Astek Diagnostics closed a $2 million spherical for its urine diagnostics system, although elevating cash for medtech isn’t for the faint of coronary heart. The corporate’s deck has some great things in it and might be a deep supply for issues we are able to be taught from, too.

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Slides on this deck

Astek Diagnostics has a reasonably beefy 22-slide deck that splits lots of the narrative over a number of slides. In some elements, the deck is complete and spectacular, however it additionally comes throughout as fairly defensive and barely dated, though this fundraising spherical closed just lately. A few of the slides have been flippantly redacted.

  1. Cowl slide
  2. Imaginative and prescient slide
  3. Platform slide
  4. Strategy slide (Half 1)
  5. Strategy slide (Half 2)
  6. Present focus slide (Half 1)
  7. Present focus slide (Half 2)
  8. Answer slide
  9. The way it works slide (Half 1)
  10.  The way it works slide (Half 2)
  11.  Expertise slide
  12.  Workforce slide
  13.  Advisory board slide
  14.  Expertise validation testing
  15.  IP overview slide
  16.  Firm validation slide
  17.  Firm timeline slide
  18.  Funding phrases slide
  19.  Industrial and exit technique
  20.  Comparable transactions slide
  21.  Govt abstract
  22.  Closing slide

Three issues to like about Astek Diagnostics’ pitch deck

The place the AD pitch deck is sweet, it’s nice: complete, well-researched and well-designed. Slide 6 — the issue assertion — is a superb instance of all three coming into play.

A complete drawback assertion

[Slide 6] An important, complete drawback assertion. Picture Credit: Astek Diagnostics

Explaining the issue in a pitch deck is essential as a result of it lays the inspiration for individuals to grasp the need and relevance of your startup. This part ought to captivate the viewers by highlighting a spot or inefficiency out there that the corporate goals to deal with. It units the context for the complete presentation, permitting traders to know the magnitude and urgency of the problem at hand. Higher nonetheless, explaining the issue successfully helps to validate the market demand for a services or products.

On this slide, Astek takes the chance to current information and insights that again up its declare, thereby reinforcing the potential for progress and success. This part is a startup’s first step in constructing a compelling narrative that aligns its mission with the pursuits and funding targets of would-be traders.

On this slide, Astek paints an impactful image: big quantities of hospitalizations, pointless therapies, issues with velocity and accuracy. Remedy these issues, this slide suggests, and nearly 70,000 lives per 12 months may be saved.

One other factor this slide does nicely. It describes the issue, however what’s actually going to make traders lean ahead is the immense proportion of the issue: 8.1 million hospitalizations signifies that there’s a really formidable market dimension at play right here.

Stable defendability

In biotech, an organization is simply as beneficial as the flexibility to guard it, and having an important moat is a key a part of constructing a startup for the ages. The truth that the corporate is considering IP safety is reassuring, though I did have some questions on what every of those really imply.

[Slide 15] The authorized moat round Astek is off to begin. Picture Credit: Astek Diagnostics

One query I’ve right here is why the Check Algorithm patent is proven with a publication quantity slightly than the patent quantity; the patent (US11,788,962) was granted in October 2023. The second IP entry — the Fluidic Cartridge patent — is marked as pending, however it’s available to the public.

The third one had me flummoxed, so I checked with the team at Run8 Patent Group. They defined that that quantity is neither a patent nor a publication quantity: It’s a provisional patent quantity. We weren’t in a position to inform whether or not the patent was transformed to a non-provisional patent, however on the very least, the terminology is complicated right here.

The ultimate entry on this record — for a Fast Cartridge Modification — can be complicated. It seems that’s a regulation agency docket quantity, which isn’t a lot of an IP safety, and my pleasant patent lawyer pals inform me that merely saying “submitting in progress” might have been clearer and doubtlessly a extra trustworthy description of what’s happening right here.

Simple to grasp (however …)

In slides 9 and 10, the corporate makes it very simple to grasp how the system works:

[Slide 9] – The way it works, half 1. Picture Credit: Astek Diagnostics.

[Slide 10] – The way it works, half 2. Picture Credit: Astek Diagnostics.

These two slides do job explaining how a consumer would use the product. Insert pattern, micro organism are captured, then examined, then you may learn what the machine discovered. From a gross sales perspective — if I had been a purchaser of one among these machines — that’s an important top-level view over how a consumer would use the machine.

However, from the attitude of a client, that is how I might count on a machine like this to work. If I, a non-medically-trained individual, had been to stroll as much as this machine, I believe I may use it. the expectation of consumer expertise is so excessive now, that this isn’t an innovation: That is how issues ought to be. In fact, in medical units, consumer expertise is usually not a excessive precedence, and maybe the benefit of use is a promoting level for the machine, however the way in which these slides are projected, I sort of go “Sure, and so what?”

What I’d actually like to have seen right here is context. If all the opposite machines are a lot tougher to make use of, inform that story. If the machine is means sooner, present that comparability. If there’s a main know-how breakthrough, that is what I might be interested by as an investor.

The product slides shouldn’t present the way to hit the minimal viable consumer expertise. It’s higher to elucidate what it’s in regards to the product that makes it particular, defendable and price investing in.

Three issues that Astek Diagnostics may have improved

There have been lots of potential studying alternatives — many greater than I’ve time or area to enter on this pitch deck teardown, however let’s pick some takeaways:

Inform the total group story

The group slide has each an excessive amount of and too little info on it.

[Slide 12] Teeming with group members. Picture Credit: Astek Diagnostics

The aim of a group slide is to inform the story of why a group is uniquely positioned to construct this particular firm. As an investor, I don’t significantly care about engineers or pc scientists. The group slide is for highlighting the founding group and senior management, the oldsters which can be trusted to hold this firm by the subsequent few rounds of funding and product improvement. This slide wants extra context to be helpful.

Astek does get partial credit score for together with LinkedIn hyperlinks to every of the group members, however a quick description underneath every title can be simpler.

Because the firm put hyperlinks to the entire group’s LinkedIn profiles, I went seeking to see what I may discover — and I discovered some yellow flags. Kevin is listed as a co-founder, not as CTO on LinkedIn. His profile reads that he’s “a flexible full stack developer with a background in Chemical Engineering. My experience lies in creating web-based functions.” In order that’s nice and all, however {hardware} is difficult, and medical units are extraordinarily specialised. Having a CTO that appears to don’t have any startup or {hardware} expertise may trigger traders to ask some questions.

Rick is listed as the corporate’s CFO — it’s complicated why an organization elevating $2 million would even want a CFO — however he doesn’t list Astek Diagnostics on his LinkedIn in any respect.

On the slide, Scott is listed as the corporate’s chief industrial officer — once more, a wierd function for a corporation that doesn’t have a product in market but — however he, too, doesn’t have Astek Diagnostic listed on his LinkedIn. On the intense facet, he does seem to have related expertise from Particular Diagnostics because the CCO and as a board member of LEX Diagnostics.

In a nutshell, make certain no matter info you embrace in your slides matches with public info that’s out there. If not, prepare for some prickly questions from traders.

Let’s speak in regards to the funding spherical …

[Slide 17] That’s lots of redacted information. Picture Credit: Astek Diagnostics

The corporate has one thing happening on its timeline, displaying three rounds of funding, all of them redacted. Placing apart for a second that I’ve by no means heard of a “pre-Collection A” spherical, this, too, raises some flags.

The irony, in fact, is that lots of this info is accessible by different information sources. When traders consider whether or not to speak to a startup, they use no matter info is accessible to see the standing of the corporate. On this case, I appeared up the corporate on PitchBook and Crunchbase.

Crunchbase “is aware of” about three rounds of funding. Picture Credit: Crunchbase

Crunchbase tracked a $125,000 pre-seed spherical, a $256,000 grant led by the NSF (which turns out to be $275,000) and a $2 million seed round led by Wexford SciTech Enterprise Fund, which was reported in June 2023.

PitchBook has a bunch extra info:

PitchBook exhibits an enormous quantity of details about firm financials in its database. Picture Credit: PitchBook

All of that’s to say that I’m not completely certain why the corporate determined to redact this a part of the pitch deck, because the info is so simply gathered from public sources.

What worries me extra, nevertheless, is the subsequent slide:

[Slide 18] This slide isn’t solely superfluous, it’s doubtlessly a pink flag. Picture Credit: Astek Diagnostics

There are lots of issues to fret about on this slide: Elevating an quantity to “get to Collection A Goal Milestones” helps reply why the corporate wrote “pre-Collection A” within the earlier slides: It’s a bridge spherical. That might imply two issues:

  • The corporate wasn’t clear on what it wanted to do to have the ability to increase a Collection A.
  • The corporate did not hit the targets for its Collection A.

Within the case of the primary choice, that signifies that the founders didn’t have roadmap for what it wanted to perform so as to increase its subsequent spherical. That’s a pink flag: It’s essential to have a agency set of targets, making certain that the corporate has a transparent path to hitting its milestones and having the ability to increase its subsequent spherical.

The opposite different is that the corporate did have a transparent set of targets, however it did not hit them. That occurs on a regular basis, and there’s no disgrace in that. Nonetheless, this deck makes the issue worse: It doesn’t clearly define what the corporate thinks the “Collection A Goal Milestones” are, and nowhere within the deck does it clarify what the milestones are, or what it thinks it must do so as to hit these milestones.

The ultimate pink flag right here is that the corporate is attempting to pre-negotiate the deal: I admire that the founders have an opinion on what they assume the cap and low cost are, however they don’t get to set these; the lead investor does. It’s potential, in fact, that this deck was up to date after the corporate already had a term-sheet in hand, but when that isn’t the case, this slide doesn’t come throughout as founders who’re skilled within the fundraising course of.

A lot of the VC business has stopped utilizing convertible notes lately, utilizing Y Combinator’s post-money SAFEs as a substitute. The additional bizarre factor right here is that Astek Diagnostics is, in fact, a Y Combinator alumnus from the accelerator’s S21 batch. It’s complicated why the corporate would go together with one thing apart from the usual funding phrases.

The straightforward factor can be to only do away with this slide altogether. When elevating a certain amount, the phrases are at all times up for negotiation and can rely on which means the VC wind is blowing in that specific second.

Eliminate the “exit” slide

Refined traders are conscious about comparable exits within the area they’re investing in. A startup’s mission is to construct an especially beneficial firm. As quickly as founders begin speaking about exits, they’re arguing towards themselves.

Amazingly, Astek Diagnostics included not one, however two exit technique slides:

[Slide 19] Exit technique, half 1. Picture Credit: Astek Diagnostics

[Slide 20] Exit technique, half 2. Picture Credit: Astek Diagnostics

This exit technique slide strikes me as spectacularly defensive, along with sending the flawed sign. Belief high-quality traders to know their markets. Founders ought to clarify how they’re going to construct a multibillion-dollar firm and fear about M&A or IPO one other time.

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