Astek Diagnostics has completed $2 million in funding for its urine diagnostic system, despite the fact that funding for medical technology is not for the faint of heart. The company's documentation contains great content and can be a deep source of information for us to learn from.
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This deck slide
Astek Diagnostics has a fairly thick document with 22 slides, with many instructions split across multiple slides. In some aspects, this deck is comprehensive and impressive, but it also feels quite defensive and somewhat outdated, even though this funding round recently concluded. Some slides have been lightly edited.
Cover Slide Vision Slide Platform Slide Approach Slide (Part 1) Approach Slide (Part 2) Current Focus Slide (Part 1) Current Focus Slide (Part 2) Solution Slide How It Works Slide (Part 1) How It Works Slide (Part 2)Technology Slide Team Slides Advisory Board Slides Technology Validation Test IP Overview Slide Company Validation Slide Company Timeline Slide Investment Terms Slide Commercial Strategy and Exit Strategy Comparative Transaction Slide Executive Summary Closing Slide
3 things I love about Astek Diagnostics pitch deck
The great thing about AD pitch decks is that they are comprehensive, well-researched, and well-designed. Slide 6 — Problem Statement — is a great example of all three in play.
Comprehensive problem statement
[Slide 6] A wonderfully comprehensive question. Image credit: Astek Diagnostics
Explaining the problem in your pitch deck is very important because it lays the foundation for people to understand the need and relevance of your startup. This section should captivate your audience by highlighting the gaps or inefficiencies in the market that your company is trying to address. This provides context for the entire presentation and helps investors understand the magnitude and urgency of the issue at hand. Even better, effectively stating your problem helps validate market demand for your product or service.
In this slide, Astek takes the opportunity to present data and insights that support its claims, thereby strengthening its potential for growth and success. This section is the first step for a startup to build a compelling story that aligns its mission with the interests and investment goals of prospective investors.
In this slide, Astek depicts an impactful situation, including massive hospitalizations, unnecessary treatments, and issues with speed and accuracy. As this slide suggests, solving these problems could save almost 70,000 lives a year.
There's another great thing about this slide. This describes the problem, but what really drives investors forward is the sheer proportions of the problem. 8.1 million hospitalizations shows that there is a truly formidable market size here.
solid defense power
In biotech, a company's value is as important as its ability to protect it, and building a large moat is a key part of building a startup for many years. While the fact that the company is thinking about intellectual property protection is reassuring, we had some questions about what each actually means.
[Slide 15] The legal moat surrounding Astek is off to a good start. Image credit: Astek Diagnostics
What I'm wondering here is why test algorithm patents are indicated by publication numbers rather than patent numbers. This patent (US11,788,962) was granted in his October 2023. The second IP entry, a fluid cartridge patent, is marked as pending but is publicly available.
The third question confused me so I checked with the team at Run8 Patent Group. They explained that the number was not a patent or publication number, but a provisional patent number. I wasn't sure if this patent was converted to a non-provisional patent, but the terminology is confusing, at least here.
The last entry on this list (Rapid Cartridge Modification) is also confusing. This looks like a law firm's docket number, but it has little to do with intellectual property protection. A patent lawyer friend of mine says that simply saying “pending” might be clearer and give a more honest explanation of what's going on here. .
Easy to understand (but…)
In slides 9 and 10, the company makes it very easy to understand how the system works.
[Slide 9] – How it works, part 1. Image credit: Astek Diagnostics.
[Slide 10] – How it works, part 2. Image credit: Astek Diagnostics.
These two slides do a great job of explaining how users will use your product. When you insert the sample, the bacteria are captured and tested, allowing you to read what the machine detects. From a sales perspective, if I were the buyer of these machines, this is a good top-level view of how users would use them.
But from a consumer's perspective, that's how I would expect a machine like this to work. If someone like me, who has no medical training, approached this machine, I would be able to use it. This is not an innovation, as user experience expectations are now so high. This is how things should be. Of course, user experience may not be a priority in medical devices, and perhaps ease of use is the selling point of the machine, but the way these slides are projected makes you say, “Yes, so what?” It feels like it.
What we really want to know here is context. If all the other machines are much harder to use, talk about it. If your machine is much faster, I'll show you the comparison. If there are big advances in technology, that's what interests me as an investor.
Product slides should not show how to achieve a minimum user experience. It's better to explain what makes the product special, defensible, and worth investing in.
Three things Astek Diagnostics could have done better
There were many potential learning opportunities. We don't have the time or space to break down this pitch deck, but let's highlight a few points.
Tell your team's entire story
Team slides can have too much information or too little.
[Slide 12] It's crowded with team members. Image credit: Astek Diagnostics
The purpose of the team slide is to communicate why your team is uniquely positioned to build this particular company. As an investor, I'm not particularly interested in engineers or computer scientists. The team slide is meant to focus on the founding team and senior executives, the people trusted to drive this company through the next few rounds of funding and product development. This slide requires more context to make use of it.
Astek gets partial credit for including LinkedIn links to each team member, but it would have been easier to briefly describe each one under their name.
The company had put up links to the entire team's LinkedIn profiles, so I looked around to see what I could find. And I found some yellow lights. Kevin is listed as his CTO on LinkedIn, not as a co-founder. His profile says, “A versatile full-stack developer with a background in chemical engineering. My expertise is developing web-based applications for him.” That's great, but hardware is difficult and medical The equipment is very special. Having a CTO who doesn't seem to have any startup or hardware experience could raise questions from investors.
Rick is listed as the company's CFO, but it's hard to see why a company raising $2 million would need a CFO, but Astek Diagnostics doesn't appear on his LinkedIn at all.
The slide lists Scott as the company's chief commercial officer, an odd title for a company that has yet to bring a product to market, but Scott also lists Astek Diagnostic on his LinkedIn. Not posted. On the bright side, he seems to have gained relevant experience as his CCO at his Specific Diagnostics and as a director at his LEX Diagnostics.
In short, make sure the information you include in your slides matches the publicly available information. If not, be prepared for some pointed questions from investors.
Let’s talk about the funding round…
[Slide 17] That's a lot of edited data. Image credit: Astek Diagnostics
There's something going on with the company's timeline, which shows three funding rounds, all of which have been redacted. Putting aside the fact that I've never heard of a “pre-Series A” round, this one also shows some signs.
The irony, of course, is that much of this information is available from other data sources. When investors decide whether to talk to a startup, they use all available information to learn about the company's status. In this case, I looked up the company on his PitchBook and Crunchbase.
Crunchbase “knows” about three funding rounds. Image credit: Crunchbase
Crunchbase is funded by a $125,000 pre-seed round, a $256,000 NSF-led grant (finally $275,000), and Wexford Cytech Ventures, reported in June 2023. We tracked a $2 million seed round led by the fund.
Pitchbook has more information.
PitchBook displays a vast amount of information about a company's finances in its database. Image credit: PitchBook
So, I have no idea why the company decided to redact this part of the proposal material, since the information is easily gleaned from public sources.
But what I'm more concerned about is the next slide.
[Slide 18] Not only is this slide superfluous, it could be a red flag. Image credit: Astek Diagnostics
There's a lot to be concerned about with this slide. Raising money to “reach the Series A target milestone” helps answer why the company wrote “pre-Series A” on the previous slide. This is a bridge round. This could mean two things to him. One, it wasn't clear what we needed to do to raise a Series A. One is that we didn't meet our Series A goal.
For the first option, it means the founders didn't have a proper roadmap for what they needed to accomplish to raise the next round of funding. This is a red flag. It's important to set solid goals and ensure a clear path for your company to reach milestones and raise your next round of funding.
Another option is that the company had clear goals but was unable to achieve them. It happens all the time and there's no shame in it. But this material makes the problem even worse. The company doesn't clearly outline what it thinks its “target series A milestones” are, and nowhere in the documentation does it say what those milestones are or what it thinks it needs to do to reach them. is not explained. to achieve those milestones.
The final red flag here is that the company is trying to pre-negotiate a deal. I appreciate that founders have a say in caps and discounts, but they don't have the power to set them. The lead investor does so. Of course, it's possible that this material was updated after the company already had a term sheet, but if not, this slide doesn't look like a founder experienced in the fundraising process.
These days, most of the VC industry has stopped using convertible bonds and instead uses Y Combinator's post-money SAFEs. What's even weirder here is that Astek Diagnostics is actually his Y Combinator alumni from his S21 batch of accelerators. Why the company would adopt conditions other than standard investment conditions is puzzling.
The easiest thing to do is to remove this slide completely. When raising a specific amount of money, the terms are always negotiable and depend on which way the VC winds are blowing at that particular moment.
Eliminate the “Exit” slide
Sophisticated investors are acutely aware of similar exits in the areas in which they invest. A startup's mission is to build a company of great value. As soon as founders start talking about an exit, they're arguing against themselves.
Surprisingly, Astek Diagnostics included not one, but two exit strategy slides.
[Slide 19] Exit Strategy, Part 1. Image credit: Astek Diagnostics
[Slide 20] Exit strategy, part 2. Image credit: Astek Diagnostics
This exit strategy slide seems to me to be not only sending the wrong signals, but also brilliantly defensive. Trust quality investors who understand the market. Founders have to explain how they're going to build a multi-billion dollar company and worry about M&A and IPOs another time.
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