Investing in bio-as-tech: The most important question I ask
This simple question can make or break whether I invest.
š Welcome to the Evolve your Portfolio series! Iām sharing the questions I ask to decide whether to invest in bio-as-tech companies. This isnāt investment advice - this is my process for learning about founders, their companies, and whether I contribute value. Although Iām coming from the perspective of investing, itās a perspective that is also useful to non-biologists considering joining a company in the bio-as-tech space.
Questions are always welcome! You can drop a comment here, or hit me up on twitter @biooptimist.I view bio-as-tech as distinctly different from traditional biotech. While biotech is the current juggernaut. My end goal is straightforward: consumer bio-as-tech products and the platforms that make that possible.
Although I know what motivates me to invest, I also want to understand whatās motivating the founder to build. So I start there, āWhat made you decide to found a bio company?ā I keep it casual and since there is no real right or wrong answer, itās also a good icebreaker to get everyone comfortable in the conversation.
Even though Iām asking one question, Iām going to dig until I understand two very different things:
Why the founders are in the bio space.
How bio is positioned relative to the product value proposition.
In the process of getting that information, Iām also learning about how the founder communicates, what motivates them, and how they see opportunities and handle change in the space. Being nimble is key.
What Iām looking for in founders
Technical and empathetic communication
Bio-as-tech has a tendency to sound scary to non-experts(1). As an investor, Iām putting my money on founders who are empathetic to consumer fears and can couple that with exceptional communication skills.
The gap between molecular biology and consumer marketing is, shall we say, significant. To knock it out of the park, I think bio-as-tech founders need to be able to eventually speak to this entire spectrum (though I donāt expect those skills to be fully developed at the stage of an angel fundraise).
I do expect an incredible organization of thought, such that they can forge a clear path through a complex discussion and guide me through their thinking. Empathy of communication is not a soft skill in this context - itās the ability to accommodate vocabulary choices to be as precise in communication as possible without overwhelming others with jargon.
Clear founder-passion fit
Iām adamant that founders should have a clear founder-passion fit(2).
For some, biology is their area of expertise. Some are mission-driven and see biology as the critical tech stack. Some see a market opportunity that their skills enable them to pursue. The list goes on and on. Beyond assessing founder-passion fit, I find this information and dialogue useful for understanding the foundersā long-term thinking and strategic inclinations.
Navigating change
I am most impressed when someone can see from multiple perspectives. Founders with this ability are more nimble, less likely to create blind spots from assumptions, and better at seeking and receiving feedback without defensiveness.
This is closely related to understanding founder-passion fit: a foundersā motivations have a huge impact on how they navigate the twists and turns of an early-stage company.
Evaluating the intersection of bio and product
Itās not enough that the product happens to tangentially involve bio-as-tech somewhere. I want bio-as-tech to be core to the customerās willingness to pay.
As a reminder, Iām most excited by bio-as-tech consumer products that are purely optional, linked to social status, and desirable to evangelize. I think that there are incredible opportunities in the fashion industry(3), consumer packaged goods, and massive growth remaining in the food space.
As more and more companies are founded in the bio-as-tech space, itās increasingly important to evaluate if biology is central to the customersā willingness to pay. I think itās easiest to explain by analogy to the mid-2010s when blockchains were all the rage and the letters NFT was most likely a reference to a network file transfer.
At the peak of desirability for blockchain, money was being thrown at anything that used the word with multipliers if you also said ādistributed.ā That combination incentivized companies to incorporate blockchain somewhere in their product, even if it wasnāt actually critical. But itās a bad idea for pre-PMF companies to include unnecessary features, especially those requiring dedicated resources. It limits strategic optionality, increases time cycles between iterations, and generally misaligns the flow of capital and customer value. Itās a recipe for failure.
The same will happen in bio-as-tech. Companies will incorporate biology because they think it will improve their access to capital. Itās inevitable, but I prefer it not happen on my dime.
True story: When I first started pitching in the bio-as-tech space I had to re-watch Terminator in order to answer some of the most common questions that the movie has inspired.
Check out that article on founder-passion fit! Iām the co-founder of Glassfloor, a web3 community for founders, built by founders. We donāt care what type of company youāre building, so long as you are committed to being a great founder and leader for your organization.
Have you seen the Mycoworks x Hermes collab?! A stunning example of a product that is covetable, the fashion industry already knows how to appreciate, and features the potential of bio-as-tech.