market is SLIPS® Dolphin™ Bottom Paint for recreational boaters. This paint creates an ultra-smooth, slippery surface that organisms can’t attach to. It lasts multiple seasons, so boat owners don’t have to worry about painting their boat every year. It’s also environmentally friendly. The commercial versions for tankers, cruise ships, and other commercial vessels performs the same way. Go to our website to see a demo of SLIPS Dolphin in action.
We’re currently working on a solution for repelling frost and ice for industrial and aerospace applications, a project which was started with the help of two government SBIR grants from the US Air Force (AFWERX).
BP: How big is your addressable market? DW: The marine anti-biofouling coating market is close to $4 billion annually. The majority of the market is commercial shipping; recreational boating is just a fraction. The consumer packaging market is a bit difficult to quantify as there isn’t an existing solution to compare against but given there are billions of packages filled in our target market every year, the prospective licensing income is also very large.
BP: Do you have competitors? Is yes, what is your competitive advantage? DW: Again, it varies by market but centers around performance and sustainability. In the marine market, various paints and coatings are currently used but 90% contain biocides and create microplastic waste because they are designed to decay into the water over time. Neither of those are environmentally friendly and with all of the attention on keeping oceans free of plastics and other non-natural material, we have a significant competitive advantage. In consumer packaging, we improve performance without adding anything that interferes with the package’s recyclability.
BP: You have very robust IP protection: 27 issued patents, 22 in prosecution. DW: Yes, we do. They are split between patents filed by Harvard University when the liquid coating was developed and exclusively licensed to AST for our fields of use. The balance of the patents are owned by AST as we developed the dry coatings used for the marine industry.
BP: What is your revenue model? DW: We predominantly license the use of our products to customers, and therefore gross margins are high. This keeps our revenue model simple. The sales cycle includes time for product validation, but when you’re written into the specs you are in a long-term relationship with the customer. The one outlier is our SLIPS Dolphin Bottom Paint for the recreational boating market. This is a traditional sales model.
BP: What is your traction to date? DW: We have commercial products for the marine, consumer packaging and semiconductor manufacturing markets. As mentioned earlier we have benefited from non-dilutive funding from the U.S. Department of Energy, ARPA-E, U.S. Navy, and the AFWERX SBIR grant supporting development of our anti-frost dry coating.
We’re also excited that one of our new investors is AkzoNobel, a Dutch multinational company that creates paints and performance coatings for both industry and consumers worldwide, which we see as a major vote of confidence.
BP: How do you plan to use the funds from this round? DW: Primarily as working capital as we expand our commercialization team and efforts. Our technology is done for marine and consumer packaging; it’s time to develop our market presence.
BP: Why should VisionTech Angels invest in Adaptive Surface Technologies? DW: We have a very large and growing market opportunity. That’s aided by the environmental benefits we offer. Our technology is proven in the markets we’re focused on. Lastly, we have an expert management team who have deep industry and commercialization experience.
To learn more about Adaptive Surface Technologies, visit their website. VisionTech Angels’ May Pitch Events will be virtual on Thursday, May 26 at Noon ET and at 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page where you’ll find the RSVP links, or email Ben Pidgeon at bpidgeon@visiontech-partners.com.
Employee benefits are the second largest expense for companies. And there’s no getting around it. To attract and retain talent, you have to offer benefits. But this mandatory expense has become increasingly painful for small companies. Over the last three years, employee benefits costs have increased an average of 5% a year. Cleveland-based insurtech software company TPA Stream led by CEO Jacob Sheridan has a solution. Their claims harvesting platform gives smaller companies the ability to unlock claims data that then can be used to reduce annual benefits costs by as much as 25%. TPA Stream’s value proposition is resonating with the marketplace: their traction in 2021 was strong and 2022 looks to be more of the same. The VisionTech Screening Committee was impressed so we invited Jacob to present at our May virtual pitch events. Here’s a preview.
BP: Tell me about TPA Stream and what unmet need you saw in the market? JS: About 10 years ago, one of my co-founders, Eric Sukulac, was working for a small company as a software developer. He used his health insurance, and it became somewhat of an administrative nightmare. He had to submit claims to his company’s third-party administrator (TPA) every month, and when he got reimbursed for his medical expenses, the amount was always wrong. Realizing the system was broken, he set out solve it and brought me and Steve Fuhry, now our CTO, on to solve it.
As we dug into it, we identified a much larger issue which is the fact that small businesses (with less than 100 employees) have no access to their medical, dental, and vision claims data. As a result, these companies typically make decisions based on assumptions and end up overpaying for employee benefits. We saw an opportunity to capture and aggregate companies’ claims data and make it available to health insurance brokers and TPAs to better meet the needs of the small group market.
BP: What’s your solution and what are the benefits? JS: We launched our first product in 2014, a claims harvesting platform that unlocks hard to access claims data for employers. It’s a gamechanger as it allows companies to customize their benefits to their employee population instead of purchasing a high-cost, off-the-shelf benefits package. TPA Stream helps companies save as much as 25% a year on their benefits, savings that can be put toward something else. We have since followed up with a claims and employee enrollment integration and employer invoicing solution. Back to Eric’s original frustration, employers and employees can use the platform for more visibility into their benefits without the old manual processes.
BP: What kind of response have you gotten? JS: Across the board—insurance brokers, TPAs, employers—people are super excited by what we offer. The uptake by health insurance brokers alone has been incredible. We now support 250 carriers across the United States.
BP: How big is your addressable market? JS: There are six million small companies in the United States that represent a $18 billion addressable market.
BP: You seem to have a number of competitors. What is your competitive advantage? JS: We do have competitors, but no one has what we have, the claims harvesting capability and the data it affords. Our ability to integrate with other systems is largely unique as well. We’re building a new product for brokers that will launch in a few weeks that will give us a “triple moat” against competitors.
BP: What is your revenue model? JS: It’s a straightforward SaaS model. We sell the software platform to TPAs and brokers.
BP: What is your traction to date? JS: We’re extremely pleased with the traction to date. We now have 40,000 employers representing 1.8 million members on the platform. In 2021, we hired Greg Brady as VP of Sales and Amanda Metes as our Marketing Director, which has been great. We’re better positioned than ever and expect the next six months to be huge.
BP: How do you plan to use the funds you raise? JS: We have already built out our technology, so these funds will go to building out our team. The top priority is the sales team, followed by development and operations personnel
BP: Why should VisionTech Angels should invest in TPA Stream? JS: First and foremost is our team. We have put together an awesome group of people who are dedicated to what we’re doing and driving the next wave of growth. Second, our product gives us an unfair advantage. No other company has a claims-harvesting platform like TPA Stream. Finally, the economics. Our operating model is extremely attractive with high gross margins. It’s a compelling combination.
To learn more about TPA Stream, visit their website. VisionTech Angels’ May Pitch Events will be virtual on Thursday, May 26 at Noon ET and at 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page where you’ll find the RSVP links, or email Ben Pidgeon at bpidgeon@visiontech-partners.com.
An independent USDA study found the precision spray technology reduced pesticide use by up to 60 percent.
INDIANAPOLIS, Indiana (May 10, 2022) – – Smart Apply® an agtech startup whose precision spray technology reduces chemical and water usage by orchards and vineyards by an average of 50 percent, has successfully raised a $1.3 million seed round. The proceeds from the round will be used to build upon the company’s momentum in preparation for a Series A round.
The Smart Apply system helps solve significant challenges faced by orchards and vineyards around the world to reduce and better control chemical use. Additionally, water shortages are necessitating aggressive measures to use limited resources more intelligently without sacrificing crop yields.
Commenting on the announcement, Smart Apply Founder and Chairman Steve Booher said, “The excitement in the marketplace around our Smart Apply precision spray technology is palpable, with placements in the field growing faster than projections. Our value proposition that we reduce dependence on pesticides, other chemicals, and water by 50 percent and more resonates on multiple levels: financial, environmental, social, and public health. The timing for Smart Apply could not be better.”
The Smart Apply precision spray system is based on nearly a decade of development, field-testing, and research at the USDA Agriculture Research Service. A study published in The Journal of ASTM International in September 2020, found that the system reduced pesticide use by 60 percent, 52.8. percent, and 50 percent on average at two nurseries and a fruit farm, respectively. The system also reduced pesticide costs significantly.
VisionTech Executive Director Ben Pidgeon said Smart Apply’s technology and traction resonated with his angel network: 35 investors wrote checks totaling $390,000. “We invested in Smart Apply because of the quadruple value proposition. Farmers win because they can spend less on pesticides and decrease water usage. The environment wins because fewer chemicals are required to achieve the same or better results and there’s less spray drift, which satisfies regulatory oversight. Equipment dealerships win by having better technology that meets customers’ needs. Finally, Smart Apply wins because they are at the center of the value equation.”
Smart Apply CEO Jerry Johnson said the ease with which Smart Apply’s technology can be integrated with a farmer’s current spray equipment and processes is a major part of Smart Apply’s appeal. “Our system, which is sold as a kit, is compatible with existing air-blast sprayers. Farmers realize the significant benefits of Smart Apply immediately. The sustainability and cost advantages are just too big to ignore.”
The company’s Series A round is anticipated to begin in early summer.
About Smart Apply® Inc.
Originally founded as SmartGuided LLC, Smart Apply is a Delaware C Corp based in Indianapolis, Indiana, that created the laser-guided, density-based, precision sprayer technology in conjunction with the USDA. The Company markets the Smart Apply® intelligent spray control system through dealerships around the world. The Smart Apply system is proven to reduce chemical use by more than half, with less waste and less labor. Learn more.
