Episode 94: Crafting a Biotech Startup Pitch That Attracts Venture Capital – Insights from an Investor

If you're trying to raise money, do you know what DOAT, MOAT, GOAT, and FLOT mean? Listen today.

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Welcome back to BIO from the Bayou. I'm James Zanewicz, the Chief Strategy Officer of Tulane Medicine and your host for today. And today's guest is Dr. Travis Manasco. Travis is a Tulane alumnus, a practicing physician, and a principal at Solis Bioventures, a VC firm that invests exclusively in the life science industry. He earned his MD from Tulane, and I want to welcome him to the show. Welcome, Travis.

Thank you. Thank you for having me. Excited to be here.

I have some questions for you, thanks to our amazing producer, Ian, who always sends us in incredibly prepared. But it's fortunate that you and I already know each other, so these are all easy for me. The first thing I want to touch on is how you got involved in venture funding. That's a little different than patient care.

Right. It is. Yeah. Thanks, James. So, yeah, great question. So my first exposure to the world of venture capital was watching the show Silicon Valley. I don't know if you ever saw that, but it was funny.

I did.

But really, it's kind of a circuitous route. What happened was I was, you know, I was at Tulane for med school and then went to residency at Boston Medical Center and then fellowship at WashU. And had my head down doing the medical school, kind of the medical path. And I was like, I'm gonna do this and complete it and go to the bedside and practice. And what happened was I was moonlighting in a VA ER about 3:00 AM on a weekend. I, I still remember. And, and I had a, so yeah, you know, it's gonna be a little bit of circuitous route, but I was taking care of a patient who came in. He was bleeding from his head. Mild bleed, but it had been going on for 12 hours. And what happened is I used an old drug in a new way. It was an IV drug. The drug's called tranexamic acid. So if anybody's a practicing doctor, especially if they're in kind of acute care settings, they use it frequently. We use it for gunshot wounds or penetrating trauma, blunt trauma. There have been articles about using it for nosebleeds, which, which were really useful actually in my practice in Boston, which was like a revolving door of If you're on an anticoagulant, you have, uh, you know, high blood pressure and a nosebleed, it's just, you know, stop the bleed and then they come right back because of the winter and things like that. So I used this medicine on the guy's scalp, kind of held pressure and it stopped. And he said, hey, can I take it home? And I said, no, it doesn't work that way. But what a great idea. And so, so I have that gentleman and, you know, and somewhere outside St. Louis to thank for getting into venture. Because what happened after that is like, you know, it was maybe the night shift haze or whatever, but I went, I went home, slept, thought about it some more, thought about it some more. And then I got outta training, came to North Carolina to practice. I practice in a busy community ICU part-time now, and I started a company based off that idea.

Wow.

And I didn't really know anything about starting a company or funding or anything, but luck always plays a role in these things. And luck would have it that I lived in Research Triangle Park. And so there was the North Carolina Biotech Center, there's the Center for Economic Development. There's kind of all this, there's this nucleus of people here that can help you if you have an idea. And so I eventually started the company, bought that Amazon book, How to Start a Business, literally.

Well, you also have entrepreneurship in your DNA because your mom, Dr. Penny Manasco, is also an MD and an entrepreneur. So there may be a little bit of genetics in there.

It's true. And to give my mom a shout out, I remember going through medical school and she said, oh, you're gonna, you're gonna like want to do something other than clinical practice. I'm like, no, I'm not, mom. I'm gonna have the stethoscope. I'm gonna, I'm gonna use it. I'm fine with that. And of course she was right, like most things. And so, you know, yes, the, the, the entrepreneurship in the DNA is, is there. And my daughter's already, you know, doing lemonade stands and stuff. So it's, it's, uh, it's anyway, so bought the book from Amazon and started the company. And we ended up raising money, finding a management team to run that, take that asset, run with it. I learned a lot through that process. And through that process, I met another doctor entrepreneur, David Adair, who's the managing director at Solace and the founder. And he had started Solace as an angel investment group when, while he was running his company. And he had a very, he had a company for a new use for an old drug and, you know, did the research on that and was a successful angel investor in Chattanooga. And started a fund and we met and connected and hit it off and have similar views on clinicians as both innovators and investors and also kind of the Southeast and the Midwest of being kind of underfunded over science. And there's a lot of opportunity in this area. And so I joined 3, you know, over a little over 3 years ago and it, you know, it's been amazing.

Well, and you're still a practicing physician, which is incredible. And so I'm curious, you've got much like Elaine has as our executive in residence, she has one foot still being CEO of companies and one foot in kind of helping academia. You have a foot still in patient practice and a foot in investment. So what kind of lens does that give you?

I think practicing keeps me grounded. I love helping patients and being at the bedside and talking to patients and helping them. In the ICU, it's one of their worst days and one of the family's worst days of their life, if not, if not the worst, or week or month or whatever time period. I think also practicing helps me see the problems because there's kind of 2 ways you can go about it. You can have some miraculous discovery in a lab and then kind of take it all along the discovery path or some miraculous engineering discovery or diagnostic. I see the problems up close. And so I know what are problems in a lot of different fields. And so can see those. And so while I'm hearing pitches or meeting entrepreneurs, and if they have something, it's kind of, it clicks if it targets an unmet need. And I think that's one of the big things at Solace we do is we look, you know, we think about the patient and then after the patient is the doctor or provider, whoever's gonna use this product, diagnostic or therapeutic. And so I think it helps kind of bring it all together.

So while you're thinking of the patients at Solace, you're emphasizing that investment in early-stage biopharmaceuticals, medical devices, and digital health technologies. What criteria do you use when assessing opportunities in these areas? And is it the same for all 3? Or do you have a little bit different type things that you're looking for depending on which of those verticals you're in?

It's a good question. And I like to—

Ian wrote it, so I don't get credit.

I appreciate the credit. So everything good I'm seeing comes from Ian.

So, you know, thank you. I'm just the show pony they trot out.

Oh my God.

They're like, gallop, horsey, gallop.

This is, this is a lot of fun. This is a lot of fun.

Wait till I find a song that I want to sing and Ian dies. He's like, okay.

No. Oh my gosh. Anyway, so, you know, I look at a lot of things from the lens of a physician and one of the kind of aha moments I had at Tulane was when you learn, you know, you learn the basic science and then you learn kind of the approach to a certain chief complaint. So the approach to shortness of breath, and it takes something scary, seeing a patient short of breath or in respiratory distress, and it makes it kind of logical and broke it down to certain parts. And so it's like, okay, well, You know, okay, if they're short of breath, okay, you know, you have all these questions you ask, you have these kind of diagnostics you can do, you have these physical exam maneuvers, and then, you know, here's your differential. And so it's similar when we're looking at investments. We have an approach to all different investments. It is different between an IT kind of play versus a diagnostic versus a therapeutic, but the general approach that kind of works for all of them is pretty simple. And it was taught to me by David Adair, and it's the GOAT, the moat, the Have you ever heard of that, James?

I have not, and I cannot wait. I love when I learn new things.

It's simple and it works. So the DOTE is the, does the therapeutic or device or diet, does it offer therapeutic efficacy? So D-O-T-E, does offer, you know, and I also think of like an antidote too, personally. Like, is it an antidote to something? Isn't it, you know, does it solve a problem? Is it meeting on that need? You know, that's the first and most obvious thing we're trying to answer. The next is the GOAT. And so DOAT, MOAT, FLOAT, and GOAT. Okay, so the GOAT is the management team and the people. And it's cliché, but it's important because the team that is around the idea or the company is extremely important. And the execution and how they execute and what they've done and what their motivations are. And are they the greatest of all time, or are they the 4-legged furry kind of a goat? And you need to decide, you need to decide on that.

I mean, goats can be pretty resilient. You never know.

Resilient. They're resilient. You know? Yes, absolutely. Goats can be resilient. And so that's kind of the next checklist, the next approach. The next is the moat and float. And so I'll start with the moat. So how do you protect it in biotech? And in medtech, most of it is intellectual property. So what is, what's the patent life? What are you, what does it cover? How are you going to, like a moat around a castle. And Warren Buffett talks about moats and margins of safety, and it's really, really important because, you know, the patents are really what protects you for a long time. And what's the patent life? Those kinds of things. And then the next is float. So no matter how great it is and great the management team is, does the price Makes sense. Because, you know, a great business, again, I'm invoking Warren Buffett, but a great business doesn't deserve an infinite price. And so you have to have the right price to create value. Because in the end, what are VCs trying to do? We are trying to invest in ideas that make a difference, make an impact in patients' life, but also have to have a financial return. And you have to have that financial return to, to our investors and our limited partners.

Absolutely. And so when you have these early-stage life science entrepreneurs who are seeking venture capital, are there common pitfalls they fall into that you see that they should avoid? Or I guess another way of phrasing that is, what advice would you offer them to increase their chances of securing investment?

It's one of my favorite parts of this job is just talking to entrepreneurs that are excited and motivated and hungry. And so The advice, I, I think there's, there's a few points that I, I give all of, I think the first is, it's kind of the, like what you learned in kindergarten kind of thing. And it's don't make unforced errors. Okay. So show up on time. If you're going to meet with an investor, show up on time.

And on time is early so that you're ready when they are.

Yeah.

On time is early. Hey, you know what I really like, to be honest with you, shoot me an email the day before, just making sure we're still on for this. You know, that's kind of like being on the ball, you know, like So show up on time, send us a non-confidential deck. VCs don't sign NDAs, you know, after, you know, for the first call, that's just all we would do is would be sign NDAs if that were the case. And, you know, and don't make the unforced errors. So like, make sure, you know, the Zoom works. There's a Zoom link. Sometimes we only have 45 minutes to an hour with you. And if it's sloppy on the first call, when you're trying to put your absolute best foot forward, it rarely ends up, ends up well.

You don't get a second one. Yeah.

You don't get a second one. It's our job to prepare. So, um, it's your job as the entrepreneur to make it look easy and, um, make it easy for us. Um, but we have a responsibility to, um, do our diligence before, um, et cetera. Um, the second pro tip I would say is start the meeting after the, the obligatory introductions and background and small talk is, is ask about the VC group. And you should have, of course, already gone to the website and at least looked at it. And got an idea of the investments, et cetera. But ask what the VC is interested in and what they do. Do they lead? What size checks do they usually do? Where are they in the lifecycle of their fund? And when entrepreneurs do that, it shows, you know, it just shows experience. It starts the meeting off on a great foot because they know to ask the right questions. That's, and that's the first right question is to say, hey, before we get started, tell me more about Solace's investment philosophy. Where are you on your fund, et cetera? I think the third thing is having clarity. You need to have a specific ask, know how much you want, know why you want it, back it with logic. Maybe you have third-party vendors and you have, you know, that's kind of for deeper diligence, but be very clear and, you know, pitch a focused plan. I think one of the most common pitfalls really smart, motivated entrepreneurs have and scientists is lack of focus.

Mm-hmm.

They have their technology. And it could be used in this field, in this field. It could be a diagnostic, it could be a therapeutic.

Pick, pick your horse, right? Yeah.

Yeah. You need, yeah, you need to pick, 'cause they may see that and get really excited. I hear it and maybe I'm excited, but I'm just calculating the amount of money that those clinical trials cost. Yes, exactly. Exactly. So be focused. And then also when you're talking to us, it's not a thesis defense. And so we want to know the science. Many of us have scientific backgrounds, PhDs, MDs. You know, we want to know the research. But it doesn't, it's not a talk for an hour. It's not a grand rounds, you know? So you need to kind of make sure you give us the science, make sure why it makes sense, and then tell us why it's going to be a successful product.

Yeah, this was, I think, a huge point that Elizabeth Chabais made when she was on visiting with us is that like, you may be a scientist, but you're talking about the business now, not the science and why that matters. And you got to code switch into that language. And so speaking of that, can you give us, we've talked a bit about pitfalls. What is one success story that you've seen? Is there one company that you guys have invested in you want to brag on or a technology you're looking at?

Oh yeah. Yeah. We love to brag, but this is the fun part. Yeah. We have a few success stories at Solus. I think the first one that's, I think really kind of inspirational is the story of one of our companies, Francis Medical. So one of our co-founders and general partners, Dr. Michael Hoey, is a tremendous scientist and inventor. And Francis Medical is one of our portfolio companies. They just raised an $80 million round to kind of complete their clinical trial and, and, and get ready for a commercial launch. We're very proud of them and they've just executed all the way along the way. But Francis is named after Dr. Hoey's father who died of prostate cancer.

Yeah.

And Francis Medical is a, a medical device company that uses water vapor to eradicate prostate cancer. And when you have prostate cancer kind of at that stage, the option is really watchful waiting or prostatectomy, which can have a lot of untoward effects. And so, With this kind of technology, you'd have a whole new kind of treatment paradigm for these patients as opposed to a really kind of difficult surgery to undergo. And watchful waiting is not, is not the easiest thing to do either as a patient, knowing you have cancer and just kind of living with it. And so we're excited about Francis, but the interesting thing about Francis is it kind of shows how the relationships VCs build too, because we knew the management team before from a company called NextThera. And they used kind of similar technology for BPH. And so they got that mark, they got that product through the clinical trials, and then it was acquired by Boston Scientific, and then they spun the new technology out into Francis. And so, and we've been there since the very beginning. It's been really fun.

Relationships matter so much. It's a long-term game. It's not short-term.

It's a long, it's a long-term game. And I think I heard it on your podcast. It was like, be my friend and then be my partner.

Yeah. You know, that was Tari Sopratto, I guarantee you, because Tari and I are always in sync and I can hear her voice when you say that. Yeah, it was, uh, so yeah, she's like, if you wanna pitch me, take me to a steak dinner with bourbon. Don't ask me for coffee or to a Zoom meeting. Like, you know, she wants to develop a relationship and, you know, 100%.

100%. It's all about relationships. And, and then when you find a great management team, you wanna back 'em and you wanna, See them succeed.

Yep.

Yep.

All right. Well, I'm getting the, we need to get closer to wrapping up. We have 2 questions, so let me go before Ian beats me. I do want to ask about AI because AI is everywhere. How do you guys consider that when you're looking at investments? Is it a plus? Is it a minus? Is it something that, that you're open to with your investments?

Oh, we're definitely open to it.

Yeah.

You've taught me a lot about AI, James. So I know. Yeah. So the—

All I know, all I do is know people smarter than me. The end.

The, yeah, so we're very open to AI. We have a few companies that use AI in different ways. We have IOUrology, which is a way to kind of using AI and technology to objectively measure a patient's urinary stream as opposed to just kind of, how's your, how's your urinary stream? Or we have a company called Vector Medical, which is using AI to non-invasively locate areas of arrhythmia. So before you have to make a puncture, you can know You know, where in the stadium you need to go. So those are just 2 of our companies. I think AI, I could go on for a long time. This could be an hour about AI.

Maybe we should do another podcast on that topic. Ian, let's do it. Yeah, we'll have you back.

So for, I'm down. The, so a couple of things, I think for us, AI needs to be implemented to solve a clinical problem. And then we would invest in a company that is regulated and that is solving a problem for patients and or Providers, physicians. That's the first thing. We were not just going to invest in AI for the sake of AI. And then I think as I, if I put on my other hat as a clinician and you think about what AI does, what does AI do? I mean, it takes large amounts of information and then can like just digest it and give you these kind of relevant kind of insights. And so what does medicine need? It needs something that can digest large amounts of information. And give you relevant insights. And so it's kind of perfect, you know, thinking about my time as an ICU doctor, how much time I spend documenting in the EMR, you know, how AI is, it's actually already starting to show its face, but how much more it could like save my time and I could spend more time at the bedside. I could take care of more patients or be more efficient as opposed to, you know, having to sit in front of a computer for a large amount of my day. And then there's all the different parts of, you know, the healthcare system. So procedures, logistics, Inefficiencies. There's tons of inefficiencies. It's why, you know, it's why we have a job, you know, and there's lots of problems in medicine. I think medicine's a great field because there's a lot of people that really care about people trying to just do the best they can for patients. But there's still a lot of inefficiencies and, you know, it's exciting to see the potential for AI in medicine. And one of my favorite companies, we're not an investor, but it's called Open Evidence. Have you heard of Open Evidence?

I've heard of them. Yeah, they're cool.

It's phenomenal because again, just like kind of an electronic health record with all this data, think of all the journal articles that have ever been published and all the guidelines and all the— and so with Open Evidence, if I have a question, and there's always questions because medicine, like investing, is an art and a science. So there's, you know, you have to use data, but it's not just an algorithm. You have to like use your clinical gestalt or your investment kind of intuition and then make the best decision you have. And so Open Evidence allows you to, To search through this vast trove of data to like get you, you know, very specific questions really quickly. So it's phenomenal. I actually LinkedIn'd the founders on it just to tell them, great job. Like, you're like, thank you.

Yeah.

I was like, you've, it teaches me, I'm a better doctor. Anyway, this podcast brought to you by Open Evidence.

You know, I was gonna say Open Evidence, we are open for sponsors now. So hit our producer Ian up. Uh, we're, we're at the point where we have enough listeners now that we're worth it. And I do think it's interesting though that you are looking at AI at Solus because there may be possibilities for Solus and then the venture fund that I'm part of, Maker, to do some co-investment. So I'll have to make sure we get you guys hooked up to do that. So with that, are there any final thoughts you have for us before Ian like throttles me for going, going so long? But I just love talking to you, so I don't care.

No, no, I, I think thanks for what you're doing. Putting this kind of content out there is really, really helpful because I remember As an entrepreneur, you know, and I had that book, right? But I didn't know what to do. And it was because of resources like this that you can kind of go, oh, okay. Yeah, that makes sense. Or that's a person to talk to. And, you know, as an entrepreneur, your job is just keep building your network so you find the right people that can help you out. And so you're playing a big part of that. So thanks to you, James and Ian, for what y'all are doing.

And Dr. Elaine Hamm, who I know, you know, 'cause she's, she's a huge part of this too. And, and, you know, I think one of the great things that we always tell people, and I'll tell them now, like, they're interested in meeting you after they've listened to this podcast, they should find you on LinkedIn and say, hey, I enjoyed your point about X, Y, or Z in their ask. Don't just send an ask, tell you why. If people want to connect, and it's amazing how when you have a little bit of a hook, people will connect and then you're in their network. And that's what we're trying to do is help people build that network as easily as possible.

So true. So true. That's a mic drop right there.

It is. There we go. Well, I want to thank you again for making time to talk with us. I know between your multiple jobs, you're super busy. Uh, we're Definitely going to keep an eye on Solis Bioventures, all your companies, your work in venture capital. Always love hearing about your patient care as well. And we're going to have all your contact info, your informational links. Poor Ian was taking notes like crazy because of all the things we talked about. He'll have— this will probably be one of the longest show notes we've ever had. They'll all be in there. I encourage everyone to check them out and learn more. And thank you once again, Travis.

Thank you, James.

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