What is your background and who are you?
I’m a biomedical engineer and my name is Dan Radcliffe (pseudonym to protect identity).
What is the startup you have been working on?
We are a medical device startup focused on mobility.
Have you been internally funded, or did you look for outside capital?
Both. We got as far as we could with internal funds and then simultaneously looked for outside sources.
What has your experience been like raising money from outsiders?
In most cases like Sisyphus rolling a boulder up a hill only for it to roll back down. It wouldn’t be hard for people to get interested or excited but getting that first person to commit funds was very difficult. Usually it came down to a doctor saying they’d have to see it work before they’d invest and then the non-doctors would invest. But I couldn’t make the prototype without an initial investment. So, then I’d lose momentum and the boulder would roll back down.
What was it like landing your first investment? What did it feel like?
Very surreal. That same week I had been fired by a person who I considered a friend that had refused to pay me $4k for work I already did on payday. It was also my birthday, so I thought well that’s a hell of a present. Then a month later I lost my other job. So not only did I have the initial funds, but I had no choice but to go all in.
It didn’t feel like a win as much as it felt like a tectonic shift. I was so off balance I didn’t have time to appreciate the situation.
I bet you met some interesting folks when you were on the road raising capital?
I did and my first real investment came from a very unexpected angel investor.
How were you connected with the angel investor?
I was at a film festival volunteering when a small old woman in a dress that you’d expect to find in an art exhibit, came up to me saying that she was told that she should meet me. The first thought that came to mind was she was a potential investor, but I had grown cynical by that time and didn’t try to get her to invest. So, I didn’t even bring up my company.
Then she invites me to come to her house and I very rarely turn down such offers. I agreed to meet, and she gives me an address and we agree on a time to meet.
I drove to her house, which is hidden away next to a highway, but in the woods. It was in a nice area.
However, I felt a little uneasy because of the secluded nature of the place, but also safe because I was so close to everyone else. Then I walked into the house and immediately was overwhelmed.
I cannot stress to you enough what I’m about to say. Every. Square. Inch. Of the house. Was covered in art. And not like art you’d find at a coffee shop.
What kind of art?
This is was extremely experimental art. Like whole art exhibits were put into this house but there was so much art that the exhibits overlapped on top of exhibits.
There were A LOT OF CHAIRS NAILED TO THE CEILING! Chairs on a ceiling are in horror movies. That was the first thing you see walking in. Oh, and a polar bear, but not a real one. In hindsight I had awful self-preservation instincts.
Every room was covered. There were mannequins covered in sheets that looked like ghost nuns in a neon red lit room. I believe they were having dinner.
It was a three-story house covered in art exhibits – with an attic – which was also an art exhibit.
Oh and did I mention, the house is purple?
And it was all just covered in art? That would have shocked me seeing all that art. What did you think to yourself when you were in the house?
Yep, every room. There were themes to the rooms but over the years she kept collecting so rooms would theme on top of themes
And I wasn’t thinking. It was sensory overload for me. I was trying to process everything, but it was so much that I just kind of stood there until she invited me to sit down.
Did you ask her about the art?
I didn’t know what to ask. I think I asked how long she has been collecting and she said a long time. Then she asks me about my startup. And I tell her how it works and why it matters. I focus on the why more than anything. In the past I would try to emphasize how profitable it would be because I thought that was what investors cared about. What I actually cared about was how many people it would help. A business must be profitable but that’s not why I’m doing this.
Then she asked if I wanted to see a quarry. Not thinking, I say “yep” and one of her family members drives us.
So, you were not alone in the house with her?
No, I was she called her family member to come and they appeared out of nowhere. I think she was expecting me to say yes.
That is so strange. What happened next?
Then family member starts asking me questions about my startup and starts saying how my business is never going to work. I’m quietly furious at this point because I always meet these kinds of people who treat me like a child that clearly doesn’t understand how healthcare works. But I hold my ground and don’t lose my cool.
We arrive at the quarry and I thought I understood how big a quarry was, but this was a big quarry.
And this quarry was just in her backyard?
No this was a fifteen-minute drive from her house. Near a railroad. We went from color everywhere to gray everywhere. It was like being in a black and white picture at times. The quarry is as deep as a skyscraper is tall.
Why did she take you there?
To show me the quarry. It was over a hundred years old. I saw these giant rusted buildings and machines that had been abandoned. There was a small group of metal workers that had made a village essentially were they made her art. She said she had sponsored them. I took pictures. Said it was cool and we left back to her house.
What happened after the quarry?
She asked me to stay for lunch, but I had been there for a while and needed to get back to work. She seemed disappointed and I regret not staying but my mind wasn’t clear. As I’m about to walk out the door she says, “I’d like to give you the money you need”. In hindsight I should have feared for my life.
Why should you have feared for your life? Did you think she was going to kill you at the quarry?
Because there were so many places in that place to hide my body. I understand why the mob is in construction because there are so many opportunities to hide a body These were strangers. Taking me to a quarry. Out of nowhere. I’ve seen Jordan Peele’s movies. Get Out.
But you raised capital from her? How much?
$25k. In hindsight I should have asked for more, but at the time I had two jobs, so I just wanted money for equipment and materials. Two months after receiving the money both jobs were gone.
My partners and I apply for a pitch competition to win $50k. Sadly, we lose to a biotech company who had hired me to create their product. In a way I won. Just not money.
Did anything material come from the pitch competition despite not winning the money?
No. We lost and the next day moved into a startup incubator that if we had won, would have given us free rent for three months. So not only did we lose but with my remaining funds had to pay rent the next day. However, a month later we had $25 in the bank account.
Was this the $25K from the old lady?
Yep. We took those funds and bought the equipment and supplies and started making prototypes. But with the loss in income I had to also use it to pay rent and buy food, while at the same time taking jobs for other companies. However, we did a lot of 3D printing and 3D modeling which was beneficial.
After raising the $25K what happened next?
With $25K in the bank we tried to start making sales. I didn’t know this at the time, but I had no idea how to do sales. I wouldn’t realize this until much later.
Then, just as things start to look bleak, I get a call from the Air Force. They want me to facilitate an event for them regarding Space Force. That’s really all I can say because I really want them to hire me again.
But they give me three weeks’ notice for an event that would takes months of prep to set up.
I workday and night. When we get to the event, we scrap everything, because it wasn’t what they wanted. I ended up doing a kind of Frankenstein flying by the seat of my pants approach.
We collected feedback at the end of each day. Some good. Some very harsh. But after working 16 hours four days in a row, we were done and were paid handsomely for our work. But I still needed more money. I was like the very hungry caterpillar except instead of food it was a fear of debt.
Did you find a source for another capital infusion?
I did! Another startup that had raised $4 million needed engineering done. We did the engineering and it wasn’t great.
For about three months before it all fell apart, we were making good money. With more money, I expanded our office and bought some more furniture and tech.
Projections showed us making a nice profit by the end of the end of the year. But running a business is stressful. Chronic stress changes people. Makes little things appear big. Little wins are amazing and little losses are devastating.
The guy that hired us, fired me and another guy, and told the other guy he fired him because he had to fire me. All these people working for him were on my team. I take this disrespectfully, because if I call him out, I’m putting not only my income but my team’s income in jeopardy. And then the startup loses its funding.
Did you have to shut down the start up?
Hell no!
For three months I try making products that would be quick to sell in an attempt to make more money. What I should have done is focus on selling the main product.
I also had to go into debt. I’m currently learning what happens if you miss two monthly payments on things like rent. But there is a light at the end of the tunnel. We are going to raise another $350k. We have an investor lined up and a kick ass product that we developed this entire year.
We never lost sight on the purpose of the company, even though we were doing all this other stuff to fund it. But I’m landing a plane with no landing gear only to refuel and take back off again. That’s where I am today.
That sounds extremely stressful. If you raise the $350K do you think you will have enough money to bring your company to a self-funding level?
Oh yeah. The product works. Takes about two minutes from meeting a stranger to them buying it. That’s the thing. I started this off not knowing how I was going to make enough money to make it to the end of the day. One day became two, and then a week, and then a month. I think I’ve burnt out the part of my brain that is stressed about this kind of stuff. I’m more of in a mindset of if they want it, they come try and take it.
What kind of advice would you give to people trying to raise capital and run a start-up?
There is no advice. What I do and what others do are different beasts entirely. We raise money by relying on our strengths but each of our strengths are different. People aren’t investing in me because I’m good at sales they invest because I’m a hell of an engineer. It is trial and error to figure out what works best for you. Your success requires an investment of time.
If you want to learn more about the secret biomedical engineer and his company, please email him at the following address:
secrethealthcarestartupguy@gmail.com
