Dr. Matt Lipscomb is the CEO and Founder of DMC Biotechnologies, Inc. His career has included a range of development stages from early R&D to commercial deployment in a variety of sectors, including both industrial and pharmaceutical biotechnology. He has a Ph.D. in Chemical Engineering from the University of Colorado at Boulder (CU Boulder). Following his graduate education, he worked in pharmaceutical biotech in the production of biologics from microbial fermentation and cell culture.
Previously, he was a founding employee of OPX Biotechnologies and served in various roles during his tenure there. His technical leadership supported multiple successful fundraising rounds totaling more than $60M. He provided project leadership on the execution of a successful Department of Energy (DOE) ARPA-E Electrofuels program ($6M) for the production of biodiesel from H2 and CO2. His technical expertise includes microbial fermentation, process development, process modeling, analytical chemistry, and techno-economic analysis (TEA) of bio-based processes.
In an exclusive interview interview with AsiaTechDaily, Dr. Matt Lipscomb says:
“One of the most common mistakes that scientific founders make is having an insufficient understanding of the potential market and who their potential customers may be. A successful founder will have a comprehensive understanding of both their technology and their target market, in exquisite detail. There is an abundant amount of fascinating research happening every day, but unless a customer is willing to pay for your innovation, it will remain just a science project.”
Read on to know how Dr. Matt Lipscomb raised more than US$15M to deploy biotechnology to produce bio-based specialty chemicals.
Please tell me about your background, and what are you working on currently?
Dr. Matt Lipscomb: I have a Ph.D. in Chemical Engineering from the University of Colorado at Boulder (CU Boulder). Following my graduate education, I worked in pharmaceutical biotech in the production of biologics from microbial fermentation and cell culture. I transitioned to industrial biotechnology as a first employee of OPX Biotechnologies, where we used microbial fermentation to produce commodity products such as acrylic acid and oleochemicals. On a personal note, the mountains are central to my life. I love living in the Rocky Mountains, and as well as leading DMC Biotechnologies, I am an AMGA certified ski guide and a Director of a non-profit organization that develops educational curricula for avalanche safety for recreationalists and professionals.
What motivated you to get started with your company?
Dr. Matt Lipscomb: The last two decades have seen historic advances in biotechnology tools such as DNA reading and writing, high-throughput DNA assembly, microbial strain construction, and genome editing techniques. Despite these advancements, it has proven vastly more difficult than anticipated to engineer biology for biobased products that must meet target economics to achieve commercial success.
My co-founder and I started DMC because we believe that there is significant untapped potential to deploy biotechnology to produce biobased specialty chemicals using fermentation. Our technology addresses the key barriers that have plagued this sector for decades. For example, we are the first to demonstrate predictive performance from high throughput to a commercially relevant fermentation scale. We believe in sustainability and economic viability.
How have you attracted users and grown your company from the start?
Dr. Matt Lipscomb: We intentionally started slowly, growing the company organically, applying for (and receiving) federal grant funding, and conducting significant customer discovery efforts to refine our business model. Currently, we are scaling our process and will be commercial with the first biobased chemical products by the end of 2020.
What’s your business model, and how have you grown your revenue? What strategy worked best?
Dr. Matt Lipscomb: Our business model is B2B sales of biobased chemicals. The initial commercial launch will leverage third-party toll manufacturing operations. As we grow our customer base, we will transition to production in our facility to capitalize on higher margin and greater control of our supply chain. Our initial products have existing markets that are primarily driven by quality and are currently constrained by price. Our approach and technology enable us to produce a premium quality product at a best-in-class price point.
How much money (funding) have you raised in total so far? When was the recent funding round?
Dr. Matt Lipscomb: In total, DMC has raised more than $15M in equity and non-dilutive financing. The Series A fundraise, which completed the final close in December 2019, raised $11.3 million in equity and was led by Sofinnova Partners with participation by Capricorn Partners, Breakthrough Energy Ventures, SCG, and Boulder Ventures.
How do you decide when to go out for fundraising? What were the internal decision processes in determining when to begin fundraising, and what were the logistics for this?
Dr. Matt Lipscomb: There is an adage within the startup community that as a founder and CEO, you are always fundraising. (This expression would be more humorous if it were less true!) It’s crucial to begin meeting potential investors months, if not years, in advance so that the relationships have time to cultivate. Having multiple touchpoints over time also provides the opportunity to demonstrate to a potential investor that you are executing according to the plan that was previously outlined.
In our fundraising, we have focused on investors who bring deep domain expertise and are mission-driven. We are not only looking for capital, but the wealth of experience and commitment that our investors bring to the team is essential.
How did you meet these investors, and which channels worked best for you?
Dr. Matt Lipscomb: One of the most efficient routes to meeting potential investors is to attend industry-specific conferences. Often these are organized by industry trade organizations and focus on business topics (as opposed to scientific conferences). For example, in the US, the BIO World Congress on Industrial Biotechnology attracts a global audience of companies, investors, and experts. It has an online platform to facilitate networking among attendees.
What are the biggest challenges you’ve faced and obstacles in the process of fundraising? If you had to start over, what would you do differently? (Your insight or advice on this would be very helpful for startups)
Dr. Matt Lipscomb: As a CEO, Founder, Mountain Guide, and father of a young child, it seems like my time is overwhelmingly spent in “herding kittens.” And of all the “kittens” that I “herd” daily, the most challenging group to wrangle are the investors. They are fiercely independent, highly individualistic, and each VC firm has its process for evaluating potential deals and, once an investment is made, their own needs for information and reporting. When a startup is pitching to potential investors, it is easy for the information only to flow one way: the founder(s) are focused on selling their vision and their potential to attract financial partners. But it is equally essential for founders to learn about the potential investor by asking detailed questions and then holding them accountable to their responses.
Some of the key questions include, but are not limited to: Amount of capital available in the fund? The number of investments made by the fund? Stage in the lifecycle of the fund and time horizon? Decision-making process for an investment, including timeline and key decision-makers? The relationship between the startup and the investor’s needs be aligned (in terms of interests and outcomes) and mutually respectful. As with any relationship, if it becomes one-sided, it is a recipe for disaster.
What are your milestones for the next round? And what are your goals for the future?
Dr. Matt Lipscomb: We are focused on bringing our first products to commercial launch later this year (2020). This first product family is specialty amino acids for human and animal nutrition. We make fermentation work better at a lower cost than the current processes. Our goal for the future is to make a range of products that contribute to better use of natural resources and help resolve some of the big global challenges we face. This focus on efficiency is key to making our society more sustainable.
What are the most common mistakes founders make when they start a company? (or What should all first-time startup founders know before they start their business?)
Dr. Matt Lipscomb: One of the most common mistakes that scientific founders make is having an insufficient understanding of the potential market and who their potential customers may be. A successful founder will have a comprehensive understanding of both their technology and their target market, in exquisite detail. There is an abundant amount of fascinating research happening every day, but unless a customer is willing to pay for your innovation, it will remain just a science project. For further reading on this topic, the lean startup methodology and business model canvas are highly recommended.
Another element that most founders underestimate is the emotional challenge that goes hand-in-hand with starting a company. Building a company is a process that takes years of consistent attention; if you go into a startup, expecting overnight success, then it’s going to be a struggle. You must have persistence and durability (emotional, physical, and mental) to be able to ride out the highs and lows. Equally important is maintaining a balance between work and personal life – building a company should be viewed more like a marathon than a 100m dash. Plan accordingly. For me personally, maintaining an active lifestyle in the mountains helps provide balance, provides perspective, and helps recharge my batteries routinely for the long-haul.
What do most startups get wrong about marketing?
Dr. Matt Lipscomb: Marketing is a delicate balance. If you communicate too much too soon, you risk overpromising. If you don’t communicate enough, you don’t have the visibility needed to attract investment and partners. Once a company has the right team, intellectual property, investors and partners, then marketing starts to be important. Marketing shouldn’t dictate the business strategy.
What’s the best advice you’ve ever received? And What advice do you have for someone who is interested in doing similar things like yours or in a similar direction?
Dr. Matt Lipscomb: A few things come to mind: The first is the importance of seeking out different perspectives and being able to learn from them. This means asking tough questions and being able to listen to even more difficult responses. There are so many examples of entrepreneurs (and investors!) “drinking their own Kool-Aid” and then being surprised when reality harshly reasserts itself.
The second is that details matter. All too often a technical founder will possess minute detail about their innovation, but will “hand-wave” over other key areas of the business, such as market, supply chain, financial model, logistics, regulatory, etc. All of these elements have to line up to make a successful business, so it is critically important to analyze each of them with the same rigor and depth that the technology is subjected to.
Finally, the reality is that science is easy (by comparison), but working with people is much more challenging. This is further complicated by the nature of technical training today in the life sciences. Most Ph.D. training is individual with no direct report responsibilities. But in a startup, all of the projects become team science, and technically trained founders must hire and lead diverse teams of people. Invest early to develop the skills to build a great organization and to inspire and lead a highly functioning team. Some specific recommendations would include: take an assessment that informs you about your style and provides a common language to discuss other people’s styles, such as Emergenetics or Enneagram, and then have your team take the same assessments. Dare to Lead by Brene Brown and The Advantage by Patrick Lencioni are also strongly recommended.
What are the one or two things that you would do differently if you could go back to 10 years ago?
Dr. Matt Lipscomb: The source of my advice above with regard to the challenge of working with people is directly informed by the hurdles and mistakes I made along the way. I was a classic example of a Ph.D. trained engineer with an under-developed appreciation for working with others and was woefully under-prepared in terms of having the right tools to be successful. If I could go back in time, I would definitely make those investments sooner!
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