Ep 50 – Building a Research-Based Startup From Scratch

 

About

Summary:

How do you mine the kernel of a startup idea from scientific research?

How do you bridge the knowledge gap in learning hundreds of new startup and business concepts, while progressing your idea and getting funding all at the same time?

How do you piece together every part of a complex business model when you don’t know what one is to begin with?

In this episode, Dr. Christy Sheehy, co-founder of C. Light Technologies inventor of Retitrack™, talks about how she started her career as a hard-core scientist, and learned literally every step of the startup process from scratch, through trial and error, all while trying to raise her first funding right when Covid put the brakes on the whole world.

Listen to her priceless insights on how to move quickly and thoughtfully from research to commercial application, how to get smart about startup building when you’re starting from ground zero, how to make lemon from lemonade and still advance your idea even when the whole world comes to a grinding halt, and much more!

Episode Highlights

1. How to blend science and mission to spark a high potential startup
2. How to move from conducting good research to exploring commercialization for your research
3. How to explore multi-party markets in healthcare
4. How to leverage university resources for your startup
5. How to decide on which startup programs to enter
6. How to optimize your time to find and apply for the right government grants for your startup
7. How to know when it’s the right time to approach outside investors
8. How to plan your fundraising approach using a numbers-based approach
9. The real scoop on how to build a great pitch deck
10. How to nail presenting the financials in your pitch deck
11. How to handle the stress of fundraising as a first time woman founder
12. How to succeed as an early stage first time woman founder in STEM

C.Light Technologies: AI-driven healthcare company that creates digital tools and solutions to assess eye and brain health, that Christy founded.

Interview Transcript

Shubha Chakravarthy: Good afternoon, Christy. Thanks for coming and being here today. I’m just super excited to talk to you.

Christy Sheehy: Thanks so much for having me.

Shubha Chakravarthy: You have a PhD in Life sciences. You’ve done a bunch of really interesting research. Tell us a little bit about your background.

Christy Sheehy: My background actually started off in engineering. I worked as an engineer for a while, an optical engineer at a company called Corning, which is a glass company in upstate New York. They paid for me to get my master’s, and that is always awesome.

But I decided I wanted more of a biomedical spin to what I was doing in life. I was doing a lot of damage testing of glass thresholds and not really anything that could be applied to helping people.

So, I ended up going back to get my PhD and went from the east coast to the west coast to UC Berkeley to do my PhD there in vision science.

So there, for that project I could combine my engineering expertise and use it for the vision or the ophthalmic type of a community. That was a really great way of merging those two areas of expertise and the big vision of mine to be more in a space that can help other humans.

Shubha Chakravarthy: You talked about this concept of helping people. Was there like a pivotal moment or an experience, something that flipped the switch and said, “It is about helping people and that’s what I want to do?”

Christy Sheehy: I feel like it wasn’t a perfect moment with a switch in general. When I was working in the lab and being an engineer, it didn’t feel rewarding.

I was doing work, but I just couldn’t feel inside me that there was a bigger mission for it.

I mean, yes, I could get really nice glass out and use it in lasers, but it wasn’t something that made me feel like at the end of the day, when I came home, I felt rewarded from it.

So that, for me was just more of a motivating factor to find more purpose in my work. Then, as everything has unfolded as it has now with my startup and some of the work I did as a postdoc, after grad school, everything kind of seems to happen and, and unroll for a reason.

Shubha Chakravarthy: If you had to describe to a layperson what your research was, how would you describe it in brief?

Christy Sheehy: I looked at new ways to see the back of the eye, the retina, see how that looked and see how it moved.

So, I would create technology to visualize zoomed in and up close how the retina looks, and then use that to watch how the eye moves over time.

Shubha Chakravarthy: So, you have developed all of this expertise, you are doing your postdoc research. Tell us about what was the spark that triggered you to think about starting up or even come up with the idea?

Christy Sheehy: So, at my postdoc at UCSF there, I worked in the neurology department. I had a wonderful opportunity to work not only with experts in the neuro space, but also directly with patients.

My research was very clinically focused, and I started to study how eye movement could change in neurological disease.

So, the studies that we had ongoing were on eye movement, mostly in multiple sclerosis, but also Parkinson’s, Alzheimer’s, and other areas. It was a really rewarding opportunity because I could see directly in those moments as I’m recording eye data from patients, how their eye movement looked, how it felt.

They described to me how things seemed differently, or the world seemed like it was jittering. Just being able to quantify that and see that in real time gave me that human link. That is when we realized that this could be something where there could be a bigger mission, a purpose.

My PI at the time, my principal investigator and I, we applied for a phase one NIH grant, and we got it. So, that was kind of the first study that we had, non-diluted funding and then we did it again for concussion.

So, really that non-diluted funding start was a perfect way for us to really start validating that business opportunity. But I think having a postdoc experience where I could work with patients is really what pushed and motivated me to say, “Hey, this could be used for something much bigger than I ever imagined.”

Shubha Chakravarthy: This is an important point, and I know we are going to jump into it later, but you get the funding, it has got a specific purpose and a specific intent for the study.

You already have the vision that you are going to start a company with this research. Is that how it played out?

Christy Sheehy: So, to apply for NIH grants, you have to be incorporated. So, the very first step that I had taken with my co-founder, who was also a vision scientist at Berkeley, was to incorporate.

We went through The Startup in a Box program, which came out of UCSF.

So, you incorporate, and you get all documentation you might need to become a startup through those wonderful university resources. Then from that you can then begin to apply for NIH grant.

If you think you have a profitable opportunity or potential business opportunity you incorporate, and then you can do the non-dilutive funding route through places not only like NIH, but also NSF or DOD.

Shubha Chakravarthy: Through the SBIR then that you get the same way?

Christy Sheehy: Exactly. Yes.

Shubha Chakravarthy: What was a moment that demonstrated to you that there was commercial viability in this idea?

Christy Sheehy: As a part of our NIH grant, we got to be in this program called C3i. It is very much like the I-Corps program for NSF, where you interview a hundred customers.

That can really tell you a lot in a very short period of time if you are scrappy about getting the interviews quick, whether or not you have a viable product.

I think for us, having those early interviews, understanding what unmet needs were in the clinical space, understanding how people viewed the eye in general and, viewed capital expenditures versus other type of payment models, all of that was so helpful for us to then understand what it meant to be successful for our particular unmet needs.

So, really a lot of this is driven by your future customer. What are they willing to pay for, and what are their biggest unmet needs that you can tackle?

Shubha Chakravarthy: Now tell us what C. Light Technologies does since we now have a background of what your research is. What does the company do?

Christy Sheehy: C. Light Technologies creates digital technologies and solutions that enable high resolution eye tracking through the retina, and that is really where my PhD work comes in.

It is the technology that I had used and created during grad school that we are now commercializing and spinning out.

Shubha Chakravarthy: Okay. Then when you talked about customers and interviewing customers. Who are the people who buy this technology?

Christy Sheehy: So, in healthcare, that is always an awesome and convoluted question because many of the times, people that you are selling to might not necessarily be your buyers.

So, for us, clinicians are ultimately the ones that we want to have use our device.

But if they are going to be in a large academic institution, the buyers would actually be through more of the buyer and purchasing side of that large institution.

You can go directly to clinicians once you start to span out into private practice. But usually, you’ll start with some of those bigger academic centers that tend to be the early adopters. From there, you can then go on to private practice.

Shubha Chakravarthy: Did you interview the procurement officers then? Did you interview clinicians? How did you split up that and what did you focus on in your questioning?

Christy Sheehy: Yes, we interviewed procurement. We interviewed purchasing a lot of them at UCSF because we were right there. So, we had tried to make sure that we interviewed every touchpoint of what our device would have.

So, purchasing? Yes. Procurement, yes. Also, insurance, which wouldn’t be at a large institution necessarily, but the large institution would want to bill.

Then a breakdown of the different types of customers that we could see the device being used for in the near term and the long term.

So, kind of understanding the full gamut of clinicians that might have a touchpoint as well as anyone else along that pathway of purchasing or reimbursement that you would want to understand their needs from.

Shubha Chakravarthy: Through this process, was there any insight that came out that was different than what you expected or was counterintuitive that made you change your course or assumptions?

Christy Sheehy: I think the short answer is yes. I think there were a lot of different things that came out from there.

One of them is depending on the physician group you are talking to. A large capital expenditure versus a leasing model, for example, can be make or break for individuals that don’t have a whole lot of upfront capital to spend, but want to break it down over time.

There were other groups who were more interested in software as a service for a model for a medical device. That is somewhat of a newer type of model with the med device space.

But being able to have a scan fee, for example, paired with leasing to make the upfront leasing even less so, there was a whole bunch of ways that we talked with purchasing departments and clinicians themselves in terms of what made device adoption the easiest and what made the signatures or approvals in large institutions seamless and then how we could potentially adapt to that in order to have a successful rollout into the space.

Shubha Chakravarthy: So, you now have your market insights, what the purchasing process looks like. How then did you come up with the business model and the monetization method?

Christy Sheehy: A lot of that came from really work with our early accelerators. So, any individuals that have technology that you can roll out from a university, tap into your incubators and your accelerators because the advisors there are going to be instrumental for how you shape your business model.

So, we worked a lot with our accelerator program through Berkeley, which was called Skydeck, and the advisors there were providing us different ways to think about it. If you do a pay per click, how can you hit that future $1 billion market?

How can you, within year five hit a hundred million? You know, being able to move those models around to then maximize, what a clinician can make for reimbursement, but also what C. Light Technologies can make in terms of revenue.

All of those stakeholders are really important to have a touchpoint with. So, I think ultimately the business model was really about talking to investors, talking to advisors, and then picking the type of model that would work best for our revenue streams.

Shubha Chakravarthy: The accelerator program sounds like it is pretty well structured.

What was the duration of that program and where did you end up at the end of that accelerator program in terms of your business model and how well baked your whole idea was?

Christy Sheehy: I have actually been a part of a lot of accelerators, so I can talk a little bit about each one. Some people say “Limit your accelerators. If you don’t need it, don’t do it.”

But what I found honestly, coming out as a scientist, the more I could talk to people about how to make this a viable product and business, the more I just wanted the opportunity, especially if it was equity free.

So, what I ended up doing just out of Berkeley, I joined a program called Free Ventures. It was by students, for students, and it was thinking about creating a technology and then spitting it out of the university.

So right up front there, we got the first insight into what a pitch deck even was. That for us was huge because as a technologist, you want to show your science. That is not what investors want to see. They want one slide for your science. So, that first step was big.

Then we did that C3i program through the NIH. That was nine months. That was really focusing a lot on what reimbursement was, how insurance played a role in medical devices, how it was paid out and interviewing the customers. That is what that first C3i did.

After that we joined California Life Science Fast Program. This was also equity free, and it was an opportunity for 12 individuals to sit around a table and talk about your business model.

So, this is really the first time where the business model came into play, and it was individuals that had reimbursement, former CFOs of companies and all different types of experts that were there that hour a week just to listen and help you brainstorm.

After that we joined Skydeck, which is really where our business model started to come together. It was almost like that fast program gave us the ideas of what we could do, and then we solidified it more fully through Skydeck.

Then after Skydeck, we then went out to fundraise. So, really once we had hit that point there we had solidified the business model and so, for me, each one of those had a purpose.

Each different group we talked to along the way set us up for success in that exact moment for what we needed. By the time we hit Skydeck, I was ready to go full-time into the startup itself. We’d had non-diluted funding success and I was ready to roll out and raise venture capital at scale.

Each one of those brought us a different value, I would say.

Shubha Chakravarthy: I just love the story because you hear so much about accelerators and just like you said, some people say don’t go to more than one.

What is your thought process? How did you identify these accelerators and how did you vet them to make sure that, for example, they would be really value added, not predatory and all of that good stuff?

Christy Sheehy: So, the first one we did through Berkeley was by students, for students. So, for that one, there was not a predatory nature about it because it was literally just students helping other students.

So, I think that was a really fun way to start thinking about the problem because you have people at the same state as you. Those a little bit further, those a little bit behind and you all spend a semester trying to figure things out together. For me, that was fun.

The NIH one, because it was sponsored by NIH and it’s only for people who have NIH grants. We knew that one was going to be amazing. So, that was a nine-month program. That was awesome. Again, it doesn’t cost anything. Once you apply to it, they give you a 25K grant to use towards that program.

So, it is a “No equity. No Anything.” You just join and they give you help.

California Life Science Institute, I’d had a recommendation from one of our early advisors who had done the program about how useful it was because you had those 10-12 people sitting around a table just thinking about you and your company for that 12-week program. So, having an advisor vet the program first was huge. So, then we knew that was something that was super worthwhile.

Then finally Skydeck had been doing an accelerator for many years before we had joined. In the Berkeley ecosystem it was just thought of very highly and individuals who went there.

Most of them have really great funding success stories. So, for us that final Skydeck accelerator was really where we were ready to fundraise and that is what we wanted to tap into. There was that network that people had so highly spoken of for the VC and Angel world.

So, I’m all about an incubator and accelerator. Now, granted, out of all of those, only Skydeck took equity, but they are also the only ones who gave us VC or Angel funds. They gave us a 100K.

So, if you do programs that are constantly taking more and more percentage from you, I could see how that would be difficult to swallow if you are just constantly giving away equity.

But in this case, it was really just a bunch of groups of people that wanted to help startups. So, that is why I always love to be able to give back too, because I’ve really thrived in that environment of people just helping other people.

Shubha Chakravarthy: You are helping others now. So, thank you. I can certainly appreciate that.

What I’m taking away is basically that the people who are running the accelerator, I mean in all of the cases that you laid out, they are pretty legit. You could trace the incentives and the motives behind why they are doing it. NIH, of course, you want to drive scientific improvement academic institutions that are as respected as Berkeley or the UC system.

So, those are good takeaways and also your pointers around vetting it through people who have been through the program as well as what kind of outcomes, checking for yourself to see, “Did they actually generate the kind of outcomes that you are looking to get from going through the program?”

I think all of those are excellent pointers, so thanks for mentioning that. One other point in terms of the IP, you generated the IP through funding, or you generated through your own work. How does the IP piece fit into the startup world and journey within the context of an academic institution? Can you just walk me through that process?

Christy Sheehy: Sure. As a PhD student, one of the first things that you do when you join a PhD program is that you basically sign something saying, “Whatever I invent during the course of this program and with university resources belongs to the university.”

So, the core technology that we use at C. Light was my dissertation from Cal.

So, in order to be able to get that, you have to go through a licensing process. The first step for me was to literally just locate the technology transfer office because I had never been there before. I had to figure out where that was on campus, know who was in the office that I should talk to.

I popped over and they suggested, “Oh, here is an email that you could write.” I wrote to an individual named Laleh, who was on one of your shows here. She is great.

So, we worked with her to go through that process of exclusive licensing. Early on it started out with really a letter of intent because when you are first thinking of it, you might not have large funds to support a full license. So, that first step for us was, “Here is a letter of intent for C. Light Technologies, which is our startup.”

For the next semester it is almost like you go to a store to buy a pair of pants, but you put it on hold. We wanted to go take our technology, put it on hold, make sure no one else comes in and uses it.

We paid, I think a 3,500 or 5K fee for a letter of intent just to say, “This is ours. Make sure no one else takes it.”

Then after that going through the different accelerators and having funding, we then executed the official licensing agreement. From that agreement, there are different levers that you can pull with the university in terms of how much equity they take, how much royalties, et cetera.

Every university might be different with that. But that is something where you work directly with your tech transfer office. Usually you are given a representative, I had Laleh as mine, and you work with them to execute that license.

We now have an exclusive license of the technology, and we are off to the races. Now we have our core tech.

Shubha Chakravarthy: It is the technology layaway program. I love it.

Throughout this process, obviously research is a very capital-intensive process, and what I love about your experiences is that you have raised through so many different sources.

You talk about raising more than 7 million just from the government or VC. What was that process like? How prepared did you feel? What did you need to learn and what did you learn through the process? Let’s first talk about the government sources and then we’ll talk about private sources.

Christy Sheehy: Yes, with the government grants, as a PhD student, I had written other grant applications, none specifically for NIH or SBIR.

So, UCSF actually had a program that came with a startup in a box, and you went to a grant writing class where you learned how to write an SBIR. So, that was huge for us. Just understanding the different components that go into an SBIR or an STTR. SBIR is a small business grant. STTR is more of the tech transfer with a university partner.

Either one are great for these early opportunities, but having that grant writing class was really helpful because there is a lot that goes into writing a grant and all the different attachments you need to have.

I think having either a class or having another founder who has gone through the process is really crucial. Otherwise, you might not have your grant reviewed on some submission technicality, and that would be really unfortunate with all the hard work. So, having that class was perfect for us to help us write those.

Shubha Chakravarthy: I’ve looked at the grant website, the SBIR and STTR website, and there are literally hundreds of grants and you have only so many hours a day and you have all your other work.

How do you figure out what are the right grants and then what is your rate of success going in? Do you expect a hundred percent? What does that thought process look like?

Christy Sheehy: For us, there is a solicitation or a funding announcement for a general SBIR or STTR that happens three times every year. So, you always know it is going to happen. I think it is the fifth of the month. You apply on those three dates, and it is read, you pick the department you want it to be submitted to, and then it is reviewed.

So those were really what we ended up doing. I think it is called an omnibus solicitation or something where it is just the general SBIR review dates, and that was easy for us to not have to go through hundreds of grant opportunities. So, we did that one in particular.

In terms of the mission and success rates I’d have to look on the website to see what they say. It probably varies per each department because each department doesn’t have identical funding.

So, whether you submit to National Eye Institute or National Institute of Neurological Disease and Stroke, they are probably going to have different success rates within each of their specific groups.

For us, we ended up with two phase and I would say I probably submitted 9 or 10 times.

So, none of my grants were first submissions that got awarded. They were all resubmissions. I’m the kind of person who does not give up easily. So, the great thing about these grants is that you get a summary statement with them from reviewers to give you feedback. That can be how you can reshape your grant and make it better.

For me, again, it was me and my co-founder writing these. We’d never done them before, so we knew going in probably we weren’t going to hit all the points that we needed, but it was a learn as we go.

For us just learning through that process, you know, you do the grant writing class to figure out how to submit, and then writing the grant in and of itself, you can then learn from your mistakes.

I know that there are other companies out there who specialize in this, so if you have funds up front, you can utilize those groups who have done this hundreds of times and have had really good success rates.

For us, at the time we didn’t have the funds to work with a group like that, so it was just, “Let’s put both of our hats in and see what we can do and how fast we can keep resubmitting in order to get one to stick.” So, it was just trial and error.

Shubha Chakravarthy: So, it sounds like if it is three times a year, it sounds like it is at least a three-year period during which you are kind of revising it, trading on your grant applications. Is that the kind of time?

Christy Sheehy: For example, I submitted a grant this past January and they just reviewed it a week ago. So, you get your score usually within a week or two after their review.

Then after that you get your summary statement if you have a good score. For me, it has typically taken about nine months from submission to receiving money. I think that can vary again, based on departments to being based on timing, based on if the government shuts down, all things can play a role into that.

But for all three of ours, it has been around nine months from submission to get money. So usually, you can kind of guess whether or not you would want to try to submit to the next date based on the feedback you get from your previous submission.

So, is a longer process and that is sometimes the hard part for founders who want money. Now that is where going out to fund fundraise for Angel or even VC can be beneficial because it can be much quicker than the NIH or the grant process in general.

Shubha Chakravarthy: Started with the trade-off of potential dilution, right?

Christy Sheehy: Exactly. So, the wonderful thing about grants through NIHR, that they are non-dilutive, which means I don’t have to give away any stock, any equity, free money, so to speak.

Shubha Chakravarthy: Which brings us then to your work with angels and VCs. You mentioned that you raised money through them as well.

At what point did you decide, “Okay, I’m going to go out into the angel or VC market.” Can you walk us through the process of when you decided how you picked and how that played out?

Christy Sheehy: I think for us the big thing was validating our device. We had built the device and then in talking with just early angels in kind of the pre-seed stage, getting the early clinical validation was a make or break for their involvement. So, that’s what the NIH grant allows was that early validation.

Once we had that, we then had the capability to go out and raise some preceded funding. So, we actually did do a 100K with an angel group through pre-seed and then there were university-based groups as well that were run by students.

So, Berkeley had dorm room fund and aero capital, they can write 20 or 25K checks. Again, tap into university resources because they can really help be early sources of capital too. That was our very early angel funding pre-seed level.

Then when we joined Berkeley Skydeck, as I said, they gave us that a 100k. After that we went out to go fundraise for VC and it was a very interesting time because our demo day was February 2020 and we went out to open our round the end of March, which if you remember is right when COVID hit.

It was a very weird time to do your first seed fundraise. we talked to investors and every investor said, “We need to take a pause. We need to see what this is going to do to the market. Come back in a few months once we have figured out how this is going to play out.”

So, that was tough from March through mid-June. Really, we were in a bit of a standstill until the market could be validated, so to speak. So that was tough. But we got our first term sheet actually in June of 2020.

So, that was huge because once you have the lead term sheet, things happen much faster after that. There was a lot of worry and concern between March and June.

But what I ended up doing was just talking to potential future customers more, getting letters of intent, showing that there was interest in what I was doing. That way when investors were ready. I would have more traction and validation of customers.

So, this early investor for us, Creative Ventures, this first term sheet ended up being our lead investor for the seed round and we met them through the accelerator. We had been at Sky Deck from the demo day.

I think that network that some of these accelerators can have, particularly this one through Berkeley really helped us with that first lead term sheet. Then after that, it was bringing on follow on capital and, for me, I did something potentially a little bit out of the ordinary.

I did a lot of cold emails and I had so many people saying to me, “Don’t waste your time. You are a valuable founder. You have things you need to do to validate with your tech. Don’t cold outreach.”

But I didn’t listen, and I ended up doing cold outreach and I had some people helping me. I literally wrote, a thousand emails because I was like, “This has to be a numbers game.  I think I needed a final million to close.” I was like, “I’m going to find it.”

As a first-time founder, I didn’t have a network, right? So, I’m just doing everything I can to try to have as many touch points as possible. One of our other major investors for this round, I got through cold outreach. So, I think it was a lesson for me in terms of constant drive to try to reach your goal.

Even if it is harder than the norm, it is going to be okay. Probably one of the best things I could do was to just reach out and talk to more people. Some people are so surprised when I say that one of our major investors who gave the million dollars was a cold email, but I think there are some firms that look at their emails. Some firms don’t, but some firms do, and that is how we ended up closing that seed round.

Shubha Chakravarthy: I understand the part about it being a numbers game. That makes a lot of sense. Looking back, do you think there is anything noteworthy either about how you pick the firms to call or mail or what about this particular investor made it click for you and for them?

Christy Sheehy: One of the big things to know when you are doing outreach is to make sure that they actually invest in companies like you.

So, with the emails I did know some of them. I had multiple people at the same firm, but the firm that I emailed, they did health tech, or they did digital health, or they did deep tech. There had to be some touch point to what they were doing.

If they are just a FinTech company they are not going to care. So, you do have to tailor your outreach to people who care enough to listen. So, I think that is a huge step is any website you go to for a VC. Just click on the portfolio link and look at the different verticals that they run. If they have one in your vertical, then you are good to go.

Shubha Chakravarthy: Now I just want to ask one other question on the SBIR and then we’ll move forward. Clearly, as long as you are part of an academic institution, and for most technology that feels like a fair assumption, you have the ability to rely on the resources that these institutions bring to the table.

Let’s say you are not currently aligned with an institution, let’s say you are an alum. How then do you get all of these resources? How do you then equip yourself to tap into these government funds or what have you, to get the same level of traction on the resource side?

Christy Sheehy: You know, with SBIRs, you don’t have to be currently at an institution to apply. I think there are a lot of groups that are not necessarily institutionally driven, like Mass Bio for example.

They are not run by a certain university, but they have a lot of resources internally for who they help and what they provide. So, I think if there are any groups within your area, university related or not, that are in the startup network that are doing things similar to what you’re doing, reach out.

I think being a founder is very hard if you are in a silo and not talking to anyone else. So, even if you are not in a university, find your local chapter of entrepreneurs.

Find a group that is doing healthcare, life sciences, something along those lines with a broader scope of individuals and join those groups, talk to those people. I think you will be surprised at how many founders have that give back mindset because they have been helped in the past as well.

Shubha Chakravarthy: Then coming back to the fundraising, you mentioned that you had an entirely scientific background and had to learn the product and the business side.

What are the biggest lessons and learnings through the fundraising process? What did you have to learn and how did you learn it?

Christy Sheehy: I think in terms of what did I have to learn, it started off a lot where I wanted to showcase the technology, and I touched a little bit on this earlier on, but when you are coming from the sciences and you have created something, you think that something is the best thing since sliced bread.

You want that to be the focus of your pitch. It really isn’t. The focus of the pitch is really the problem, and your solution is like a slide or two.

So, I think for me, again, having the resources of all the groups I was in, I could have iteration upon iteration of different pitch decks.

So, that to me was helpful. If you look at the one I had, you know, when I was still in school joining the By Student For student group, it is unrecognizable from where I am right now. Even now versus my seed round is different too.

So, I think most of what I learned was along the way. I think sometimes when you are pitching, if you put investors early on and you are pitching that, it might not be the perfect fit but are willing to listen, they can give you the feedback from an investor point of view on what to shape.

So, a lot of our traction slide or business model slides needed more nitty gritty ways in which we were planning to use the funds.

I mean, really a lot of it was trial and error, but grounded in a truth from an accelerator. Here is the typical flow of what a deck looks like. You create that flow, you bring it to the world, you start pitching it, and then you will see where your holes are based on the questions, and then you just keep reiterating as you go.

I think, I iterated consistently through my seed round, even the start of my seed to the end. There were slight changes in my slide because I would learn something new and I thought, “Wow, okay. Investor wants to know this, I’m sure a future investor will too. Let me add a slide in or let me correct this slide to make it more fitting for the audience.”

So, yes, trial and error unfortunately is a lot of my early advice because that is ultimately what I did. But if I was to go back in time with the knowledge I have now, I’m sure it would be very different.

Shubha Chakravarthy: Can you give us examples of the kinds of areas where investors probed harder that had to do with the business of financial side and what your learnings were and what your improvements were?

Christy Sheehy: I think business model in general was a huge area of questioning. They want to know how you came up with the model, who you talked to in order to validate the model. They wanted to talk to potential future customers.

So, the early work that I did for LOI’s, they wanted to reach out to each one of those customers I talked to and validate that they do see promise in what we are doing, and they are willing to put money down on it. That was a huge thing. That was the biggest area I’d say that questions were.

Then of course, with any medical or healthcare space device, they are always going to ask you about insurance and reimbursement. So, understanding that pathway, knowing what is possible versus not. Those were all important too. They kind of linked directly to the business model.

How is the actual physician going to make money? How are you going to make money? Revenue driver for hospitals and clinicians are just as important as value add in the care process as well.

I think another area that was big for us was really how to show our traction. It wasn’t necessarily a question pushed by investors or prodded at, but for us to be able to show them all the hard work that we have done.

I realized in my early decks that wasn’t as prominent. So, I then created a traction specific slide that shows the stats of what I’ve done, a hundred people I’ve talked to, here are our 20 institutions that gave us LOI’s. Here are their areas of expertise. That made a huge difference in terms of where they saw our progress.

Are we brand new or are we actually in the space talking to people we need to be talking to? So, I would say business model is the biggest prod. Financials, everybody has that kind of hockey stick projection in their deck, I’d say.

But when it comes to the actual fundraising and the seed round, you have to be able to support and justify everything you put in there.

So, with our major investors, we sent them our five-year projections and I had a call where I had to go over all the major calculations, how it got to the projections that I had put on that slide what the assumptions were for all of those projections. So, knowing those numbers inside and out is something that I had to learn how to do.

We worked early on with MBA students at Berkeley who were learning this and had templates for this and helped me understand how to create it. Again, it is asking for help when you need it, knowing where your areas are that you can use the extra people power and getting it.

Shubha Chakravarthy: Can you just give us examples of the types of items on the P&L that you would have to explain the assumptions and the values that you ended up with on the models themselves?

Christy Sheehy: I’d say just more generally. The questions that were asked were, for example we say our target market is, this group of clinicians. How many clinicians are in that space? What is the sharing parameter of your device?

We needed to know when we interview clinicians, they said generally two to three clinicians would share a device like ours. In that space for reimbursement, what percentage of customers are going to pay with cash pay with Medicare and Medicaid or payment private insurers.

How does that impact your revenue model? How does that impact the clinician revenue model? How many devices do you project to be selling each year? How does that translate with your leasing? If your leasing goes for more than a year, how does that translate to scan fees?

Every part of the process that we laid out, we were questioned on, and so it is important that you can just always back up those projections for lack of a better explanations. It is just important that you can think about each group that you are selling to and understand really that group and how they share, how they buy, how they build.

Shubha Chakravarthy: It is almost like how the sale plays out in real life needs to be reflected in the model and if there you are not able to bring receipts for each step in that with real world data, then you are going to lose credibility to that extent, is what I’m hearing from what you are saying.

Christy Sheehy: I mean the nitty gritty of the breakdown for Medicare versus private insurer versus cash, it can be an estimate. It doesn’t have to be to the 1%, but you need to know generally what your billing population will look like and talk to the people at the university you know to understand what billing they get for that particular group. It is all about asking questions to the right people.

Shubha Chakravarthy: Fantastic. So, we read a lot and especially post 2022 in terms of the cliff that VC funding has fallen off. It is already difficult for women. It is even harder now for women.

What was your personal experience of pitching as a technical, life sciences, female founder to VCs? Can you talk about what that felt like and what some of the challenges were?

Christy Sheehy: I think for me, coming from an engineering background where in my optical engineering graduating class, there were two women. So, I think, coming from that space and when you are on a pitch call and the room is just filled on your zoom call with a bunch of men, I think having done that in engineering, it didn’t feel as scary.

So, that was helpful for me just in terms of having that background and being able to expect that. But I think for the most part, I’m trying to think, it is not like I changed my story in any way to tailor a certain group.

My story is my story. I am who I am, and there are going to be some people who like one of those, both of those, or neither of those.

The big thing for me was understanding how not to personalize that. There were instances where people would say, “Oh, she’s a science PhD. How’s she going to be able to run the business and do the business side of things?”

You always question, “Would the same be said for a man?” I don’t know. So, you are left always wondering in those instances what might be asked differently.

It is a question framed as prevention versus promotion. I even went to a class on how to flip those kinds of answers just in case they are presented to you.

But at the end of the day, if you have the passion and you have a product that you want to be able to push through, you just have to do it.

I don’t know how to say it in the way that you want to do it. So, I think there were times, there was even a time once when someone said, “I pitched too bubbly”, or “I sounded too bubbly and happy in my pitch.”

I was like, I’m just really happy about science. I love what I do and if that is a problem, then you know, I can find someone else who loves my enthusiasm.

But at the end of the day, own yourself. Own your process. Don’t change who you are to try to match an environment that wasn’t built for you and continue that process as you.

Shubha Chakravarthy: Fantastic. So, through this long process, there have been ups and downs. Has there been any moment that has been particularly dark or challenging where you came to the brink or really had to dig deep? If so, what caused it and how were you able to overcome?

Christy Sheehy: I think, your first fundraising round in COVID isn’t particularly fun. That was definitely a hurdle for us in terms of whether or not we would get seed funding to make a company.

I think once you go out from the umbrella of safety of grant funding and go into that venture capital world, there is that leap and you wonder, “Am I enough? Are my ideas enough? Is this going to be validated? Is this going to be funded?”

So, I think every time someone goes to fundraise, even just now, I recently did a C plus round. It was for a smaller amount because we have an NIH phase two grant.

Still, every time you go out you wonder, “Are we going to raise?” It is really stressful. I think any founder that is fundraising right now, I’m just like, “Oh, I feel you.”

Because you know they have that concern. “Are we going to get enough? Are we going to hit what we need to hit?” In times of market volatility or down slopes, it is even harder.

So, I think for me, what some of the hardest parts were, “Am I going to close this round? Am I going to get that funding? Are we going to move to the next step?”

All I could do was keep trying to find solutions, get more LOI’s to validate start doing cold emails to see if I can increase my numbers. The great thing about being a scientist is that you are trained how to think solving the problem.

So, in that respect, it was like, there was never the solution of, “Okay, we are done.” It was like, “How do I know? I’ve tried everything I can and then I’ll know I’m done.”

But I never reached that threshold. So, here we are. But that is just one instance. There are so many. I could probably have a whole podcast on lessons learned and things that were hard, but I think fundraising is an easier one to relate to.

Shubha Chakravarthy: Throughout this, you had the support system of fellow scientists in your academic institution. Did you find yourself needing to, or relying on other supports for whichever part of this startup process?

If so, what kind of support did you really need and how did you find the sources to give you that support?

Christy Sheehy: Yes. I needed lots of help, in terms of the technology. I was the inventor. I could really create a great solution slide, create a great solution mindset, but I didn’t have anyone initially outside of my founder and I, who did anything else other than science.

So, for us, we reached out to find people that were better at things than we were like at business models, marketing, and data science. Reaching out and finding people smarter than you in areas that you totally lack was my biggest win. It was just finding individuals that excelled at areas I couldn’t.

Whether they joined your team full-time as an employee or whether they were advisors through the university or local programs. I think that is the key, finding individuals in areas that you are not good at, and you figure out the areas you are not good at by honestly looking at what a pitch deck requires.

Look at those 10 slides. I think you can even look up what Dropbox did for their first pitch deck. Look it up online. If you can create all 10 of those slides by yourself, kudos to you. If you can’t, you find the individuals that can help you through each one of those.

So, if you are not an expert in finance, find that finance person. If you are not an expert in business model creation, find that person and then at the end of the day, if you can have them join your team, that is always great too.

Our team now is made up of amazing individuals who are way better at certain areas than I would ever dream to be. That is my goal, hiring people that can excel and be independent in areas that I lack. That is when you really have the best teams.

Shubha Chakravarthy: Now you know a lot. You have learned a lot relative to where you were when you first started this journey. So, if you had to do everything over again, what would you do differently?

Christy Sheehy: I’d definitely go through the process a lot faster. I think I would probably do short capital raising a little bit earlier.

I think as a scientist, I assumed this validation had to be super thorough with zero doubt that what we wanted to do worked. But a lot of the time that early funding that you get is based on the founding team and how good that team is and how strong their ideas are.

The ideas don’t have to be fully flushed out. They can be 60% of the way there. You just know better than chance there is a shot at this.

So, I think from that respect, we would go out and do some more early fundraising as opposed to waiting to get two NIH grants until we went out and did the external fundraising.

Shubha Chakravarthy: Got it. Then to conclude, what advice would you give the earlier Christy or future Christies in the science field or any STEM field that is based on some kind of academic IP and want to go out and start a venture?

Christy Sheehy: I think the biggest thing I’ve learned is to always ask for help. There are a lot of times you spend yourself kind of spinning wheels, trying to think of what you need to do or be good at moving an idea forward.

There is going to be a whole network of people around you, even if it is just on LinkedIn or a local community that is going to know things better than you.

So, I think doing that early reach out and early networking is really big. It is huge. Networking is so important in the entrepreneurship community, I’d say compared to maybe even just more than general science, but I’d say one, talk to people, network, ask for help, and then two, advice for myself would be, you are enough just as you are.

I feel like early on I felt like I had to be something I wasn’t, “Oh, I have to be this firm negotiator because I’m a woman and maybe they will take advantage of me. I have to be really tough with negotiations.”

I just felt like I was worried I wasn’t enough as I was. If I could go back and tell Kristy five years ago, “You were perfect just as you are,” that would be great because a lot of stress would be off her shoulders.

Shubha Chakravarthy: Fantastic. That’s great advice. Is there anything I should have asked you, but I didn’t?

Christy Sheehy: No, I think, you hit all the big points. It has been a fun conversation.

Shubha Chakravarthy: It has been an amazing conversation. Christy, thank you so much. It has been a joy and I really appreciate your generosity in sharing your experiences, your advice, and insights with so many more women who can benefit. Thank you!

Christy Sheehy: Thank you so much for having me!