Building a Revolutionary Biotech Startup: The Challenges & Surprises

Intro 00:01
Sarah, welcome to Startup Success, the podcast for startup founders and investors. Here you’ll find stories of success from others in the trenches as they work to scale some of the fastest growing startups in the world, stories that will help you in your own journey. Startup Success starts now.

Kate 00:18
Welcome to Startup Success. Today we have Laura Katz in studio, who is the CEO and founder of Helaina. Welcome Laura.

Laura 00:27
Thanks so much for having me. Kate.

Kate 00:29
I’m excited to talk to you because what you’re doing is really neat. We’ll get into it in more detail, but before we get into your background. Can you just give you, know, a high arcing overview of Helaina, just to set the stage?

Laura 00:46
Yes, Helaina, we’re a biotech company, and we replicate breast milk’s most valuable components, specifically the proteins that impact our immune system, and we’re bringing these replicated proteins to market for the first time. So we’ve created our first product. It’s called effera™. It is a replica of human lactoferrin, which is the most abundant protein in colostrum, which, right now, a lot of people are talking about colostrum as a supplement, but we’re replicating the most abundant protein and colostrum that’s also found in a lot of concentration in breast milk. And we’re bringing that to healthy aging, women’s health, active nutrition, and eventually infant formula, for the immune benefits, gut benefits and cognitive benefits that it provides to us, people.

Kate 01:38
That’s so great. I have three kids, twins, so as someone who’s had my fair share of struggles back in the day, I think what you’re doing is awesome. Give us a little bit more now about your background and what led you to this.

Laura 01:52
I’m a food scientist by training, so I started my career developing food products. The fun stuff, I like to think in the food industry, where you get to come up with an idea, or when you walk into a company, they usually have one for you, but you formulate the product, you decide what goes into it, you scale the production, you do all of that fun work, from idea to shelf. And in the early part of my career, I saw so much innovation going into alternative dairy and alternative meat. And really this innovation was helping us replicate the taster, the flavor, the texture of the real thing. While I think that’s a really important endeavor, I thought, Well, okay, if we can do that, we can replicate how a burger bleeds or a milk or a dairy product. Can’t we also focus on nutrition and making our foods healthier using this technology? And that was really where the idea started with Helaina, of how do we kind of capture what we’re able to do in advancing our food products to make them healthier, and we know that our food over the last 30-40 years has increasingly become unhealthy and has not been good for us. So what I did when I started figuring out, okay, where do I take this? I looked into nature and I wanted to figure out, okay, what is like naturally, a food and a medicine? What can we learn from that, and how do we use that, marry this technology and come out with some good outcome? And of course, breast milk and colostrum, which is the first milk we produce, is really the only natural food and medicine that has all of these different bioactive components in there that help our body develop for the very first time. And not only that, what I had also learned was that people try to buy breast milk on the internet from strangers, which is a crazy idea, but bodybuilders and cancer patients and parents, of course, but people all across the spectrum are going on line to a black market to buy breast milk, and so that, to me, was such a big alarm bell that, okay, there’s really something about breast milk that is so special. We have the tools and technology to replicate those things. We can actually bring them to market, to shepherd in a new era for nutrition, where our food ingredients can be bioactive, can actually advance our health. Of course, going from idea to where we are now is an entire process, but I knew it was possible. I have a background in food science, and I knew how to develop food products, and I figured that this was the best way that I could be using my time as somebody in this field.

Kate 04:47
Wow, that first of all, that’s, that’s quite a lead up, just because it’s good to know what is possible. And I like what motivated you, but you must have been. It’s. So there’s a leap of faith there, right? Because I’m guessing, as a food scientist, you were at a good job, you were doing well, and then to go out on your own and pursue this idea, what was kind of the catalyst in your mind that gave you the courage to do it.

Laura 05:16
I think I always knew I wanted to, one day create something on my own, and I had this idea for many, many years before Helaina. I actually had in grad school. When I was in my master’s degree at NYU, I had started thinking about this, and I knew I couldn’t go and do it right away. I was like, I want to get some experience working period, because I was a master’s student. I went straight through. And I also know I can’t just go start a company – that’s expensive. I was a student. I didn’t have any money, so I spent three years saving up money so that I could quit my day job. And I ended up saving, I live in New York, and, you know, I was pretty young in my career, a working professional, not making that much money. So I saved $15,000 thinking that that would be at the time that I figured out how to make it work. But I quit my job, I had a drop dead date for myself, where I was like, I need to save X amount of money by this date, and then I just have to do it. I have to rip the bandaid and do it. And that was what I did. And I was young enough to not…I was pretty naive in a good way. And I think you kind of have to be when you start a company that I didn’t really, I wasn’t able to evaluate all the downside. It was just the upside. I didn’t need a lot to live. I was totally focused on this, and I just kind of took that leap. And I think not really knowing that much helped me take the leap. Because if I knew now, back then, I think I would have approached it very differently, and not necessarily in a good way. I think that naive mindset, in a very optimistic mindset, is actually really empowering at the early stages of starting a company.

Kate 07:04
Yes, I was going to say, when you said naive, I was going to say actually optimistic, which is where a lot of these great companies come from, these optimism, the optimism from their founders. And very admirable. And I love how you set a goal for yourself and everything. So, if you could delve into a little bit more that this is possible and that you know how to do it, that I think that would be really interesting for the audience, because this is a big undertaking.

Laura 07:34
Yes. So the ‘this is possible piece’, when I, like, in those three years leading up to me doing this, I wasn’t just, I wasn’t doing nothing related to Helaina. I was kind of doing research, reading books, talking, okay, not seriously committing 50 or 60 hours a week. And so there’s a few things that tell us, okay, this is possible. I’ll start with just maybe a background of the technology that we use. So, what we do at Helaina is we take yeast, and you can take a lot of different types of little microbes, yeast or bacteria or different things, and you can engineer them or train them to make very specific molecules. And you ferment them so you put them in a big tank, you feed them the things that they need, and then they spit those molecules out of their little cells, and they produce products. It’s called precision fermentation. You can be really precise in making a specific outcome or ingredient or molecule. And there’s a lot of examples in the Pharma industry in particular, of where this technology has been successful, insulin, human insulin that diabetics take. You know, for decades insulin was taken out of the pancreas of pigs. And that’s not, I think there are some places in the world where that still happens. But most insulin that’s commercially available is made through fermentation, so bacteria are taken, they’re engineered, they’re taught to make insulin. The insulin is produced through a large kind of fermentation process. It’s purified out, you don’t have any bacteria in it anymore, it’s just the pure insulin. So we know that is possible. Insulin is a human protein, and what we’re making are, you know, they’re milk human milk proteins, but they’re human proteins. But since the last decade, there have been a lot of companies in the food space who have seen how that technology has developed over the last 30 or 40 years, scale and accessibility the scale has been available. It’s still an expensive technology where it’s hard to make it work for very cheap foods, but for what we make, which is quite high value, there’s a good fit. And there are other companies like Impossible Foods, for example, the heme in their bleeding burger is actually a heme made through fermentation. So we had seen all these examples, and we knew that the fundamental background behind how to make this was possible. Now we have to go build it, and all the engineering is the hard part, but it is possible. It is scalable. You can make it in at least a cost effective enough way for what we do, which is in the higher value part of the Food and Nutritional space. And so that was kind of the validation work that I did, even before starting the company, was like, Is this even a path? And we realized that, yes, it is.

Kate 10:32
That’s so exciting. So you’ve taken that leap of faith, you know, it’s a potential, possibility path. So then is the next step you went and got funding?

Laura 10:48
Exactly, yes.

Kate 10:49
Okay, and how was that? I mean, were you able to articulate what you wanted to do and find investors?

Laura 10:52
Not well. I guess, well enough that it worked. (laughing) I was a food scientist. I didn’t even know what a venture capitalist was. So I bought the books, and I read a bunch of stuff, and I just started emailing founders of companies that I thought were interesting, like even big companies, most people don’t respond, but I was like, I don’t have a network in this space. I don’t know anything. I have an email address, and I can use that. And that was kind of my strategy was I emailed first founders to understand kind of how they’ve done it, and then I spent a lot of time on CrunchBase, and I looked at, Okay, who funds early stage startups. And I was told angel investors are the path. So I emailed a whole bunch of them. Most didn’t respond, but a couple did. And somehow I was able to sell the dream a little bit enough to raise about $600,000 which was our pre seed round back in 2019. So it was really, I mean, early stage fundraising is selling yourself in a story. And somehow I pulled it off. But it was not without, you know, I quit my day job. I was doing this 100% of the time, and I would sit in front of my computer for hours and hours and email people and try to get them on the phone. And some people were interested and some people weren’t, and so it was just really kind of pounding the pavement.

Kate 12:18
Wow. I appreciate you walking us through that. Because I think people think, Oh, then you just go out and get VC funding. You get that first, (no) it’s really challenging. And I like how we have VCs on this show, and one of their pet peeves is they invest in electronics, and they hear from a founder that’s, you know, they I like how you used CrunchBase to figure out how to target because we hear that again and again on this podcast, how important it is to target. Okay, so that’s exciting. So you got your first check or checks, and then you were kind of, when was that? When did you raise your seed round?

Laura 12:55
So that was like, at the end of 2019 it was a pre seed round. And then at the beginning of 2020, in January, I was able to hire a couple people, scientists. And we found lab space here in New York. So kind of like, like, imagine a We Work for life science companies. So okay, the model is you, like, pay per bench, per person, and you get access to a lab, and they have all the different facility needs that you would need. So it’s a really nice model for companies starting up. And we found that space. They allowed us to use it because you had to apply. And we found a couple scientists, and hit the ground running. We got the lab set up by mid to end February of 2020, and then a few weeks later, it was COVID. So it was a really interesting time to start a company that is a lab company, and the whole job is being in person in a lab. But we figured that out.

Kate 13:53
Yeah, I’m sure you could build a bubble and wear enough protection that you were able to keep working once COVID calmed down.

Laura 14:01
Yeah, we were out for a little bit, and then we were able to kind of come back in and, you know, sterility, and PPE and all of these things are already so fundamental in a lab setting. So it’s not, you know, these are a lot of really smart, trained scientists. It was something that we were able to handle.

Kate 14:20
Right once you know, COVID was better understood. So where are you all today?

Laura 14:26
So we have developed the technology, which is a platform that allows us to make human bioactive proteins broadly. We zoomed in on our first protein, which is our first product off the platform, which is a human lactoferrin we call effera™ that’s the brand. We’ve scaled the production. We’ve run a clinical study, a really robust set of studies against showing the impact that this protein has on our immune system. And we are launching this quarter. So we’re selling to partners. We sell B2B. So we’re a branded ingredient. Effera is the brand name and we sell to partners that want to put this into their products. So think like Splenda is a branded ingredient. This is obviously not Splenda, but just conceptually that there’s, you know, that effera will land on the front of the pack. We are launching into women’s health, active nutrition and healthy aging, and we’ve recently actually shared and announced some of the partnerships that we have within those categories, both small and larger companies, and we, in the background, are, of course, really committed to Infant Nutrition, and that takes longer than online. There’s more safety work behind it. So we are working with a partner in infant nutrition to get our products ready to be launchable into infant formula. But we are now commercial. We’re selling and generating revenue

Kate 15:55
That is so exciting. I mean, wow, that’s incredible. So after that initial seed round, did you have any other fundraising rounds? I’m guessing you did. How many?

Laura 16:09
Yeah, so this is what we do is…that was one of my biggest fears in starting this company, was funding it, because someone who was in our initial round, our pre-seed round, who became a mentor of mine, I said to him, I said, my biggest concern is, I think that I need to build this, but I don’t know how to fund it, and I know it’s going to be an expensive journey. Biotechnology is expensive. Just the cost to operate a lab, the consumables for the lab, the different specialties of people, the scale. There’s no way to get around these costs. And he was like, okay, but if you took that out of the equation, would you do this? And I was like, 100% absolutely, this has to exist. And he said, Well, we’ll figure it out. And he’s an investor who’s invested in all the rounds that we’ve raised to date, and has also helped guide me through how to do it. And I definitely know a lot more now about fundraising than I did five years ago. But so we did a pre-seed round, a seed round in the summer of 2020. We did a series A in the fall of 2021. We did an extension of our A little bit after that. And we actually just announced the close of our series B, which we closed last quarter, which was a $45 million round. So to date, we’ve raised about $83 million dollars.

Kate 17:33
Fantastic. Congratulations. And how fortunate that this mentor you know that you found this person and has helped you so much.

Laura 17:43
He’s been so instrumental. And what’s actually really fun about all of this is he, I mean, he cares about me first, and I think that has actually enabled me to be the right leader and founder for the company. But he has, there’s another investment that he wants to make right now of a company making, you know, this really impactful ingredient. And he’s like, I want to bring you in to advise the company. And now we get to, like, work together in other capacities. So it’s like, you never know where relationships with investors or the people you surround yourself with in the world of startups, you just, you don’t know where that could take you

Kate 18:23
Yeah, that’s a great example of the power of a network and look what it’s brought you and congratulations on all your fundraising. If we switch gears a little and talk about your experience as a founder, I mean, you’ve had a lot of success, but you’ve couched it in this conversation that it’s been a lot of work. What has surprised you most? Is it leading the company that’s hard, is it you know, you mentioned the fundraising, but what? What has surprised you?

Laura 18:56
I don’t know if this is surprising or if it’s more – I guess what’s surprising is just how much more difficult it is, and I realized is people. I think, fundraising, like if you’re building a good company, if it’s strong, it could be hard but it’s almost always possible. No, I mean, in this market, it’s really hard, but it is possible. The technology – really difficult to figure out, but it’s possible. Like scaling a business, totally possible. Again, all these things are hard, but the hardest part that I think I didn’t realize would be the thing that consumes my mind the most is hiring the right people and scaling the right culture. And at the end of the day, people make the business. I didn’t walk into Helaina wanting to manage a big team. I’d never actually had a direct report until starting this company. And so I never actually understood just how much work it was to make sure that the people that are going to be at the company are motivated. I mean, you can’t always, it’s not always your job to motivate them, but have growth opportunities, are doing their best work, are challenged. Also understand the path of the business. Understand that like, it’s not always going to be fun to show up to work every day. Like, it certainly isn’t. There’s going to be really hard days, and keeping people into the mission where they could be working literally anywhere else. I think that’s really hard, but it’s also really rewarding to be able to pull together such a strong group of people. And I think the thing that makes me very nervous right now is with having just closed a round is we’ve been really lean, even though it sounds we’ve raised a lot of money in the biotech space, we’ve been very lean, very cautious on headcount, and there’s a lot of hiring that we have to do, and growth that’s going to happen. And I just get so nervous about how to scale the culture, because that’s where a lot of startups fail, and it’s not going to be perfect, and our culture will change, but you want it to change in the right direction, and I think those are the things – just how much time it consumes in my mind has been really surprising.

Kate 21:08
I really appreciate you sharing that, because here you had this really complex problem that required a lot of investment and fundraising. But you’re sharing something that we’ve heard from the best founders on the show, and they’re like the product, the funding, the technology you need that will all come, but they’ve all said it’s the culture that made the difference and put them over the edge, and how it changes. You’re at that inflection point right now where, when they’re a founder, you kind of walk around, you know, when you everybody, you have this very lean team, and then you get this one round, and you get huge, and you become a CEO, you’re not a founder anymore, and what that leap is like, and it’s, it’s really challenging, but that’s kind of, you know, a big make or break point. So I appreciate you sharing that, because the fact that that’s where you are too in this complicated space says so much. I can’t believe I only have a few more minutes of your time. So we always wrap up this show with this question, any lessons or advice for other founders listening? That’s their favorite thing. They insist that I continue to ask that. But you’ve had so much success.

Laura 22:26
Most people, even today, but definitely in the beginning, told me this wasn’t possible, either because they thought the tech was impossible. They would say, Well, you don’t have any experience starting a company. I didn’t have a co-founder. There was a laundry list of things that people said, No, this isn’t gonna work. And we still get that all the time. We just closed a series B. So many investors are like, I don’t think you’re actually gonna hit where you need to hit. That’s gonna happen, and you have to tune that out. And for some people, that’s actually motivating, it’s hearing rejection. But you have to know that if you can get comfortable with rejection being part of the role and keep your eyes laser focused on getting it done, you will get it done. And you have to tune out all the people who are going to tell you, it’s not possible. If you keep kind of that mental focus, and you also have to, even if it’s artificial, build some kind of confidence that you’re the right person to do it, that will really, really help you. Because so much of the founder journey is dealing with failures, dealing with rejection. Like that is most of what I deal with everyday – fires, rejection challenges, and you have to be able to embrace that and not let it get in the way of your ultimate mission. And so I say through the hardest times of what we go through at Helaina, because sure, you know, it sounds all bright and sunny, but there are so many challenges that we face is like, one day we will get this into babies, into the hands of women, and we know we will change like, we will materially change their health. And so you have to keep that in your mind of like, we know that that’s going to happen. And sometimes you have to deal with all of this around you, all the chaos to get there. But it is so worth it, and don’t let it get you down.

Kate 24:23
Wow. I appreciate you being so candid and open, and I think you’re going to do it.

Laura 24:30
I hope so. That’s why we’re sharing.

Kate 24:31
I really do. I’m very positive. Yeah, it’s super exciting what you’re doing. Really, really commendable. For people who want to learn more about Helaina, where did they go?

Laura 24:42
It can go to our website, MY Helaina.com. LinkedIn – they can follow us there as well. The things that we post, papers that we’re publishing, the clinical work that we do, job postings, I said we have a lot of hiring to do. If you want to reach out over there and or honestly, people can reach out to me directly. I keep my inbox open. I think that’s really important, because I was that person reaching out to, you know, founders five years ago. So I am always happy, I reserve time on my calendar monthly to talk to, especially students, is kind of where my soft spot is to be able to talk to them as they’re figuring out their journey. So any of those places are good places to find us.

Kate 25:25
That’s great. You know, with everything you have going on, I really appreciate you being here. I really enjoy speaking with you. I wish you the best, and I really believe it’s gonna happen. So thank you again.

Intro 25:40
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