Corporate File

Biotech startups lack exit angle

Chitra Narayanan | Updated on May 24, 2021

Devang Mehta of Anthill Ventures says buying appetite of pharma is weak

“India now has the critical mass of money, talent, and ambition,” says Devang Mehta, partner, Anthill Ventures on the startup ecosystem in India, adding that there is support from government as well. However, in health tech and biotech, the areas that he is focused on at Anthill,an investment and scaling platform, what he finds lacking is the exit angle: The buying appetite of big companies for biotech startups is weak. In the US, he adds, there is a well- oiled system – biotech startups emerging out of premier institutes get funding, assemble a great team, are noticed by big pharma and sign deals. For instance, Bristol Myers Squibb recently picked up a company for $200 mn. “The total payout can go up to as much as $1.1 bn,” Mehta says.

In India, by contrast, if some were to come out of a premium institute and create a startup, they were unlikely to get a deal from the pharma sector. Pharma here has been focused on generics. This, Mehta says, has had an impact on innovations in the field.

However, the Silicon Valley returned engineer-MBA, who worked with startups as product marketer before turning investor, says things are changing. Qualified people returning to India and the growth of biotech institutes and of the patent regime are all contributing to this change. Mehta, who is also a founding member of Lumos, a healthcare accelerator, promoted by Anthill ventures and oncology and multi-speciality chain HCG, says, “We have been pleasantly surprised by the kind of pitches we are getting.” Excerpts:

Is there a time frame with your engagement with startups at Lumos? How does it help the companies?

The active engagement is six to nine months. However, we like to think of it as a long-term partnership, and help those who go through the programme on an ongoing basis. We help startups with business advisory, access to mentors, a mix of data and clinical validation, access to funding. We pick up advisory equity too and give infrastructure credits where needed.

The focus at Lumos is primarily pre-series A and it is a speed scaling programme. There is a lot of focus on areas like early cancer detection, cancer biomarkers, genome sequencing, immunotherapy.

For instance, we have just onboarded Erly Sign, which has a non-invasive early test kit for detecting oral cancer. The background is that India has disproportionately high oral cancer, due to tobacco usage. If you detect early, you are literally adding ten years of life and joy. What Erly Sign has developed is a way of collecting sputum, sending it to labs and stratifying patients based on risk.

Anthill has invested in KroniKare (a Singapore-based AI driven solution that automates the assessment and management of chronic wounds), Ayurhythm, (an app that uses ancient naadi pariksha, or pulse diagnosis, through a fingerprint impression capture), and also put some money in Raybaby (an AI based baby monitor).

Anthill is in three areas – healthtech, media tech and urban tech. We are focussed from pre-series A to Seed to emerging winners to Series A . We are looking at investments in the range of $100,000 to $200,000 in pre-series A. In Series A we may go up to a million dollars. In 2021, the plan is to look at a larger chunk of Series A.

We play an advisory role in some companies. But not all companies require hand holding. Some companies – especially the Series A ones – want only money, they have pretty strong teams.

We have taken a close look and broken up the companies in three parts – severely impacted, moderately impacted, and the third set that has actually gained from Covid. Most areas of healthcare have gained.

The companies that have been severely impacted, we are making sure they have enough runway to outclass the competition and are ready to grow once things get better.

Those that are moderately impacted, we are ensuring that their expenses are under control. And that their key areas of growth are aligned to the shifts in the market and they are engaging with potential customers.

In healthtech, we saw some companies pivot to address Covid. The best example in our portfolio is KroniKare. Their DNA is to create a wound scanner. It takes a skilled nurse better part of 30 minutes to measure length of wound, and assess various parameters. KroniKare has made a wound scanner that will gauge all things about a wound in a matter of two minutes. Not only does this save valuable time but from a business standpoint, addresses the shortage of nurses.

With our help the company pivoted during covid to use its technology to create a temperature scanner that could scan multiple people at the same time. It is called iThermo and it has become widely popular in Singapore, used in bus stops, and other public places.

We have seen a few plans directly predicated on surviving Covid. But these are one-trick ponies. And other diseases are not going away.

Published on May 23, 2021

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