Eric Sugalski (00:08):
Hey, Sydney.
Sydney Robinson (00:09):
Hey, how's it going here?
Eric Sugalski (00:11):
Good, how are you doing? I'm good.
Sydney Robinson (00:13):
Just living the dream.
Eric Sugalski (00:14):
All right. Well, thanks for joining today. Got an exciting conversation ahead of us and for all of you LinkedIn friends out there, thanks for joining Sydney and myself. For those of you that I don't know, my name is Eric Sugalski, I'm the founder and CTO of Archimedic. Tell you a little bit more about Matic later, but let me set the table for what it is that we're going to be talking about today with Sydney. The title of this is Breaking Barriers in MedTech Fundraising. And so for those of us that have been in the MedTech field over the last couple of years, we've realized that it's been a pretty challenging environment in order to raise funds. A lot of the investment dollars are going into AI and software, and MedTech has really not gotten a lot of love from the investors over the last couple of years.
Eric Sugalski (00:57):
So it's been a challenging sector to be in. There's some additional challenges that Sydney and her team faced as well. So she's a young female founder, and so there's some unfair challenges that are imposed on her and her team. She's based in Canada, and so looking for money in the US and other markets being out of the country also comes with some challenges and it's early stage. You're not just in med tech, but you're in early stage med tech. So that comes with a whole bunch of other challenges. So despite all of these challenges, Sydney and her team, they have beaten the odds. They have oversubscribed their pre-seed round, and they're off to a really, really great place right now. Got a great team on board. So with that said, I'm going to turn it over to you, Sydney, kick us off by telling us a little bit about what you're all about, what happened before getting vessels started. Give us your backstory.
Speaker 3 (01:51):
Absolutely. Well, thank you so much for that intro. I really appreciate it. My background's engineering, so I started in mechanical, I specialized in biomechanics and then did my master's in biomedical engineering. I never thought I would do a master's. I went into engineering so I didn't have to do more school, but I actually loved research, so I stayed on and I did some research for my master's. And then in Canada there's a program out of Western University that was modeled after Stanford's Biodesign. So it brings engineers, PhD scientists and doctors together to innovate within medicine, and that was the starting point of vessel. So I talk about that in a little bit.
Eric Sugalski (02:26):
Awesome. That's great. And so let's jump over into Vessel. Actually let me do a quick timeout. I forgot to mention that the format for today, we're going to talk for around 40, 45 minutes or so, but we do want to make sure that all of you are part of this conversation. So we're going to make sure to earmark around 15 minutes on the backend for questions and comments, thoughts that you all have. So go ahead and drop those into the chat. One of my colleagues, rightly McConnell, is here with me and he's going to be sending those over to Sydney and myself towards the end. So we'll try to get to your questions there. So that was a great, great opener. Sydney, let's jump into Vessel. Give us the quick pitch on what exactly is Vessel all about.
Speaker 3 (03:07):
Yeah, so everyone's body changes size day by day and year after year from weight fluctuations, diet, exercise, even the seasons. But changes in leg size are actually dangerous for people like Stevie here that have a leg amputation. What happens when Stevie's leg changes size is it does so inside of a prosthetic socket that does not change size. And so that misfit leads to chafing and blisters just like if you wore the wrong size pair of shoes. But this is actually connecting Stevie to his leg. So that pain and discomfort is extremely debilitating. It means he can't move, and that was where Vessel came in. So we've developed an adaptive volume management system, so you can see a silver disc underneath of his black socket, and that silver disc is really what's powering this whole system. It automatically adapts custom panels against the leg as the leg is changing size throughout the day. So this empowers Stevie to live comfortably. He doesn't have to be fiddling with his prosthesis constantly throughout the day. And it also empowers on the clinic side, the people that are helping care for Stevie and develop his leg. It helps them stay more efficient in their clinic activities.
Eric Sugalski (04:19):
Awesome, great overview. And for those of you that are interested in learning more, there's a QR code, it'll take you to Vessels website. Let's jump back into your entrepreneurial journey. You're a first time entrepreneur, is that right?
Sydney Robinson (04:31):
You bet.
Eric Sugalski (04:31):
And so you have a co-founder, Alexi, who's probably watching right now. Great guy. I've gotten to know Alexi myself a little bit, but take us back to that time when you and Alexi were thinking maybe we should start a company about that moment. What was going through your head at that time?
Speaker 3 (04:48):
Yeah, that was a fun stage. So we were doing that medical innovation fellowship I was talking about, and so I was one of the engineers. He was one of the PhD scientists, and then there were also medical doctors on the team. There's five of us. And we started off the program, which was 10 months interviewing clinicians trying to figure out different problems in med tech that we could help solve. And we interviewed all kinds of clinicians from vascular surgeons to neurosurgeons to physiotherapists, and we got to shadow a doctor at a diabetes clinic. Diabetes is the leading cause of leg amputation. So we met a lot of people that were struggling with this exact problem I was talking about, or their leg changes size and their socket, and it just struck us how archaic the solution was. The solution right now is that you take your leg off and you put a sock on.
Speaker 3 (05:34):
If you bought shoes that were too big and you just put three pairs of socks on, you're like that. There's got to be better solutions out there than this. That was really the inciting moment for us. What got us really passionate was the people that we knew we would be able to help along the way. So we worked on that project as well as a couple of others for the 10 months of the program. And at the end of the program, Alexia and I who got along, I host on fire, our skill sets are so complimentary, whatever he's really great at is not necessarily my forte and vice versa, which makes for an awesome co-founding team. And so we kind of looked at each other and said, all right, well, if there's any time to start a company, it would be now when we've worked on that idea phase and we think we really have something here. So that was the birthplace of vessel. That was June of 2022.
Eric Sugalski (06:20):
Cool. Great. And so one of the things that I think engineers are sometimes guilty of is having this overly technical focus. We get an idea in our head, we get a little bit of tunnel vision and we just go, go. How did you maybe break out of that mold and how did you make sure that you weren't going down that mode of just focusing on the tech? Was there anything that you were doing in the meantime to kind of evaluate the clinician's perspective or the end user's perspective? What was that process like and how did you weave that feedback into the overall product?
Speaker 3 (06:51):
Yeah, it's definitely a cliche that engineers just come up with a product and then try and fit it into some kind of solution or some kind of problem. And so we really focused on what, I think it was Albert Einstein who said, focus 90% of your time on the problem and 10% of your time on the solution. And that was exactly what we did. So we interviewed clinicians, amputees all the way along as well as anyone who's involved. So caretakers, physiotherapists, physiatrists, anyone that we could talk to that was along that patient care pathway. And just created a very clear picture of what a day in the life looks like for someone living with amputation or limb difference and someone who is a prosthetist. And then we were able to piece together what are those kind of key gaps and poor socket fit obviously kept coming up over and over and over again, but when you focus on all of the other elements of the patient journey as well, you can see what the solution needs to be and how it would fit within that pathway.
Eric Sugalski (07:45):
Got it. Great response. Okay, so let's talk about fundraising. That's the meat of this conversation, early stages. How did you get going? Was it friends and family? Tell us about what was the initial kickoff for getting funds in the door?
Speaker 3 (08:00):
Yeah, so very, very early days was all grant funding, so it was different incubator accelerator programs here in Canada that have a little bit of funding attached to them as they're kind of helping you build that out. It was pitch winnings, small grants, that kind of thing. And then about a year in, we did have some early investment from friends and family and from Techstars, and so that also really helped to just jumpstart the company in the early days.
Eric Sugalski (08:21):
Yeah. Tell me a little bit more about Techstars. Why did you get involved in that? What was the process like? What did you get out of that experience?
Speaker 3 (08:28):
So as a Canadian company, but knowing that the US is going to be our first market, we really knew that we wanted to embed ourselves in the American ecosystem to be around other American founders, American investors. We knew that that was the space and the culture that we needed to be in. And then on top of that, Texas was physical location of state we really wanted to be in because there's a high rate of diabetes there, but there's also a high population of veterans, and veterans are a population that is inordinately affected by amputation. And so it made sense for us to be physically located there. So when I was looking at the different Techstars program, Techstars Physical Health Fort Worth was one that really stood out to us. We'd heard from other founders that they had an amazing experience. The feedback was that the managing team is what makes or breaks any of those kinds of experiences, which is true of any accelerator. And I can say is definitely true of our experience because we had the most amazing shout out to Jordan and Trey who really led the charge there, and it was a fantastic experience.
Eric Sugalski (09:30):
Awesome. And so coming out of Techstars, did you jump straight into pitching angel groups and different types of investors right after that? Did that happen throughout the course of Techstars as well? Tell us about the early stages of pitching.
Speaker 3 (09:44):
Yeah, you take a step back and you do a whole lot of prep in advance. We were doing a lot of preparation around what kinds of investors are we going to want to be pitching VCs versus angel groups, who is that going to look like? Our filtering criteria was like med tech, so anyone in med tech, few and far between anyone who has a focus on female entrepreneurs or young entrepreneurs, and then just kind of general early stage groups as well. And we came up with this big giant list of people that we were going to go after that was during Techstars. They were extremely helpful in helping us build out that list. We started chatting with some people very much ask for advice kind of approach to early networking, getting to know people, and then we were able to launch the fundraise after that in the new year, so in 2024. And that was when we took the list and we really hit the ground running and I just emailed and LinkedIn messaged and called as many people as possible for the better part of a year.
Eric Sugalski (10:39):
And so I like that asking for advice theme. Was that something that was, were you genuinely looking for advice and feedback or was that more of a casual way to try to have these conversations with investors without seeming too pushy on the investment front,
Speaker 3 (10:55):
Honestly, it was 50 50. So as advice I'd gotten really early on and the advice was ask for money, get advice, ask for advice, get money, and I really took that to heart. It fits in the theme of just general networking. The power is in the network, so the more people that you know and you talk to, the more people either want to invest in you or can think of you later on, which was super helpful. So that was the strategy that we employed, and honestly, you do learn a lot. Wasn't asking questions that I didn't want to know the answer of it was questions that I thought would be super helpful to people who had that background expertise.
Eric Sugalski (11:27):
Yeah, yeah, makes sense now, I mean advice is a little bit of a tricky thing. You've got advisors, you've got maybe a clinical board, you have investors, and if you listen to everybody's advice, you're going to be going in a hundred different directions. So how do, as an entrepreneur that has a vision, how do you separate the signal from the noise there? What's your philosophy or how did you go about that process?
Speaker 3 (11:52):
That was a learning curve for me because I'm a people pleaser, so I would like to listen to everybody and do everything everyone says, and you just, A, don't have the time. B, the bandwidth, and C, it's such conflicting advice sometimes that you can't actually do everything everyone wants you to do. So I really started take into account where is the advice coming from under what context, from who, what is their background? And you can kind of start to prioritize things that way. But really what happens is you've got this overarching vision and as long as you stay really true to the vision of the company and what you're trying to build, you can use that as a bit of a filter. So things are constantly shifting and changing all the time as you learn new information, but you're able to keep the goal of the company and the trajectory of the company fairly stable.
Eric Sugalski (12:37):
Yeah. Did you ever find that there was maybe conflicting feedback from what the market was telling you and maybe what investors were pushing you to do? I would imagine that that's a really difficult conflict to resolve when you need capital in order to move forward, but you also want to build a product that is going to have demand in the marketplace. Did that come up and how did you get through it?
Speaker 3 (12:59):
Oh yeah, that came up. That was definitely a challenge because people are really giving feedback or asking questions from their experience. Of course, they're going to have things that they want to share with you. And oftentimes, I won't say all the time, but oftentimes it's from the goodness of people's heart. They really are trying to help and to guide you. So as long as you take it in with that mindset, you also have to remember that you are the CEO or the co-founder or whatever of your company or the creator of this company. And so you are the one that actually knows the space and the device and everything that you're trying to do the best. So what I would always do in those situations is I use the kind of catchy phrase, if you will, of thank you for giving the opportunity to clarify, and then I would maybe bring in some knowledge that I had of the field. And prosthetics is really interesting. It's not like that. It's kind of this way or what you can do is you can also ask, oh, interesting. Tell me more about that feedback. Is that something that you've experienced before? And if they can tell you what the experience was like for them, you can take the pieces that apply to you versus the pieces that maybe don't apply and use that in your answer as well.
Eric Sugalski (14:04):
Yeah, yeah, that makes a lot of sense. I think if you get into the mode during investor conversations of no, you've got it all wrong, it's actually like this, then you're going to get a wall in between you pretty quick. But if you use that as an opportunity to maybe weave in a different part of the story that is compelling or important for other people to understand, then that seems like a nice way to position it. So that makes a lot of sense. Give us a sense of this process when you're talking with investors at the early stages, what kinds of numbers are we talking about? Did you get commitments by talking to half a dozen investors or what was that process like for you?
Speaker 3 (14:46):
Not even close. So lots of people, you're just constantly talking to people. It's interesting the number of conversations you have to have to get to investment shifts with every group. Some groups are a lot more structured, like an angel group for example. You pitch sometimes at an office hour, then you pitch to the committee, then you pitch to the whole team, then you do due diligence. So there's tons of stages. And then other people, I sent a deck, had a conversation and they were in, it really depends on the individual themselves, but people have asked me so many times, how many times have you pitched? And I haven't found the time or made the time to actually count, but it would be hundreds. The list of people that I have on my investor list is 700 and something, and a lot of those were the people that I reached out to in the early days.
Eric Sugalski (15:31):
That's the pitch. Those are the conversations, the pitch that reaching out to people. I would imagine you have maybe 10 times that number of the number cold outreaches in order to get those 100 conversations, right?
Speaker 3 (15:44):
Yeah, a hundred percent.
Eric Sugalski (15:45):
Yeah. Okay. So let's talk about some of the early objections. People weren't saying yes right out of the gate. What were some of those objections that you received?
Speaker 3 (15:54):
I think you touched on it right there, which was early. So a lot of people were very focused on the early stage of the company. I think that that was a little bit of market dynamics at the time. So people were, because of the way that the market was, people were focused on a bit more later stage investments. So even pre-seed people were looking for quite a bit more than just an idea maybe they were looking for in 20 21, 20 22. So I would say that stage was a big factor for why people said no. And then med tech is challenging. It's a bit of a different space than a lot of other software type spaces. And so there were some folks that had issues with hardware, had issues with how quickly you can scale things like that. But I would say, oh, and then the other is a niche market, which prosthetics is a massive market and that was a fun opportunity for education, but it's definitely that was the perceived notion.
Eric Sugalski (16:47):
So let's dive into that a little bit though, because I think that that's relevant to a lot of entrepreneurs that sometimes investors get really hung up on. It's got to be the multi-billion dollar market. And sometimes if you go too broad and too general, the solution can be a little bit overly general. There's a saying in design, if you try to design for everyone, then you end up designing for no one. And so as an entrepreneur, how did you navigate that? It's a big enough market, but maybe we're looking at a certain segment of the population that is much more appropriate and primed for this type of product.
Speaker 3 (17:23):
Entrepreneurship is basically just walking a bunch of tight ropes all the time and constantly trying to balance two truths at the same time, which are the two truths you said. You have to be able to have a large enough market that you can scale and you can grow effectively, but you also have to be focused enough that you're able to do that successfully. And so we were just able to, I think, articulate the story of this is where a vessel's at right now. This is our flagship product that we want to bring to market. This is why that's going to work so well, but here's the big opportunity and here are the reasons why that opportunity's only going to get bigger based on the market itself, but also based on the products we want to bring to market.
Eric Sugalski (17:59):
Got it. One of the things that comes up at Robinhood, which is where we met, so I'm a member at Robinhood Ventures, which is an angel group in the Philly area. One of those topics was valuation, and it's a topic that always comes up with the deals that we're working through. How did you determine what your valuation was going to be? Were there comps that you were looking at? Was it advisors giving you input? What was that process like for you?
Speaker 3 (18:24):
Yeah, so we had this three stage process. So the first stage was as you just mentioned, comps. So we were looking at competitive devices, comparables in our market, in adjacent markets, and we used those and some models like venture capital models that we found to create models of what we thought the valuation would look like based on those other companies. And then we took all of those and we averaged them. Once we had that average number, we went onto Carta, and Carta has so much data, and so we went to Carta and we just saw what are the trends for pre-seed MedTech company, if we could find in Canada and North America, those kinds of numbers. And we were right in that ballpark, right in the middle, honestly. So we're like, okay, that sounds about right. And then the easiest way to know if you have a valuation that makes sense is to start shopping that around. And if people do give you money on that valuation, then you've probably got a fairly reasonable one. So that was exactly what we did and started to get some money coming in, some checks coming in on that valuation.
Eric Sugalski (19:20):
Yeah. Okay, great. And so this was a pre-seed round that you just oversubscribed on. Why pre-seed versus seed? How did you delineate that? How did you say this? What was the reason? Was this anticipating future rounds or tell us more about that.
Speaker 3 (19:34):
Yeah, so what we focused on first was how much money do we need to raise? So our goal was $1 million us, which as you said, we did oversubscribe, but our goal was 1 million. And we had built that out based on, okay, what's the next milestone we need to get to? How much money is it going to take us to get there? So that was how we came up with the 1 million. And then 1 million could be in some cases a pre-seed, and in some cases a seed kind of depends. So really I think of it as more of a marketing play. And so we said pre-seed because we were such an early stage when we started fundraising, no one had worn the SA yet, so we'd done plenty of bench talk tests and had de-risked the company in many other ways, but no one had actually worn it yet. And so with that in mind, we were like, just to set the stage for everyone's expectations, we'll call ourselves precede.
Eric Sugalski (20:18):
Got it. Makes sense. Okay, so I want to go back to the numbers for a second. You said you're pitching a hundred investors to close this round, and those were pitches. Did the story say fairly constant? Was that the vision for the product, the messaging, all of those things? Was the pitch deck the same all the way through, or was it kind of a constant evolution? Talk more about that process.
Speaker 3 (20:41):
Yeah, it was definitely an evolution. So again, the vision of the company and what we were bringing to market, that was always the same, but little things would shift. So for example, in April of 2024, so we had started fundraising at the beginning. In April, 2024, a new reimbursement code was passed in the United States specifically for adjustable sockets. So that in terms of an argument for why you should adopt a new device, there's already a reimbursement code in place that makes the argument so much stronger. So that really shifted the conversation that we were having with investors. That was one of those turning points, if you will. Once you got that code, people were like, oh, wow, that's super compelling. And so that changed some of the numbers in the deck and things like that. So there are a couple things that we'd shift along the way, but again, the product stayed consistent even if the look of it or the features shifted slightly, but everything else was fairly consistent.
Eric Sugalski (21:31):
Got it. That's really interesting. So the messaging around the business, some of these trends that might be taking place in the market or the code or sometimes I would imagine just the way that you're talking about the problem that you're trying to solve, maybe that's evolving as well. So the messaging changes a little bit, but the product stayed fairly constant.
Speaker 3 (21:52):
Exactly. Also kind of depends on the audience. There were a few folks that I would start pitching to and they go, oh, my brother's an amputee. Okay, scrap that part of the pitch. I'll just start talking about this other thing. Because they already get a lot of the pain points that for people like myself that don't have a loved one who has an amputation, you have to learn all of that kind of from the starting point. So that was what tailored a little bit.
Eric Sugalski (22:14):
Okay, great. So you just talked about the reimbursement code, that being one of these things that all of a sudden maybe took some risk off the table for investors. Were there any other tipping points for you where you overcame a certain milestone or accomplishment and that also opened up access to investors? Anything else come up?
Speaker 3 (22:36):
Absolutely. The biggest one for sure was once someone tried the device on that was the biggest. So Stevie Crawford who you saw the image of, he tried it on in the summer of last year, and that was like once we hit September and we could tell people, oh, well Stevie's already worn the socket, then people were all in. So that was a major turning point right around September as well. We got our patent approved, so it was allowed in the United States, and that was another turning point for people where they're, okay, patent granted reimbursement code, someone's wearing it, likes it done. That was really helpful.
Eric Sugalski (23:07):
Got it. And with Stevie, when you were getting the socket on Stevie, was there a lot of marketing around that was a lot of video. And were there other people like Stevie that you were engaging through this process as well?
Speaker 3 (23:21):
Shout out to Trace Wright, who is our prosthetist and our advisor, because I hadn't been thinking of the marketing side of things when Stevie was trying it on the first time. And so we were using it really as an education piece. We wanted to know, okay, he's trying it on for the first time. It worked the very first time for score, but what usability things can we change to make it better and really hit the ground running once we hit the market? So were working on a couple of those more minor details, but the PR side and the marketing side Trace was actually the one who, he's got a really nice setup at his house for videography and things like that. And so he made this beautiful video with Stevie, giving feedback, asking questions, both interviewing Stevie, but then also giving his own insights as well on more of the product prosthetist clinic side. And that's a video that I've used many, many, many times afterwards because I can use that as an education piece, as a marketing piece. So I'm very grateful that he had that foresight.
Eric Sugalski (24:19):
That's awesome. That's great. So 100 pitches, let's calibrate the other entrepreneurs that are tuning in here. How long does that take to go through that entire process, reaching out, having conversations from starting that pre-seed round outreach to the moment that you closed that round? What are we talking about there in terms of time?
Speaker 3 (24:40):
Yeah, I would say eight months-ish, eight months to a year, depending on what you consider active fundraising. And I would say it was probably more than a hundred pitches, honestly, if you count the number of people that I pitched in terms of had a video conversation with, I'm sure that's north of a hundred plus, all of that, as you were saying before, cold outreach and things like that, it really balloons. So in terms of video or live pitches around a hundred or more, and it takes eight months because you, we had a few months of ramp up time. So starting to have those initial conversations before we had actually created a valuation for the company. So that was more information gathering than anything else. Practicing the pitch, practicing your answers, and then you really start to hit the ground running. Once you have that valuation in place, you're starting to get some of these milestones. The reimbursement code gets passed from that point onward. It was about eight months.
Eric Sugalski (25:35):
Got it. Eight months. So you need a fair amount of runway to carry yourself through that eight month period of time. So some of
Sydney Robinson (25:41):
That, yeah, you do
Eric Sugalski (25:42):
The grants and other things that you did regarding the outreach. Were you reaching out cold or were you trying to focus on warm leads? Hey, I know these connections on LinkedIn and I see they're connected with this person. Can I work a warmer lead that way? How was that process? Was it all cold or were there some warm leads as well?
Speaker 3 (26:00):
As many routes as you can take to find people is what you have to do. So I was cold, cold emailing didn't work as well for me. Maybe there's some tips other people have for that, but cold LinkedIn worked really, really well, honestly. It was like, Hey, here's my startup. This is what I think we have in common. Let's chat people. Were pretty receptive to that. So the cold outreach worked fairly well. And then as many intros as you could get. So I was thank you to all of my fellow founders who I reached out to on LinkedIn. I'd be like, Hey, I see you're connected to this person. Can you give me an introduction? And I would send, let's say I was reaching out to a venture capital firm, I would reach out to maybe three to five people at that venture capital firm, high up people and down to associates. Associates are typically the people you engage with first anyways. And then I would reach out to four or five founders or other people in my network, not necessarily just founders, and try to get warm introductions to each of those individuals. So that's why it takes eight months. It's not an overnight thing.
Eric Sugalski (26:59):
It's not, yeah. And so throughout that process, eight months of trying to raise funding, did you and Alexia ever look at each other and wonder, I don't know, are we going to be able to pull this off? Should we throw in the towel here? Did that ever come to mind? And if so, how did you get past it?
Sydney Robinson (27:18):
Oh yeah.
Speaker 3 (27:19):
When people say it's the highest highs and the lowest lows are in startups, they're not kidding. I say that all the time. Yeah, there were definitely a few dark points where you're like, oh my God, what did we get ourselves into? How are we going to make this work? I would say you need, people will tell you, be connected to the problem, really get connected to the people that you're trying to help and what's, why are you doing this? Really be connected to that. And I would say you need about three different whys because sometimes the one why just isn't enough to keep you going and you need to be able to tap into these different emotional drivers for why you're doing something. So for us, and that's why I find Med Tech so compelling for us, it's really easy. It's like I talk to amputees weekly, and so sometimes daily and prosthetists, I'm speaking to Prosthetists all the time, so you can really easily connect with the people that you're going to help and that you're going to solve and the impact you're going to see in their lives. That's pretty quick. That's pretty easy. But then you can also connect to your team. You don't want to let your team down. What are your own personal ambitions, things like that. And I find if you have a couple of those, it's very helpful.
Eric Sugalski (28:24):
Yeah, makes sense. Makes sense. You've already mentioned a few of these, but is there anything that you would have done differently? If you could go back to the eight months when you were starting this process of fundraising, what would you do differently then?
Speaker 3 (28:37):
Yeah, I would listen to some advice that I decided not to listen to at the time. So one of those pieces of advice was if you have a list of investors and these are your A list investors, the people that are so well aligned with what you're doing, of course they're going to invest. And then you kind of have people that you're like, well, it's a bit more of a stretch, but still a great fit for them. And then you have another list that's like, that's a pretty far stretch. They say start with those folks first. The people that it's a bit of a stretch, they could invest, but it's a bit of a stretch and you can use that group to kind of practice, and if they do invest, awesome, but if they don't, it's not a shock and you can kind of get your feet under you.
Speaker 3 (29:13):
And I said, well, that's ridiculous because I would like to do this as fast as possible, so I'm going to reach out to my A-list investors right away. And I would say that that is then you're doing all the things that you were supposed to be doing before you were practicing and things like that. So I would definitely listen to that piece of advice. We did find amazing investors that weren't on our list. Your list always keeps growing people that you're connected to or introduced to or learn about or whatever. So the list is constantly expanding and your A list people shift around. I would say that was one of the key pieces of advice that I wish I listened to and that I will listen to definitely for our next round.
Eric Sugalski (29:48):
That's great advice. So what's next for Vessel in terms of you need to now deliver, you've gotten the pre-seed round and you've oversubscribed by almost two x, so a nice size round there, but what are your goals? What are you trying to accomplish with this round of funding?
Sydney Robinson (30:06):
Well, now it's just bringing the product to market simple.
Speaker 3 (30:09):
So all of the different, I'm being facetious, it's very complicated. There's lots going on, but it's a lot of the focus now is finalizing the design to do a little bit more testing and then bring the product to market. Any final checks and balances we need to fit hiring people to actually make all of that happen. We are doing the sales and marketing side of things, really prepping the market to get ready for when we are ready to start sales, we can just hit the ground running because people know about us and are aware, so we're going to trade shows and conferences and publishing things and redeveloping a website, all kinds of stuff like that. So there's a lot involved right now, but really that's our goal is actually get this product in the hands and on the legs of people that need it.
Eric Sugalski (30:52):
And so you need to start thinking about your seed round at some point the next round of funding that's going to help you maybe scale up or how are you thinking about that? Is it the same investors? What kinds of data are those seed stage investors going to be looking for? What are your thoughts there?
Speaker 3 (31:08):
So once we get to the seed stage with this one bringing us into the market, seed stage is really going to start looking at that revenue. So what are revenue numbers? What's our growth looking like? How are we doing that way? So that's what we want to make sure is performing well. When we go to the seed round, I think that the investors will shift around a little bit. Our pre-seed raise was mostly angel investors, which was awesome. People who were really keyed in with what that mission, vision, and value is going to be of what vessels bringing to market. And so I believe that our next round, we'll also have people that have that core level of attachment to what we're building, but might be a more institutional focus when we start to ask for some of those larger check sizes. So we will obviously welcome our previous investors to do follow on, but then we'll have probably some institutional that start to come in as well.
Eric Sugalski (31:57):
Got it. And so the funds for the seed round, is it going to be more focused around sales and marketing and distribution? That's the intention?
Speaker 3 (32:04):
I believe so, yeah.
Eric Sugalski (32:05):
And have you given thought into what size round you are going to be looking for that seed?
Speaker 3 (32:10):
We have. We've started, as you can imagine, a lot of the financial projections are changing constantly. Financial projections are a fun task that every founder just loves doing. And so I would say that with those fluctuating around, we're really, really keyed in on what that raise amount needs to be. So it'll certainly be more than what our pre-seed was, but that exact amount is yet to be determined. Stay tuned.
Eric Sugalski (32:31):
Alright, cool. So there are three things that I heard during this discussion that I think are really interesting and maybe noteworthy for the other entrepreneurs that are here. The first thing that I heard from you is that when you're going out and talking with investors, asking for advice rather than funding and sort of using those initial conversations as your practice ground where you're refining your message, you're maybe kind of crafting the story in a little bit of a different way. But I think that's good advice of asking for getting that feedback rather than making it a hard sell right out of the gate. So that was one thing. I also liked what you said about the vision of the product. So as the entrepreneur and the founder, you have a vision for what the product and the business is going to be in the future.
Eric Sugalski (33:19):
You need to stay true to that because if you listen to every single person, they're going to take you off course and they're going to maybe take you down a path that is inconsistent with your vision. So staying true to that vision. But what I heard from you is maybe being flexible on the messaging, and so thinking about, well, what's important to this particular investor? It might be different from what's important to the other investor, and maybe they're savvy in one area, but they know very little about the other. And so kind of crafting your message or maintaining some flexibility in your messaging to satisfy the unique needs of those investors or advisors. And then the third key piece that I heard from you was there's often a tipping point. There's a point where all of a sudden investors are going to be on board and maybe you've taken some risk off the table.
Eric Sugalski (34:06):
And in your case, it sounds like Stevie getting the socket on Stevie and getting some real world feedback from him, the reimbursement, the patent, this was sort of the tipping point where all of a sudden a lot of that risk got pulled off and investors really came together to allow you to close that round. So I think those are three really good takeaways for other entrepreneurs that are facing a similar situation. So I work with a lot of early stage entrepreneurs that are younger, first time entrepreneurs, and I think one of the challenges for them often is just getting out of the gate. A lot of young entrepreneurs, they kind of have imposter syndrome. They think, oh, I don't know if I should really be doing this. Maybe I should get more experience first. Maybe I should do something different or pull on a seasoned CEO to kind of take things over. I think you're a great example of somebody that has sort of beaten those odds and has done it herself. What advice would you have for these entrepreneurs that are maybe a little bit hesitant about that side?
Speaker 3 (35:06):
Yeah. Well, I would say that you are not alone. Everyone feels that way. Even seasoned entrepreneurs feel that way. Everyone gets imposter syndrome and everybody had to start somewhere. So serial entrepreneurs had to start with the first company at some point. And the learning that is involved in starting the first company is so fantastic and so exciting. And I would say that you are not alone. Lean on all of the people around you. Trace was the one who said, let's do a marketing video with Stevie in it. Awesome. That's not something that I had thought of. So bringing in those people that are intimately familiar with your industry, with your journey, people who you can look up to. I always showed that Rachel Bartholomew, who's the CEO of High Ivy, she was my first female CEO crush or person that I really looked up to who was my mentor, and I was able to ask her a bunch of questions and she was always available.
Speaker 3 (35:55):
People really love to help other founders. So I find now people are reaching out to me asking for, can I meet with you and ask you some questions about this or that? And that's awesome. I love that. I want to be able to give back because so many people helped me get to where I am. So don't be afraid to ask for help or ask for guidance. Try and find people that have been in your shoes. There are tons of people who've been where you are and are happy to share their story. And if there's any ways that you can avoid some of the pitfalls that they fell into, happy to share that too. So yeah, lean on your network.
Eric Sugalski (36:28):
That's awesome. Great feedback. So how do people find out about you and Vessel? What's the best way to get in touch? There we go.
Speaker 3 (36:36):
Please scan this QR code. This QR code will take you to our website, but if anyone is on LinkedIn, you can also befriend me on LinkedIn. Happy to connect, follow Vessel on LinkedIn. We post a lot on our page as well. Those are kind of the easiest ways. Our website also has a form you can fill out that says if you're an A PT or a prosthetist or an investor or someone else entirely, and you can put in why you want to be connected. We always follow up with those kind of cold outreaches. So you'll be getting me on the other end of that.
Eric Sugalski (37:03):
Yeah, that's awesome. And a little bit about Archimedic. Archimedic is a medical device development firm. We focus on design, but a lot of our work also pulls in the regulatory and the go-to market side. So a lot of the things that Sydney was talking about today of kind of understanding what's happening on the market side, we believe at Archimedic is really essential to designing the right product and making sure that we have the right regulatory strategy. So if anybody's interested in that, I'd be happy to connect with folks offline. Feel free to reach out offline. I also have a newsletter that I publish every once in a while. It's called MedTech Mindset, and you can subscribe through this QR code here. So if you do that, no spam, it's content and perspectives that will come straight to your inbox. So check that out. So at this point, I think we're ready for q and a. What do we got rightly? First question here. Was it purely coincidental that the new reimbursement code was approved or did Vessel have a hand in that, or did you purposely time your launch with that approval?
Speaker 3 (38:07):
What you'll learn about startups is that there's an element of startups that is hard work, but there is a very large part of startups that is pure luck, and that falls into the Pure Luck category. The things that were not part of pure luck were we knew what the market, we knew what the market trends were. We knew that people were really starting to get curious about adjustable sockets because there's manually adjustable sockets that are available on the market that were kind of gunning for this reimbursement code. So we knew that they were out there, we knew that they were the hot topic, which was one of the reasons why we wanted to bring this automatically adjusting solution to market, really increase access to an adjustable socket technology. So we knew that there was talk of new L codes. We also knew that there was already a miscellaneous code. So our go-to-market strategy involved some of the codes that existed plus this miscellaneous code. But then, yeah, it was pure luck that it got approved when it did.
Eric Sugalski (38:59):
Great. Okay, another question here. So at what point did the fundraise do you cash in the checks from the investors that committed early, but you haven't closed the round in its entirety? What's that look like?
Speaker 3 (39:11):
There's a couple of different ways that you can do that. So when I was talking to other founders for a priced round, it's a little bit clearer because a priced round, everyone kind of wires all on the same day. A lot of coordination goes into effect, but everyone wires on the same day because we were running an angel round, people would just wire the money as they signed the term sheets and as the investment came in. So that was one of the ways we had a lot of grant funding that was able to keep us going, grant funding and kind of early investment. Again, Techstars friends and family that was able to keep us going throughout the fundraise. So we didn't really need to tap into any of that money, but we were accepting checks as they came in.
Eric Sugalski (39:46):
Got it. Okay. Another one here. So most startups need to pivot in order to find success. If you had to pivot why and what were they? And secondly, how did that affect your fundraising and valuation? Good
Speaker 3 (39:58):
Question. Good question. So we did not have any pivots that affected the valuation. We didn't have any pivots that affected the fundraise as far as the story that we were telling. I think that some of the things that affected the fundraise were where we were seeing traction. So I was seeing a lot of interest in angel investors. I had been pitching to a lot of VCs and I wasn't getting that kind of interest. And so I was like, okay, let's focus more on the angel group. So that was one shift that we did called a shift maybe as opposed to a pivot. And the technology really stayed very consistent throughout this whole journey. Features of the technology changed and features that are going to be available as our V one going to market a little bit different than maybe V two after we've gone to market, we're bidding what those features need to be. But I wouldn't say that there was actually a big pivot that we needed to do, thankfully.
Eric Sugalski (40:54):
Okay. Okay, good. Another question here, are there any particular databases or sources of investors that you found helpful along the way?
Speaker 3 (41:01):
Yes, there are, and I can't think of them off the top of my head, but I would be happy to. I'm sure I can put them in the page for this LinkedIn live event, but I know that we worked a lot with Techstars as well on this. So they were able to send us quite a few. And then there's a lot of databases available online. We did use PitchBook for sure, but there's a lot of databases online. If you Google VCs and MedTech VCs and MedTech in the us, we did a lot of that more boring outreach, if you will, just to start getting a list together. And then you can, once you've found one of them, there's some that pop up that are similar as well. So that was sort of how we went about it.
Eric Sugalski (41:38):
Got it. Makes sense. Alright, so here's one. You mentioned that management teams of startup support programs can make or break the experience. Can you expand on this please? What should management teams focus on that is truly helpful and what is unhelpful?
Speaker 3 (41:55):
Ooh. Okay. So focus on it from more of the, I'll focus on it from both perspectives. I'll focus on it from the founder perspective. So what I meant by that comment was there are some management teams. So Techstars for example, has a bunch of different locations, a bunch of different programs that are constantly going on and there's different managing directors and then managing staff at each of those groups. And what I was told was that the managing director really makes or breaks it. So how dedicated is the managing director to their founders? How much effort do they put into making those connections to their founders? How proactive are they? Et cetera, et cetera. So I spoke with a lot of founders ahead of time to learn about Trey. So Trey Bowles was our managing director and how much time he spends with his founders and how helpful he's and things like that.
Speaker 3 (42:40):
So I would say do your due diligence and just ask about the managing team to see do they have the right connections, do they have the right background expertise, but also are they willing to hustle with you while you're hustling on your startup? From the program standpoint, what things should a program keep in mind? A couple of things. I would say that a founder needs three areas of support. A founder needs general overall strategy and advice. I don't really know what to call that, but how all of the pieces are going to work together. Overall strategy founders also need very specific strategy. So for us, regulatory, because we're in med tech, that's something that med tech founders need to be aware of and need very specific guidance on sales and marketing. That's a very specific thing that people need guidance on. You want some either growth coaches or advisors or whatever you want to call them in that category as well that founders can reach out to for help. And then the third bin is founders also don't have a whole lot of time. So we also kind of need people who can do some work for us. So if we were able to leverage, let's say a regulatory consultant to actually build out the framework or build out the questions that we need to get started, or a hiring manager that can build out our onboarding package, those kinds of resources are immensely helpful for startups instead of just giving us homework on top of homework on top of homework.
Eric Sugalski (44:07):
Got it. That makes a lot of sense and it kind of feeds into this next question here. So what kind of external partners or teams did you find critical for support throughout this process?
Speaker 3 (44:17):
We tapped into a lot of different startup support. I don't want to say accelerator because there's a bit of a stereotype of founders jumping from accelerator to accelerator to accelerator, and that's not always looked favorably. I would say that if you can leverage the community that's available at those different accelerator programs, that's where you get a lot of benefit from it. So we were able to reach out to a few different programs in Canada, for example, velocity was a program that we leaned on very heavily or ctech or Medical Innovation Fellowship, and there's a lot of them, so I can't list them all, and I'm not picking favorites, but I would say that those were some of the groups that we leaned on where they had specific expertise in areas that we needed. They had access to fellow founders. So that's a really great way. I was actually connected to Robinhood Ventures through a fellow founder that I went to Techstars with. So you need these kind of peer-to-peer collaborations. Did that answer that question?
Eric Sugalski (45:12):
I think so. It makes sense. Another one here, so prosthetics typically fall under class one or two medical devices. Do either of you have thoughts on the fundraising landscape for class three medical devices, particularly in the preclinical stage where market entry can be at least five years out?
Speaker 3 (45:29):
Yeah, that's a tough one. Feel free to jump in on this as well, Eric, if you've got experience with it from my friends that are working on more like class three type devices. I do know that a lot of folks in the very early days will focus on doing research at universities and colleges because they often have a research budget. Sometimes they have PhD students and master's students that can work on this. You would need to think of the implications for the IP unfortunately, but that's nature of the beast. But what's helpful there is that you can use research dollars to do research in this very high risk environment to prove out the idea and then start going for investment. So I know that a few people, a few companies in kind of the class three or even pharma space will do research for years before they actually start to do investment. I'm not sure if that's been your experience, Eric.
Eric Sugalski (46:22):
Yeah, it is. I think that it's, first of all, I'd say it's a tricky and unfortunate situation right now that a lot of investors are steering clear of class three devices. And it's unfortunate because in my point of view, that's where there can be huge, huge medical impacts if we're developing lifesaving life-changing technologies, which is kind of the definition of a class three is that it's supporting life in some way. But because of the long timelines, I think what's alluded to in this question, a lot of the clinical data that's required in many cases earlier stage, smaller funds, angel groups have a hard time engaging with those types of projects because the pathway is going to be so long and it's going to be fairly expensive in order to get through. So I agree with what Sidney was saying about tapping into non-dilutive sources of funding as much as possible to do that early clinical work, take some of that clinical risk off of the table. But then it's also targeting probably some of the bigger institutional investors that are able to write bigger checks and focus on that clinical risk when it is time to get into the human studies. It's a tricky situation. I don't think there's a silver bullet right now, but that's what I would say to it. Okay. So another one here. In addition to Stevie, how many other patients have worn the device and how do you see that patient base expanding over time?
Speaker 3 (47:56):
Yeah, so we're focused in the early days on working with patients that are higher activity, very cognitively aware and can give a lot of feedback. We want people that do have sensation in the leg, a lot of people don't. So we want people that do have sensation in the leg and can give us that feedback. I can feel this, I can't feel that, whatever it might be, so that we can use that in the design feedback. Right now we focused really on just working with Stevie, and the reason for that is we wanted to keep things as consistent as possible. In the early days, a lot of the feedback that he was giving was more usability type feedback. So it was things that we could easily implement and kind of go back to him to test and see what has that changed in other elements of the design.
Speaker 3 (48:37):
Sometimes you change one thing and it unfortunately affects something else. So we kind of went back and forth with him a few times and now what we're doing is making a few final changes before we really build it out into any more of those groups so that the next stage is going to be working with that type of group that I mentioned and then we'll expand it from there. So more to the broader audience of people that are maybe part of the aging population who do or do not have sensation in the leg and maybe have some other comorbidities like diabetes that's common in the industry.
Eric Sugalski (49:07):
Great response. Okay. Another one here. When you're deciding how much to raise, how did you decide to break up the development process and expenses that you were seeking to cover and therefore the ask in each route?
Sydney Robinson (49:19):
Yeah,
Speaker 3 (49:19):
That's a good question and that's a challenging one. I would say more of an art than a science, but having those early conversations and asking for advice instead of money early on, you get a picture of what different staged investors want to see. So when I was chatting with pre-seed investors, they wanted to see people wearing it. They wanted to see certain elements of the technology de-risked, whether that was granted patents or something else. They wanted to see some kind of market driver, like the reimbursement code being passed, things like that. Whereas when I was chatting with seed series A stage investors, that was when they were wanting to see product market fit, growth in the market, et cetera. So when I looked at those two bins, I was like, okay, well these people are before market and these people are after market. So the deciding factor in between is going to market, so I need to raise money in order to be able to fund that, and then I need a couple of extra months to actually start generating revenue and show some trends, and that's when I'll be raising. So that's how I split it up was what is that next inflection point that the future investors want to see and how can we get there?
Eric Sugalski (50:27):
Makes a lot of sense. All right. And our last question here, so during your development, a reimbursement code was created that was applicable to your device Prior to that, what can you share about your go-to-market strategy that other entrepreneurs without a reimbursement code could use?
Speaker 3 (50:44):
Yeah, so the go-to-market strategy for us ahead of time was there were other codes that we could go for. So with our shock absorber with our device, it uses shock absorption in order to passively, so without any kind of electronics, make that automatic adjustment. So there is a shock absorbing code. So we were able to use that code already that was longstanding in the space. There's also, and if you don't have that at all, there are oftentimes these miscellaneous codes. So the best advice that I have for miscellaneous codes, which are a pain to go after, I won't lie, people don't always love them, but I would say that you have the miscellaneous code and then you just have to make a very strong case for how, although there is an upfront cost, this saves money in the long run for your customer, whether that's the patient. So for us, it saves them taking time off work to come in for really frequent clinic visits. If it's the clinician, it saves them time with visits that they aren't reimbursed for. So non-reimbursed time. And then for the insurance companies or whoever it is that you are selling to, how will this in the long run save them time, money, et cetera.
Eric Sugalski (51:54):
Yeah, I'll just chime in on this because I think that this is one of the most challenging and important topics for MedTech companies right now. A lot of MedTech companies do not have a reimbursement code in place that really they're able to rely on, and especially if you're selling into larger healthcare systems, if you're going to be entering the value analysis process, you really need to be thinking through what those outcomes are that the value analysis committee members or whoever's writing the check, what do they care about? Is it going to be workflow efficiencies? Is it going to be improvement of clinical outcomes? Are there operational improvements really getting clear on those things. That's where the process should start. And then the design needs to be built around that. It needs to focus on what those commercial drivers are. And I think one of the challenges that a lot of companies run into is they build the product without fully understanding and sort of researching some of those downstream adoption drivers.
Eric Sugalski (52:54):
And a lot of times that just results in the friction when you get the product into the market and it prevents the product from moving through. So it seems like Sydney, you and your team did a great job of identifying what some of those key customer insights and commercial drivers were at the front end, and you really kind of adapted the product to suit those. So well done. And I think that's a great model for other innovators to follow regardless of whether there's a reimbursement code involved or not. It's figure out what's going to drive willingness to pay, figure that out early and then make sure that your product is really designed all around that. So I think we're pretty much out of time here, Sydney. This was really fun. Thanks very much for taking time here. We'll talk to you soon.
Sydney Robinson (53:38):
Absolutely. Well, thank you so much for having me. This was a super fun conversation and if anyone else has any more questions, feel free to message me on LinkedIn. Always happy to chat.
Eric Sugalski (53:46):
Alright, thanks Sydney, and thanks everybody for tuning in.
Sydney Robinson (53:49):
Thanks, Eric. Take care everyone.
