My name is Sam Costello and I am the co-founder and CEO at BiomeBank — a microbiome therapeutics company. Our mission is to restore human gut microbial ecology.

I am a gastroenterologist by background and my PhD involved investigating the treatment of ulcerative colitis with fecal transplant surgery. 

The company grew out of that research because part of the process of studying this treatment involved setting up a stool bank — which other researchers and hospitals wanted access to. 

I knew right there that a market existed for our products.

We most recently raised a convertible note for $10.4M at a $39M cap. It took about 10 months from start to finish — it was very difficult market conditions at the end of 2022. 

Fundraising is an ongoing activity for us, but it shifts from a background concern to a more intense effort as the need to raise more capital becomes more urgent. 

We are selling the product in a limited market now, so the main use of the funds will be to reach global scale.

We need significant capital outlays to fund the clinical trials and process development that rollout will require.

We operate in a regulated industry so a lot of our milestones revolve around meeting standards that are set by the FDA. 

Those are items like building a testing facility, to code, and getting the product approved.

After that we are trying to take the model that is working locally for us and scale it globally.

We were first time fundraisers so we focused on people with whom we already had a warm connection and who we thought would be valuable partners.

After we went as far as we could with the people in our network, we knew we needed to start reaching out to institutional investors. 

In the cases where we did not already have a relationship with the firm, we tried to find a connection in our network who had worked with them before. 

Our process has been very targeted so far. For our early rounds we had an anchor investor who convinced us to take our research and turn it into a business. 

We raised funds from friends and family until recently. 

When we raised from institutional investors it only took a few introductions and meetings because we had a warm intro and were doing quite well for an early-stage company in our sector. 

We started by emphasizing that we had already developed a clear path through regulatory approval. 

That is the portion that concerns most investors with a company like this — we had already put the foundation in while we were still researchers.

We also had a clear path to a business that could scale. 

Our first product would not only help us generate revenue, but it would also give us valuable information to help us refine the more targeted products we would develop later.

We also had revenue quite early, which is actually a double-edged sword. It is good because it proves that the market is there, which is rare in a BioTech startup. 

It can also hurt your valuation because investors start using that as the benchmark to value you — like they normally would for a later stage BioTech company.

We also talked about the science underlying our thesis and the specific advantage we would have developing our second and third products. We would have human level data — rather than animal trials — to develop them.

We maintain a data room that we regularly update and give investors access to. 

We also share the progress we are making with the targeted products we are developing. We have over 30,000 isolates that we can use to build targeted therapies from.

Capital has been our biggest bottleneck. Compared to a US BioTech firm we have raised a very small amount of funds — we have to be very diligent with the funds we do raise.

We are very focused and diligent with the capital we do have. We have to constantly evaluate our options to make sure we are investing in the area with the most potential.

We are an Australia-based company so there are some advantages we have here that we would not have if we were a US-based company. 

One important advantage is the R&D tax incentive that the government applies to businesses like ours.

The government invests 43 cents on top of every dollar we raise to spend on R&D for our products — it’s like having another meaningful investor. 

This has helped us with non-Australian-based investors too. It gives them confidence to invest outside their home market to see a big government tailwind like that.

Other BioTech investors would benefit from having a clear path to exit — most BioTech companies end in an acquisitions. 

When an early investor is thinking about joining, it helps to show them the path from day one to Phase II trials. 

Those trials are necessary and have a well-known price tag. They want to feel sure that they can get to a liquidity event despite those high costs.

Books I have found helpful are: Zero to One, by Peter Thiel, Lean Startup by Eric Ries, and Secrets of Sand Hill Road by Scott Kupor.