From the outside, this round appears to be our Series A. But it’s technically our Series B because it’s our second preferred equity financing since inception. This round is “leadless.” No institutional investors (VCs) participated. It’s a syndicate of existing investors and new investors: angels and super angels, US and sovereign family offices, micro VCs, startup accelerator, and strategic investor. Comparing the two rounds, the average investment amount doubles from $140,000 to $300,000 but the median investment amount is unchanged.
How did our Series B come to resemble our Series A? To answer that question I need to wind the clock back two years to December 2015. Perlara was still Perlstein Lab. We were pre-product, pre-revenue and pre-partnership. After 18 months of scientific progress, we had a lead series (PERL101) for Niemann-Pick Type C (NPC), and we were just beginning to characterize a new fly model of NGLY1 Deficiency as part of what became our first drug discovery partnership with a rare disease patient advocacy group. That work was the embryo that developed into PerlQuest, our core product. But we needed a bridge to get us to a validating Pharma collaboration and investment.
Enter Y Combinator, or YC. I mistakenly thought that Perlara was too old to apply to YC. Several founder friends and YC alums set me straight and I applied to the W16 batch. That was the best decision I’ve made as CEO. Although I wasn’t able to announce our first Pharma partnership at Demo Day in March 2016 , Perlara signed a lysosomal diseases research pact with Novartis in October 2016. And within two months of the Novartis closing, we launched our inaugural PerlQuests.
It took 30 months for a 12-slide seed deck to grow into a post-product, Pharma-partnered early-stage biotech company with revenues. In all my conversations with VCs up to that point, I was led to believe that those were the milestones a pre-Series A company had to attain in order to start bona fide Series A discussions. So at the start of this year I created a pitch deck and honed a pitch. My first pitch meetings started in mid-March.
Scores of Sand Hill Road rejections and passes and dead-ends later, I pivoted away from VCs and institutional investors and pivoted toward the company’s investor base. I worked my close founder network for targeted warm intros. I hustled like crazy all summer. A chance Twitter conversation led to an investment. The final closings were last month. Fundraising mode could be switched off – for now.
In 2018 I’ll be singularly focused on three big goals: (1) profitability; (2) tripling the number of PerlQuests; (3) advancing our current PerlQuests into preclinical development.