Putting Women’s Health First, Part 2: Avestria VC Co-Founder, Managing Partner, Linda Greub, and Partner, Tracey Dooley, MD

Yolanda Fintschenko:
This is the Startup Tri-Valley Podcast, featuring in-depth conversations with the leaders who are making the Tri-Valley the go-to ecosystem for science-based startups. I’m Yolanda Fintschenkoo from Startup Tri-Valley.

Lynn Naylor:
And I’m Lynn Naylor, CEO of the Innovation Tri-Valley Leadership Group.

Yolanda Fintschenko:
So, I don’t think we’ve hidden our interest in highlighting the Tri-Valley as a region to start companies.

Lynn Naylor:
Absolutely.

Yolanda Fintschenko:
I’m curious with Raydiant Oximetry and maybe any of your other investments, how did you view investing in a company that was locating in the Tri-Valley and what did you see as any perceived strengths, weaknesses around the location of the company?

Linda Greub:
So you may have picked up that we’re not the type of investors that figure out what the hottest thing is and jump on it, right? In fact, if it’s the hottest thing, you’re going to be paying too much for it. I mean, just think about buying a house in the hottest market versus trying to find something that’s a little bit out of the way, right? And also there’s a lot of pressure by being hot. One of the things that I love is that most people, if you go to Palo Alto, you may be there because it’s a hot place to be and that’s where you’re going to meet all your venture capitalists, right?

Yolanda Fintschenko:
Right.

Linda Greub:
If you’re thinking more about, “Where can I find the most wet lab space at a reasonable price, where am I going to have more interaction with other entrepreneurs like myself? Where am I maybe going to be closer to my home so I don’t have to spend all my time commuting?” To me, that’s how you start a good business. Starting a business just because it’s near the hotel where you might meet the venture capitalists at having cocktail hour, to me, that’s just so foreign. It’s not how I would run a business. And so to me, being in the Tri-Valley is an excellent location.

And we’ve seen more and more, especially from my life science tools background, I mean, we’ve seen some amazing companies grow out of the Tri-Valley. I mean, Quantalife was amazing in terms of developing digital PCR. And then they were ultimately bought by Bio-Rad. So that’s how Bio-Rad got a big presence here. And then a lot of the ex-Quantalife people went out and started 10x Genomics, which has just been a rocket and is doing real well.

And that’s what’s exciting to see what’s going on in the Tri-Valley, is so many of these entrepreneurial hubs just happened because one company found success and then the entrepreneurs are like, “Well, what did we do now?”, right?

Yolanda Fintschenko:
Right.

Linda Greub:
Or some of the people are like, “I don’t know. This company’s getting really big. It’s not quite as fun as it used to be. Let’s start something on our own.” And they start it with the people they’ve been working with, right? And that’s what I think you’re starting to see in the Tri-Valley. If we go out to the Silicon Valley, it’s sort of been there, done that. And to me it’s much more exciting to go someplace that’s a little more out of the spotlight.

Yolanda Fintschenko:
That sounds consistent with some of the things we’ve heard from a few of the founders in terms of wanting to locate someplace where that made more sense for them personally, rather than locating someplace just to be close to a funding source. And so that’s reassuring to hear that that’s recognized for you as investors as well as kind of a common sense approach to starting a company. I’m curious, Tracy, if you have anything to add to that.

Tracy Dooley:
Yeah. I think geography is important and maybe not in the traditional way that people have thought it was really important, especially in the past few years, right? Being able to connect with folks over Zoom has really democratized a lot of the access. Part of our thesis from the beginning was really trying to democratize access to venture capital, right? And I think that that has happened very much more widely sort of across the board, right? And when we think about people building a capital efficient company, when we think about evaluating how they make trade offs, how they make some of these decisions, it’s really interesting to see where they choose to locate their company.

I would say that echoing Linda, we are a little bit biased against the people who are in the hottest location and have all the biggest names, right? We want to see the fundamentals and we want to know, “Okay, great. If you’re here and your manufacturer’s 10 minutes away, that’s great because we know that you’re setting yourself up for a longer term success. You’re thinking ahead. You’re trying to be very strategic. And you’re willing to spend money in ways that are strategic to the company, but you’re also willing to say this is not a priority if it’s not going to be fundamentally beneficial to what we’re trying to do.” So I think we very much appreciate that. And you can also see other emerging managers who are focusing specifically excluding areas that are typical hubs, right? So Silicon valley and Boston and New York are oftentimes excluded and they want to focus on different geographic locations because of the rich, robust opportunities that are there. I think there’s plenty there that we can focus on and we’ve been very fortunate to find some great opportunities like Raydiant.

Linda Greub:
So it sounds like this is a frontier in a way.

Lynn Naylor:
It is. Yeah. And also, femtech is just proliferating and is such a fantastic new frontier as well, right? So I’m really curious what you see happening in that sector. You’re well known now in it.

Linda Greub:
Well, femtech is a sort of controversial term.

Yolanda Fintschenko:
Is it? Okay, good.

Linda Greub:
The great thing about it is it was coined by Ida Tin. She found that she couldn’t go in and talk to venture capitalists about a menstrual tracking company because most of the venture capitalists were men, right? And it made them uncomfortable. Whereas if she could call it a femtech company, then they were allowed to invest in tech. And if they were to cocktail party, they could say I’ve invested in this femtech company. And so that aspect of the term has really been good, right?

Again, you don’t really want to invest in a period tracking company if you’re a 30 something man, right? I mean, you might, but it’s made it a little more palatable. But we tend to use the term women’s health more because sometimes femtech, the term gets very tied into direct to consumer products, which there’s nothing wrong with. But a lot of direct to consumer products are really about marketing and sales and marketing. And that’s just not our area of expertise, right? We’re much more focused on what are the health problems and how to solve them. So we, for what we do, tend to focus more on women’s health. I think we’re seeing other people who focus on the type of problems we’re focusing on, calling it women’s health as a way to distinguish it a little bit from the direct to consumer products that many of which are great, but some don’t have the rigor of having a regulatory environment behind them.

Yolanda Fintschenko:
Right. Okay. So for women’s health, it sounds like there’s still probably going to be some element of traditional healthcare in the loop, like probably a doctor or maybe a hospital or pharmacy and things have gone through FDA approval, rather than something that’s more maybe wellness-focused or solving, let’s call it a cosmetic problem for women, that is not necessarily going to have to leap through any kind of regulatory hoops.

Linda Greub:
So I think that the word femtech is fantastic. I just think that in recent years there’s been a little bit more of a discrimination going on between, do you know mean femtech meaning direct to consumer products or do you mean femtech meaning technologies that are working to improve women’s health?

Yolanda Fintschenko:
Right. Okay. Understood.

Linda Greub:
But thank goodness for the term, because you know you see it in the Lay Press all the time.

Tracy Dooley:
All the time now. Yeah. Yeah.

Yolanda Fintschenko:
Well, and it makes it so that people are talking about problems that are maybe more exclusive to women. Or exactly your definition where women are disproportionately affected, suddenly people can talk about it, which is an improvement.

Tracy Dooley:
Yeah. And the analogy to that is digital health, right? Digital health has been around, that term has been around for a while particularly in the Bay Area. I think at the beginning, people were like, “Oh, well, what is that?” Okay, well, it’s digital health, right? And thinking about technology applied to that. And then we saw this sort of expansion where everybody… Fitbit was calling themselves, “We’re a digital health company.” It’s like, well, okay, but what does that really mean? Right?

Yolanda Fintschenko:
Yeah.

Tracy Dooley:
Rock Health has put out a number of reports. And strikingly a couple of years ago, they looked at the investors in digital health. There were about 700 of them investing about $14 billion in that space. About 300 of them, that was their first time investment in digital health, right? So it presents on one hand, an opportunity for folks who are potentially new to the space and see something exciting for them to get engaged in it. It’s kind of, “Oh, this is something new. I want to learn about it. I want to invest in it,” right? So it’s always great to have that air time and to think about bringing in more folks to really understand what the challenges are.

On the other hand, there’s been a recent report, again, in digital health specifically, but thinking about what is the level of robustness of clinical evidence for any of these given digital health companies? And is that commensurate with the amount of funding that they’re getting? And the relationship is completely misaligned, right? There’s lots of money going into companies with very little or not much robust evidence. The companies that do have very robust evidence are not funded commensurately to that level of evidence. And so I think whenever you’ve got these frontier areas with digital health being a little bit farther ahead just in terms of years and familiarity, we might expect to see a similar thing in women’s health where you’ve got this category expansion, but then you’re really going to start seeing the folks who have a robust, fundamental strategy are going to be able to move through all these things. You’re going to be able to cut through that noise, right?

A lot of early-stage companies will fail and that’s to be expected in this area, right? And some of them will do well, but I think that’s part of our job as investors, is to really be able to say, “Here’s what our wheelhouse is. And we want to pick people who are also working in their wheelhouse to address these really critical unmet needs.” And the labels help as a kind of shorthand for folks to find each other. But I think at the end, we’re not making up anything new and we’re still trying to invest in fundamentally great businesses.

Yolanda Fintschenko:
So that is a great lead in to what I hope is maybe a call to action that you can give some of our founders in the Tri-Valley in terms of what do you see as being the greatest need, the greatest unmet needs where you would love to be able to fund a company. And also what would your outreach be to encourage more female founders in the Tri-Valley to found a company and to contact you? So they’re two pretty different requests, but if you could address both, that would be great.

Linda Greub:
Well, absolutely we think women should be founding companies. I mean, they often have fantastic ideas. And again, when it comes to women’s health, who better understands women’s health and the problems related to it than a woman? So I think a lot of women, they take it for granted that they actually have expertise that 50% of the population probably doesn’t have, right? So they’re starting off, already they’re above the middle of the pack, right? It’s scary to start a company and nobody knows the answer, right? So any person who’s thinking about what they want to do, nobody’s an expert. So there is well positioned as anyone. And I think that’s one of the things that we often see the difference between men and women is I think men tend to… Their confidence level seems to exceed their expertise often. And women’s confidence level often is below their level of expertise. Women probably need to push themselves a little bit harder to go ahead and believe in themselves and do what they need to do.

And then in terms of areas of need, I mean, we have some great investments in things like postpartum depression, right? There’s ovarian cancer and diagnosing it earlier. These are huge unmet needs. I think some of the areas where we haven’t yet seen good solutions are endometriosis impacts one in 10 women. It impacts them from age 12 or 13 up to age 50. There’s no good way to diagnose it right now, except to go in and have surgery. So we’ve seen a couple of companies that are working in that space. We haven’t yet invested in it. But I mean, that’s a huge problem that somebody has got to find a solution to.

Alzheimer’s is a huge problem. We haven’t been able to invest in a company yet because it’s hard. I mean, the therapeutics are not working. So we often look at other… Like, is there a good diagnostic company that can just help us make some progress or is it going to be a home care company? So that’s another huge. Alzheimer’s disproportionately impacts women. It’s not because women live longer. It’s because women are more likely to get Alzheimer’s.

Another area that we’re trying to figure out a little bit is they’re slowly starting to understand that cardiovascular disease is different in women than men. Cardiovascular disease is the number one killer of women. And I think we all tend to think, “Oh, breast cancer,” right? Well, breast cancer’s becoming a chronic disease, and thank goodness we have a lot of solutions for it. But we’re still not focused enough on the unique needs of women in cardiovascular disease. And just even the lack of training for clinicians to understand that if a woman is nauseous and is sweating and has suffering from fatigue, that’s probably a heart attack, right? For me, I would assume I had the flu, right? And it’s amazing how many clinicians are not savvy to that. It’s a pretty basic thing. So I think we’d love to do some investing in more female-specific aspects of cardiovascular disease. Tracy, what else are we forgetting that are big areas?

Tracy Dooley:
Yeah. I mean, I think that’s really important. One thing I will highlight is we do have a couple investments in the autoimmune related space, but autoimmunity is kind of like saying cancer, right? There’s a lot of different categories within that. Particularly in thinking about the pandemic and the impacts of COVID and now what we’re seeing with regards to research and the autoimmune effects of that, I think that’s going to be an even bigger area, right? Just from a pharma perspective alone, it’s a top three area of a spend and it’s a top three area of growth. And so that’s clearly something that there’s a lot of opportunity there to partner, to get acquired, and things like that as well. So I would say thinking about those areas, there’s going to be a lot of opportunity coming up.

Linda Greub:
Tracy’s the one who explained it to me, but I didn’t realize that long COVID is basically behaving like an autoimmune disease.

Tracy Dooley:
Right.

Yolanda Fintschenko:
Oh, I didn’t realize that either. Yeah. That’s frightening because there are a lot of people struggling with that. So it’s a new category to the host of autoimmune diseases that are already there.

Tracy Dooley:
Yeah, absolutely. I think that’s one example of also how everybody can benefit from having better data and better stratified data, right? Because early in the pandemic, it was determined that men were having worse outcomes than women. And you were seeing more of these cardiovascular outcomes in men who had caught COVID. This was sort of pre-vaccine. And so I think had we just lumped everybody together in this one homogeneous group and said, “Oh, well, patients in general have X outcome,” that wouldn’t tell people that wouldn’t inform them of how they might want to think about their own personal risk and what they might want to do.

But yeah, so long COVID is one of those things that it’s obviously still evolving. They’re just at the very beginning of research on this, but there’s cardiovascular elements, there’s neurological elements, there’s obviously mental health pieces and there’s pulmonary. So they’re trying to tease all these areas out. And so I think that there’s in this one bucket alone, that’s one that’s very interesting. But you can find this really in almost virtually any area of healthcare.

I would say that because folks may not be used to stratifying and thinking about the data at these early levels, I mean, you can pretty much take any area. Thinking about where you can move from that fundamental research into an area that’s more patient facing is really important. And so we are seeing a lot of folks starting with the early stage, bringing their expertise and their knowledge to both do that research and also do that, do the development piece. So I think that that’s one area where you might want to think about what can you use to elevate or accelerate your pathway as well.

Yolanda Fintschenko:
Okay.

Tracy Dooley:
And to the second part of your question around, how do you think about getting access to people, as I mentioned before, we are really trying to democratize how you get access to VCs. We don’t require a warm intro. Of course, we absolutely do appreciate warm intros. But on our website, avestria.vc/entrepreneurs, there is a form. Anybody can go to it and fill out their form and tell us a little bit about their company and submit a non confidential deck and we will take a look at that. Actually, we’ve made investments off of that when we haven’t had a warm introduction. And I think that that’s one of the things that people feel like they need to have everything figured out, right?

Yolanda Fintschenko:
Yes.

Tracy Dooley:
But the process of building company is having some of that figured out and having an idea of how you’re going to figure the rest of that out. And I think that’s really important. I will also say to female founders, you already have a big asset in terms of building community generally and being able to reach out to other folks and really leveraging an ecosystem. I think that’s one thing that also kind of comes much more naturally perhaps, and that we’ve seen in the companies that we’ve invested in and in our personal networks as well. And so that’s an enormous advantage that you can take advantage of as well. So don’t discount that, right? You don’t have to be doing it all on your own. And as we pointed out before, it’s probably not a great idea to do it all on your own.

Yolanda Fintschenko:
Right.

Tracy Dooley:
So leverage the folks around you as well.

Linda Greub:
One thing that I think a lot of entrepreneurs don’t understand is that then each venture capitalist has its own unique strategy. I mean, Tracy and I obviously only invest in areas we can understand. So there are plenty of companies that seem like a great company and could probably make investors a ton of money, but it’s just not a fit for us, right? So one of the most important things I think entrepreneurs can do when they’re thinking about funding their companies is a little bit of research or just talking to people more about like, “Which are the venture capitalists who are out there who might fund this type of company?” Because again, we don’t turn people away because it’s a bad business, but it’s just maybe not a fit for us.

And even within the few people we know who often invest in women’s health companies, each of us has a very different strategy. And how would you know that? Right? Good VCs are putting it on their websites, right?

Yolanda Fintschenko:
Okay.

Linda Greub:
But I mean, so many venture capitalists, I go to their website, they’re not really sure what they invest in and I’m not sure they want everyone to know what they invest in. But if you can, it should be there. And if you can talk to other companies who a VC is invested in, I know that’s really hard to do. And always look at a venture capital. If someone mentions a venture capitalist to you, always look at who their portfolio companies are because it’ll give you some idea of where their comfort zone is.

Yolanda Fintschenko:
Right. Right. So where they feel like maybe they have the expertise to evaluate if a company could be successful.

Linda Greub:
We also try to bring something to the table for our companies. One thing I found is that before Avestria, when I invested outside of my sweet spot, when the company had a problem, I couldn’t help them. I didn’t know who to turn to. So that’s important to us, is to try to make sure that if we invest in a company, that we can bring something to the table that will be valuable to them.

Lynn Naylor:
Well, that’s fantastic. Because you both touched on it, I just want to ask one quick question about the difference. You hear pitches and see pitch decks from men and women. I’ve heard that women have a tendency to under promise in the really thoughtful and careful because they don’t want to over promise to investors. Do you see a difference in the way that a little more bravado, gravitas in some pitches? Is there any difference that you see because you deal with so many different pitch decks and reviews?

Tracy Dooley:
The overwhelming majority of the folks who do pitch us tend to be women, right?

Lynn Naylor:
Uh-huh.

Tracy Dooley:
Because of our focus. Because of our focus.

Lynn Naylor:
Sure.

Tracy Dooley:
So, I mean, that being said, I think a lot of what we do see is also it’s culturally determined as well. So I think we can also see that in different people who come from different areas and people with certain backgrounds, right? I think we have had people reach out to us who don’t have necessarily scientific background. That’s not required for us to invest in you, right? But I find that folks who do have that scientific background are also generally willing to talk about that and really get into those fundamentals. And I think that that’s helpful to us, right? I think the folks who come in with a sales and marketing approach to their pitch and just saying, “Believe in me,” they could have a great pitch, but I think that’s just not consistent with the way we like to invest, right? So there are some great ideas, but then we say, “Great. That sounds wonderful. Please come back to us when you’ve got proof of concept, when we could see the data and then we can have a discussion around that.”

And we want to educate ourselves and we want to learn. But we also appreciate folks that are able to be three steps ahead of us. So when we ask those questions, it’s not… We are definitely not the experts in your company, right? And so when we have a question, you demonstrating that you’ve already thought about it and what you’re doing about it, or you’ve said, “Okay, well this is how we’re mitigating it,” that’s really important, right? So I think all those aspects we’ve tended to see more in women. Yes. I mean, I’ve had experiences with both women and men where just the personal interaction has gone in very interesting directions for sure. And there have been instances in which it’s really clear that it’s not a fit from some of those behaviors.

Lynn Naylor:
That’s great advice for women founders. That’s terrific.

Linda Greub:
And again, it’s sort of none of us can be friends with everyone so it’s finding your people, right? Tracy and I, the more an entrepreneur turns on, sort of this goes into sales pitch mode, the more we back away. It’s just because it’s not who we are as people.

Yolanda Fintschenko:
Right.

Lynn Naylor:
That’s great.

Yolanda Fintschenko:
So I just wanted to wrap things up. I just want to make sure people understand. At what stage, if they think they have a company that’s going to fit maybe in your portfolio, at what stage should they be applying to Avestria for funding?

Linda Greub:
Well, very early stage, but Tracy brought up a key point with us, which is proof of concept. That doesn’t mean somebody has to have gone through a clinical trial, but there has to be some scientific or medical evidence that there’s likely to work.

Yolanda Fintschenko:
Right.

Linda Greub:
It’s not just an idea. Sometimes it could be a matter of, “Well, this other person has this device and it works. And so we’re going to do this and it’s going to tweak it and it’s going to be a little easier.” Something like that, you maybe need a little less behind you because you have somebody else who’s already blazed the way in the market. And then if you’re doing a service, it’s harder to have “proof of concept” with a service, except for those companies tend to have revenue a lot earlier than a medical device or a pharmaceutical company. So if it’s some sort of healthcare service, they may have revenue already or they may already have customers or they may already have providers. What would you say, Tracy?

Tracy Dooley:
Yeah, so think about it at sort of my framework in my head is technology and then product and business, right? And we’re trying to de-risk all of those areas, right?

Yolanda Fintschenko:
Okay.

Tracy Dooley:
We do absolutely love to meet people early. And I think that we actually very much enjoy the conversations when somebody is not immediately fundraising, because that allows us to get to know you at a time when there’s really no pressure around trying to sell and to fundraise, but then we can really get to know you and then we can follow you as your company evolves. And that really helps to build the relationship as well. So that being said, in de-risking the technology, that’s really what helps us with a proof of concept. We also need to understand your strategy. And the farther along you are here, the better. So de-risking the product, how does this fit in the market?

Who wants it? This goes back to our question of unmet need, right? What is the market like? Do you have to do market development? Or is there really a market existing there and how are you going to access that? And how are you going to get your first few proof points? You’re not going to address the market as an entirety. How are you going to get your first few customers and how are you going to get that feedback? And then when you think about the business, how are you building out that business? What’s your strategy? How are you de-risking that aspect as well?

We don’t expect you at a precede or a seed stage to have a fully built out advisory board and commercial contracts and things like that. But we really want to know how you’re going to get to that point and what resources that you have that you’re using now that are going to get you to that point and how are you going to do that. So I think understanding that strategy is really important to us. Obviously, if you’ve already built it, that’s great because then we can look at it and say, “Okay, great. Now tell me how you’re going to do this next step.”

So that’s how I would think about the stage at which we like to interact. We generally focus on seed and series A. And so I think that’s sort of our sweet spot. Folks who are much later than that, we’re always happy to meet, but it’s unlikely that our check size and that our investment philosophy would be necessarily a match for what they need in the syndicate.

Linda Greub:
And we’re often the first institutional investor in a startup, but most of them have had some angel financing or they’ve bootstrapped the company. So most of them are not just at the, “I just had this idea last week,” right? They’ve usually been at it for a little bit.

Yolanda Fintschenko:
Okay. Great. That is incredibly helpful to the founders out there to understand when to reach out. So before we close, anything we didn’t ask that you really wanted to felt like we should or a message you wanted to get out there?

Tracy Dooley:
I will say that it’s really important to have confidence in yourself. We go out and fundraise too. We’re basically a startup. You can’t take it personally if people are going to say no because there are about a million and one reasons why they might say no and probably a million of them have nothing to do with you. So I would just really encourage entrepreneurs to not take that personally. I know it’s a lot harder to do that than it is to say that. But really it is about finding your people. And getting to that quick no is a bonus, right? So just try and consider the entire journey. Find the folks who you really align with. I think there’s a lot of capital out there, there are a lot of emerging managers, there are folks investing in all sorts of things. And so you will be able to find people who do that. But I would just encourage you to go after what your passions are and what your dreams are and really think about what you want to bring into the world.

Linda Greub:
And you have to have patience. I mean, as Tracy said, we ourselves are out fundraising. Initially, we tried setting targets for, “Oh, this is how much we need to raise for the fund.” But the truth is anything can be success, right? So for me as an entrepreneur, I just always said, “As long as I’m moving forward, I feel good about it.” I’m not going to set unrealistic goals or targets that may be real, but I might not know what the right target is.

So if you can have patience and the longest runway possible you can set for yourself is great. I would encourage people to not give up their day job if they don’t have to. If you’re in a situation where you can do some consulting on the side or you can work and carve out some time for your business, right? Financial pressure is really painful. And again, you want to allow yourself as much time as possible because you may have to get 500 nos before you get that yes, so you want to figure out how can you afford yourself the time to knock on all those doors to take all those nos until you get to the yes. So I think it is something to think about. Because you might have a fantastic idea, it’s just going to maybe take time.

Yolanda Fintschenko:
Mm-hmm. Well, that sounds like great advice. I think we can close this out. Thank you so much for coming. You’ve been listening to Linda Greub and Tracy Dooley from Avestria VC and we’ve been talking about women’s health.

Lynn Naylor:
Yeah. What a great day. Thank you for being with us.

Tracy Dooley:
Thank you so much, Yolanda.

Linda Greub:
Thank you.