Episode 62: Financing Biotech and Scaling Innovation at Mercury with Key Opinion Leader Ben Kromnick

What is Mercury? In this episode, you'll learn how they support biotech and healthcare companies and gain insights into early financing strategies for life science startups.

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Serving the entire Gulf South, but recorded in the heart of New Orleans.

Welcome back to BIO from the Bayou, broadcasting from BIO On the Bayou 2024. I'm James Zanewicz, the Chief Strategy Officer for Tulane Medicine. And today's guest is Ben Kromnick, the Head of Healthcare and Life Sciences at Mercury, a financial technology platform that offers solutions designed for startups and businesses and is one of the top providers to biotech companies in the world. He's also one of my bullpen colleagues and one of my new favorite people. Welcome to the show, Ben.

Thank you so much for having me. And thank you for making me one of your new favorite people.

Well, duh. It's a list.

Short list?

Short list. It is a short list.

Great.

People who give good hugs get to be on my favorite list.

Oh my God, that's like the best compliment ever.

Hugs are good, but also, you know what's more important? Biotech.

Let's talk about that.

I want to talk a little bit more about Mercury because I'm always shocked when companies that should consider working with you have not heard of you. And so can you start off by describing Mercury's role in supporting life science and biotech companies? maybe a little bit more of what sets it apart from other financial platforms that cater to startups?

Yeah, happy to. So those 2 sides of that question are really intimately related in an unexpected way. So Mercury was founded fundamentally from our founders' experience and so many of our employees' experience as founders. So many of my colleagues at Mercury have been founders before, or in many cases have an awesome side gig that they are actively practicing the craft of entrepreneurship while building this financial technology company. that is built for entrepreneurs. What's really interesting is the sort of center of gravity of entrepreneurship for so many people is cities like San Francisco, cities like New York, where we're building everything from net new e-commerce sellers to totally innovative AI platforms to consumer social apps and everything in between. Well, biotech doesn't only live in San Francisco and in New York. So while we built these tools really truly for the center of, the center of the bullseye, of entrepreneurship, which is not actually all that specific to biotech. The day-to-day processes, the day-to-day financial workflows, the things you just have to do as a CEO. Oftentimes these are the things that get in the way of your secret sauce, of the thing that you're really building. Things like paying a vendor, things like issuing a new credit card. When your employee spends more than they should have, putting a limit. on that new credit card that you just issued, maybe taking it away from that employee, maybe creating another account because you needed to start an LLC next door to your C-Corp. Those are the things that CEOs just have to slog through. These are also the things that oftentimes CEOs wake up and that is the thing they dread doing the most. When you get onto the Mercury platform, it's so funny. I was working with another colleague of mine who is an innovator primarily in the hospital system space, and he's also a spectacular entrepreneur. I demoed the product to him and he was like, I didn't actually plan to move my business over to Mercury. I just really wanted to see what you were doing, but this makes my life so much easier.

So you saved time.

I saved him time and I actually made it delightful. We are a true product company, and when our users get in there and they start using things, we do those little things that come from the B2B SaaS world, that come from the social app world, that make users actually want to be there and encourage them to get their tasks done. done so they can go work on their novel molecule. And drawing that line from the CEO has to wake up and just do the basic stuff of entrepreneurship, get that out of the way so they can go—

So they can strategize, right?

So they can go be a biochemist. And that's really where Mercury's excellent for biotech. And it's also why we're relatively new in the zeitgeist of life sciences, because we were really targeted at that founder of a B2B SaaS company, of an e-commerce company. And now we're evangelizing that same value of core entrepreneurship into biotech, into life sciences, into digital health, into the artificial intelligence applications across those domains. And it resonates beautifully because entrepreneurs are in a lot of ways purely entrepreneurs, no matter whether they're in e-commerce or they're in biotech.

Yeah, no matter where they've come from. I love that. And so you mentioned the bullseye, and we often don't think about that bullseye being at the beginning of operations, day one. Why is it important for a startup to really start looking at and involving thoughts about finances, financial platforms, banking at the beginning of their operations? And what are the challenges they might face if they don't do that early on and actually wait until later?

There's 2 different sides to that question I think are important. One is, I just hope you don't have to waste a bunch of time working with a banking platform that you just don't like working with, and wasting a bunch of time. It might take you 3 months to open an account. because it's just slow and antiquated. It might just take you longer to issue that card than you really wanted it to. And as a CEO, sometimes those hours are so valuable. Like you are working 10, 12, 14, 18 hours a day. If I can save you like a little bit of time every day, that's meaningful and that stacks up.

'Cause you're often not paying yourself. And so that's—

No.

Turns into productive time then when you might start to pay yourself sooner.

Exactly. So that's one component. The second in a similar line is, well, if you have a financial technology platform that actually does what you need it to do, Maybe you hire that controller a couple months later, maybe you hire that fractional CFO a couple months later. That could be tens of thousands of dollars, which at these early stages, that is a lot of money.

Could be an FDA approval step.

Exactly. There's like the kind of tactical reason, like consider it early, it'll save you lots of time. And at those early days, that time is super valuable. The second component is what I like to call super alignment, where you are aligning your entire business strategy across the capital environment, across the regulatory environment, across the product environment and across the technology environment. Oftentimes I think founders, they assume that they're going to build a technology that results in a product. That product will then be regulated. So they'll kind of do it stepwise. They're like, all right, I got the technology figured out, then I got my product figured out, then I got my regulatory world figured out, and I'll get the capital side figured out. That can lead to a lot of headache. It can lead to a lot of false starts. It can lead to the death of many, many companies, has led to the death of many, many companies. And I got to talk about it on our panel earlier today.

Fantastic panel earlier today. And we'll, as long as we get releases from everyone, we'll have that up and online by January, right, Ian? Usually.

Yeah. Sounds good. All right.

That's our amazing podcast producer, Ian, who occasionally makes guest appearances when I call on him, and he's always like, what are you doing?

But what we talked about was really understanding the capital profile of what you are building from day zero. If you're building a medical device company, your capital stack is going to look different than if you're building a therapeutics company, than if you're building a device company than if you're building an AI company, if you're building a services company, if you're building a tech-enabled services company. They all have different capital stacks. They all have different return profiles. And understanding that from day zero, you've got your business plan written, how are you gonna do this thing? That maps to a certain world of capital and financing providers. Know what they are. And if you don't know what they are, Go ask somebody. And honestly, the best person to ask is usually your banker because they interact with all of them. Whether it's me at Mercury or it's our relationship management team at Mercury, or if you're at JPMorgan, they do an excellent job of talking to their companies about who they really should be talking to and then demand introductions.

Don't be shy about asking, right?

Yeah.

As a CEO, if you do not ask, it will be a no because you didn't ask. If you do ask and it's still a no, well, at least you asked.

And ask again, right?

And ask again. And if that banking provider, if that financial advisor won't make introductions for you, find someone that will. That might be the person you grow the next phase of the business with.

Well, it sounds like a partial answer to our next question, but I wondered if you have any other advice for founders trying to secure early financing.

Like you said, definitely ask. Ask for intros. Sometimes you never know who has money. You never know who wants to give you money. Can be friends and family. Oftentimes that friends and family isn't the ones you think it will be. It's not always the proverbial rich uncle. Sometimes it's that friend of a friend who turns out to have a personal experience with the problem you're solving. So at the very early days, usually you're appealing to the person themselves less than you're appealing to a rigid investment thesis. Marc Andreessen and Ben Horowitz have this concept called the onion model of risk. That it starts with a little pearl in the middle of an onion, which is you, the founder. Fundamentally, at the friends and family round, they're investing in you, the person. So talk about it. Talk about you. Understand why you are the right person to build this thing. And frankly, if you can't prove that to yourself, that you really are one of the 3 to 5 people in the world who should build that company—

Why are you doing this job then, right?

Yeah, consider not building that company. If you just have a really great idea and there's a better person to go really be the champion for that thing, Go find them. And that might mean you not being the CEO, but 100% of zero is zero. So go find the right partners to go build that thing with you. So really understand how you fit into this thing as a person when you're at the very early days. That's that pearl of the onion. You go to the next layer to this onion and you get to the problem fit. Like, is this problem important? So when you're talking to investors, you're like, all right, like, I'm a person you should invest in. Like, I have character, I have drive, I have creativity, I have all the things you need as an entrepreneur. And I'm pointing myself at this problem that matters. And there's lots of different reasons things matter. It could mean just market size. Social apps often can have these massive market sizes. Are we necessarily solving a societal ill? It's not always important for it to be this altruistic need, but maybe it is an altruistic need, in which case you're appealing to maybe a reduced audience. Like if you're talking about breast cancer, well, there's a lot of people who care about breast cancer, but not everybody. And there's people who explicitly care about breast cancer, and they might even have money for you. And so you really understand that problem both on the market sizing and on its drivers. Like, who are the people that it impacts? How does it impact them? So a deep understanding of the problem. And you get the next layer of risk, which is usually you're solving for in that seed stage, is am I the right person? That's your friends and family. Pre-seed is like, is this problem worth attacking? And I'm the right person to attack it? Seed stage is really, is this product the right product for us? Or do you have problem-solution fit? This product solves this problem better than what else is out there. Better, faster, cheaper. And usually too, like, it's better if it can be an order of magnitude better, faster, cheaper. If it's a little bit better, that's still viable. Let's just understand that it's only a little bit better, finance it the right way, grow it the right way. And then we start to grow up after that. You look at like, do you have product-market fit? Can I sell this thing? And then can I sell it again and again and again? Can I sell it at scale? Can I make another product? So as you start to grow the business up and you're going further and further out on this onion, that's how you communicate to your investors, to really map that investor to your stage and map your message to your stage.

This is all such great information. I wish we could sit here for hours and hours. We have a couple more questions, a little more time today. You're a leader at Mercury and your day-to-day role must be really interesting. So I'm curious how you strategize to innovate in the biotech and healthcare industries, which is what we're here for today. And I know it probably applies broader, but Bio in the Bayou is biocare, healthcare, healthtech, AI in healthcare, kind of that realm of broad things from drug discovery to patient delivery. How does your role impact that every day?

So I've been making the joke recently that my job is dinner. I'm Ben, and my job is dinner. But I think about my business as an hourglass, in that you look at the top of the hourglass, this like big open space that kind of narrows down. There is this broad market awareness that I'm really beginning to drive. And that's what really defined 2024, was trying to understand what are the megaphones that exist in biotech, that exist in healthcare and life sciences, and starting to work with them and starting to put my voice into some of those megaphones, our voice into some of those megaphones, really evangelizing, putting the entrepreneur at the center of our product, evangelizing, building tools really for that entrepreneur at the earliest stages of innovation. That was really a lot of 2024. It was a lot of experimentation, a lot of understanding who is influencing that first decision at the point of incorporation for that founder. 2025 will be really interesting as you sort of look out. Something I'm really excited about at that kind of top of funnel, at that broadest part of the hourglass, is partnering with universities more. So starting to understand where are the engines of innovation in healthcare.

Well, Tulane University, of course.

Of course. James Zanewicz personally.

But I know—

The Gulf South is It's a broader area though, because quite honestly, the reason we do this conference is a lot of the universities here aren't as wealthy as the universities in the areas that you traditionally are, and they can't afford to travel outside the region, which is why we try and do this affordable conference and get folks like you to come in. And I hope you're seeing, I mean, it's only been an hour or so insofar, but the science is pretty incredible and nobody's looked at it yet.

You're first.

Wow.

So let's use Tulane as a great example though. So Tulane has 2 sides, right? It has the medical school. And the research institution that is Tulane Medical School and the university that is a large engine for net new IP, and especially with you leading so much of that organization, inspiring the entrepreneurship around that IP to actually help patients get healthier and happier and live longer and live more viable lives even longer. But there's also Ochsner, which is a truly incredible medical center. Medical centers are a huge part of my strategy as well, because when I look at where are those engines of innovation, it is those university researchers and it's also those academic medical centers who are driving so much of this innovation directly into the patient. When I look at where does Mercury want to be positioned, we want to be sitting right alongside of those engines of innovation. And in healthcare, it's so fun because those engines of innovation are these massive universities, these massive academic medical centers. In 2025, I expect to be spending a lot of time with universities, with AMCs, And that's really all about that top-level awareness. And then working one layer down into like kind of that proverbial middle of funnel where it's all about credibility. One of the things that's really fun for me is like, I talk about this all the time, like I have the best job in the world besides the fact that my job is dinner.

And you're in the right city if you like to eat, so you're—

Oh, I'm so excited. I've got a long list of restaurants to knock off this week. So when I think about how do we create the sense of credibility for these founders, right? 'Cause like I could take founders to dinner and everybody enjoys dinner and we have a great time. But my background is as a founder. My background is as an operator in clinical research informatics, in RWE businesses, in EHR businesses. We spent a lot of time in the belly of payers, which is the worst place in the world. We can talk about that another time. We'll do some trauma bonding.

That's a whole podcast on its own.

We'll do some trauma bonding.

A trauma podcast. Yeah.

Decent podcast concept, actually. There'll be tears. So I come into these conversations with empathy and with expertise when I meet these founders and work with these founders. And then I'm really lucky I get to collaborate with leaders at AMCs, leaders at universities, leaders at organizations that are really spawning so many of these new companies. And that's how I look at kind of the middle of the funnel of my business. And what do I do every day is doing expert sessions, doing a lot of introductions. We just talked about why you need to ask your banker for intros, not just asking them for money intros, ask them for clinical intros, ask them for sales intros.

It's the network, not just the dollars.

Exactly. And I'd rather take revenue money than I would take investment money all day as a founder. So I spend a lot of my time in kind of that middle of funnel space collaborating with oftentimes the buyers of the technologies that are being developed by my entrepreneurs. That looks like academic medical centers, it looks like large CROs, it looks like large pharma, it may look like government agencies. So I spend a lot of time organizing those institutions In order to make them into a sales channel or an investment channel for the companies that work with us. And then when I think about, as that hourglass starts to expand back out again, it is really creating the systems and processes to deeply understand my customers at scale. I have 6,000 healthcare and life sciences companies that work with Mercury. Mercury as an organization has more than 200,000 customers. So I get to build these processes that scale up and help me really quickly understand who my customers are and how to start triaging them around that network. And then building this repeatable process is to stay engaged because that intro I made for them 6 months ago, that's no longer their biggest need. That's not their biggest problem anymore. Now it's the next thing.

Because you already solved that problem. It's on to the next problem.

Exactly. And there's always more problems in entrepreneurship world. They don't stop, unfortunately.

That's the whole point, right?

Yeah. Yeah. There's not like a— there's not a day where like, oh, I'll just have them all solved and like everyone just get a paycheck every day. That's not how it works. So really creating the systems and processes to constantly monitor and understand my customers so I can keep helping, so I can stay engaged, because they're always going to have more problems. I want to be there to help them every time.

Well, we referenced earlier that, you know, one of the many areas that we see out there now is AI and machine language, machine learning with healthcare. Are you seeing shifts in how that's impacting the assessment of companies, the way you interact with companies of your portfolio of like 600 life science and healthcare companies? What are you seeing? What impact are you seeing from AI Great question.

So I'll talk about something that's really interesting from a financial services model, which is there's a lot of data out there about companies and about people that oftentimes we publish ourselves and there are government records and that kind of stuff. One of the things that makes Mercury really unique is our speed, because when you're a founder, oftentimes you're pushing everything to the edge. You're trying to do everything you can before you spend that next dollar. So you've worked really hard to like ideate around this thing and you probably did some early validation before you even incorporate the business. Then you like feel confident enough where you're like, all right, like maybe I'm gonna go pay a lawyer. Maybe I'll go to a Clerky, a LegalZoom, a Carta, an OnDeck to incorporate the business. So you just put money out and that money probably came from like your personal account. The next thing you want to go do is usually fund your corporate account with some of your own money. Or from an outside investor or from an SBA loan. There's a million ways to go get kind of that first check into that entity. Well, you need an account to get that money. Literally, there has to be a place to put it. Waiting 3 months to get that place to put that money to start building your business is not your desired outcome. So Mercury has built a really incredible system. It leverages a lot of big data systems, a lot of artificial intelligence, and just contemporary technology stacks to try to solve this basic problem of, I want a bank account when I want a bank account. I don't want to wait 3 months and like wait a week to get an email back saying, oh, that's not the right address. I actually need this document and not that document. We work really, really hard to be incredibly responsive and to be incredibly clear with our founders about what they need to do. And we do it so quickly because we know that time is of the essence for these founders. I talk about it all the time. It is one of our biggest advantages in the market is that frankly, we are there when you need us. And we built our entire system. We invested a lot.

You've automated a lot. Right, where you're taking a rate-limiting step of a person out everywhere that you can. You have them in where you need that human touch.

Exactly.

But people are able to get things done quicker and on their own time.

Exactly. So, and you're seeing that innovation happen broadly across the financial world.

But you were first.

In this particular, in this particular use case, I still, I still think we are, we are the best. I love, I love doing a horse race with a founder when they say, hey, you know, I put in an application at one of your competitors and I put in an application with you and like, My account was just open faster with you, so I'm just gonna put my money with you. And that is a pretty darn good reason to work with someone. 'Cause I used to be an Airbnb host and I had a particularly bad guest, which was unfortunate. It happens if you're an Airbnb host long enough. And I was on some message thread about hosting and it talked about how a guest communicates before they move in is so indicative of what your experience is gonna be like once they've already moved in.

Oh yeah.

So if they pay you on time and they're decisive in their communication, they're clear and they're kind in how they communicate with you, they're probably gonna be a decent tenant. If they're asking a million questions, they're asking for like small adjustments here and there, and they're always kind of wiggling around, they're probably gonna be like that—

The whole time they're there, yeah.

And that was very true for me. And I think Mercury actually, like in that same vein, we show up in this really caring, in this really entrepreneurship-first way from the very first time you see us. Look at our social ads, look at our LinkedIn posts. We have the most beautiful booth at TechCrunch Disrupt right now. It's gorgeous. It looks like this amazing space. I'm jealous that I'm not there right now, but I'm also very happy to not be in San Francisco during TechCrunch Disrupt. Much rather be in New Orleans pretty much every time. But from every single point of interaction with Mercury, you see this intentionality. You see this putting the entrepreneur at the center of everything we do. And it comes through with things like speed, because AI is not about AI. It's just math. It's really, really complicated math. It's really important math. And there's a lot of data engineering that has to happen in order to make that math useful, but making it useful is the important thing. And it's not useful because it can create paperclips. It's useful because it can help you open a bank account a little bit faster. It's useful because it can help you understand protein folding a little bit better. It's useful because you can use it to rapidly develop biological candidates and test and iterate on those candidates. You can image them better. You can understand those images better. So the application of AI in our world is really about solving those problems for the entrepreneur. Whether it's looking at fraud or it's looking at KYC and AML to open those accounts faster, or it's things like using it internally to develop new products or to test and iterate on new products or to write copy. So we really use AI to solve problems for our users. That's it. It's not about the machine learning itself.

Perfect. You're very intentional and I like that. All right, so the last question I have for you, Ben, is how do you like people to connect with you? And are there any upcoming events other than BIO in the Bayou, which you have another day and a half of, of course, where people can connect with you? And of course, Buy on the Bayou 2025, October 28th and 29th. I'm sure you'll come back. So that's way out in the future. But what else is coming up that you'd like to see people at and tell them more about Mercury?

You can always find me on LinkedIn. Luckily, I'm the only Ben Kromnick in the world, so super easy to find me. Second is we've got a ton of events. It's one of the things that makes Mercury pretty unique is we build, again, like really intentionally build this massive ecosystem around our entrepreneurs, around our founders. So coming up, I've got a couple of things that are, are worth doing. I host monthly happy hours and masterminds in San Francisco for healthcare and life sciences companies. That's really about like creating this consistent community, especially in San Francisco. I do something similar in New York. So when you connect with me on LinkedIn, happy to send you what those next upcoming events could be. Secondly, I'm hosting a great panel and pitch competition with HIT Lab in early December. So that's a lot of digital health innovation, mostly out of New York, but that's a great national platform. And then we'll be doing a lot of events and a lot of programming at JPMorgan Healthcare this year, partnering with some of the biggest firms in the world in order to, again, bring together this ecosystem, both the native San Francisco ecosystem, the greater national ecosystem, and the international community as well around, frankly, just founders and entrepreneurship in healthcare and life sciences and helping them get access to what they need, which is at JPM, usually investment dollars.

Dollars, connections, all those things are so important. And I want to thank you for making so much time to talk with us today. I mean, this information, I have a feeling this is going to be one of our most downloaded podcasts. You've come on, you've been very open with sharing advice, information, and I would encourage anybody who's looking for a financial services platform to contact you guys and reach out. And you found out you can do that on LinkedIn for Ben. And we'll also, of course, have his contact info and informational links in our show notes. We'll have Ben's LinkedIn, a link to Mercury, all that kind of stuff. So make sure you check them out to learn more. Any final comments before we go, Ben?

Just thank you for being you, and thank you for like being passionate every single day about helping entrepreneurs build better solutions to help patients live happier, longer lives.

Oh, we appreciate that. That's what we do. And as always, thank you to our podcast producer, Ian, who puts up with us and makes us all sound amazing.

Thank you, Ian.

Thank you, guys. Thanks for joining us for Bio from the Bayou, and we hope you'll join us again.

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