Providing the next generation of high-impact medicines

Biologics and peptides have revolutionized healthcare setting the stage for a new generation of equally transformative orally available small molecule medicines.

A critical gap in understanding GPCR biology has long held back an entire therapeutic category

G-protein coupled receptors (GPCRs) – a family of receptors that sense and respond to external signals – comprise the largest family of targets for approved drugs with 826 identified members, which represents approximately 475 drugs on the market acting on over 100 unique GPCRs. Abnormal GPCR activity has been directly linked to various chronic diseases including cardiovascular, metabolic, and pulmonary conditions. Despite the wealth of commercialized compounds, these proteins remain one of the most challenging target classes for structure-based drug discovery because advances in our overall knowledge of receptor structure and function have been relatively slow. As a result, more than 220 GPCRs have not yet been explored as clinical targets.

“Because the structure and function of biological macromolecules (i.e., proteins) are intimately intertwined, structural biology-based approaches offer an important foundation for drug discovery,” said Raymond Stevens, Ph.D., Founder and CEO of Structure Therapeutics. “Researchers have long sought out structural insights to gain intel about some of the most challenging targets (including GPCRs) across disease indications, and F-Prime shares in our commitment to developing differentiated small molecule therapies to overcome the limitations of biologics and peptide therapies and provide better treatment options for patients everywhere.”

Small molecules are a category of medicine that offers substantial benefits such as their oral administration and design, which optimizes and targets distribution in the body. In addition, their potential for patient compliance is higher and they offer more flexibility than biologics.

One small discovery could pave the way to one large leap in medicine

Structure Therapeutics’ story began several years ago, when Professor Raymond Stevens’ research group at Scripps Research saw an opportunity to dive deeper into the science of GPCRs and the team’s foundational work was the successful initial reveal of the first human GPCR crystal structure bound to a diffusible ligand. This important discovery was followed by the characterization of other human GPCRs and coincided with over two decades of innovation in generating membrane protein structures with a focus on GPCRs to establish Structure Therapeutics.

While Structure can use its technology to develop drugs across a wide variety of GPCR targets, its initial programs focus on clinically validated targets to minimize biological risks. In addition, Structure believes that by offering small molecule drugs against targets where there are biologics administered as an injection, one can offer patients a more convenient alternative for much-needed medicines that can be dosed orally and cost less.

In only a few years from its founding in 2016, Structure Therapeutics successfully advanced two small molecule programs into clinical trials (GSBR-1290 and ANPA-0073) and one more in IND-enabling studies (LTSE-2578). The company raised $198 million privately before becoming one of biotech’s first initial public offerings in 2023. In addition, their lead program, the oral small molecule GLP-1 selective receptor agonist, has the potential to revolutionize the multiple billion-dollar obesity and diabetes market that is currently dominated by injectable and oral peptide drugs. F-Prime and Eight Roads had the foresight to know that GLP-1 was an increasingly important drug class.

The Structure Solution: Built for speed and efficiency

Learn more about how Structure’s approach can accelerate the lead optimization process, reduce development costs, and potentially increase the likelihood of clinical success compared to traditional drug discovery.

At the end of September, Structure announced positive results from the Phase 1b multiple ascending dose (MAD) study of its highly selective oral GLP-1 receptor agonist, GSBR-1290, in healthy overweight, or obese individuals. In the 28-day study, GSBR-1290 demonstrated significant weight loss supporting once-daily (QD) dosing and an encouraging safety and tolerability profile.

F-Prime acts locally to have an impact globally

At F-Prime, we help advance entirely novel technology platforms and therapeutic modalities by recognizing and furthering scientific breakthroughs. Structure was an attractive investment for F-Prime and Eight Roads from the very beginning and underscores how small molecule drug design is being transformed thanks to the explosion of cryo-EM and advances in computational chemistry.

The company created a global footprint early on, instituting its headquarters with business operations, finance, and clinical development in South San Francisco, and discovery and preclinical operations in Shanghai. This allowed the company to leverage the talent, resources, and infrastructure e.g., CROs available on both sides of the ocean. Working together with a global mindset, F-Prime’s Partners, Robert Weisskoff and Chong Xu helped to further guide the building of the company. Structure started with hiring, where F-Prime, together with Eight Roads, was key to recruiting their initial drug discovery and preclinical development leaders. The skilled group of drug developers, industry leaders, and scientific experts brought deep experience in understanding complex biological targets and mechanisms and had previously led the discovery, development, and commercialization of multiple successful drugs. The early discovery and preclinical efforts originally began in Shanghai and then followed in the U.S. with clinical activities as the company expanded its global operations. In addition, they facilitated the company’s business and financing – ultimately preparing the company for its public offering.

By empowering the next generation of companies as we did with Structure, we are proactively pioneering breakthrough science, novel technologies, and innovative platforms capable of addressing significant unmet medical needs.

“F-Prime shares our commitment to developing differentiated small molecule therapies to overcome the limitations of biologics and peptide therapies and provide better treatment options for patients everywhere.”

—Raymond Stevens, Ph.D., Founder and CEO of Structure Therapeutics

Future Of Financial Advice – More Co-Pilot Than Autopilot

When you put “wealth management” and “genAI” in the same sentence, most minds jump straight to some version of “autonomous finance.” However, that’s a concept that would have to overcome significant trust hurdles with advisors and the public to gain widespread adoption. According to research by Vanguard, the personal connection and trust that exists between financial advisors and consumers drives about 40 per cent of the value in any advisory service.

Over the last 10 years, advisors have started to transition from “stock pickers” to client relationship builders. As a result, new inefficiencies have emerged in the value chain: advisors now spend their time collecting and synthesizing information across a sprawling and outdated tech stack to help clients make decisions.

So, while generative AI isn’t going to put our money on autopilot any time soon, it has the potential to save advisors’ time by handling the more repetitive and labour-intensive aspects of their jobs. As a result, advisors will be free to build deeper relationships and trust with an expanding client base.

The current state of play
Most financial advisors juggle five different tech platforms every day:

ria tech stack investment advice

Many of the steps outlined above involve pulling together disparate information, often supported by different tech stacks, and synthesising it all to generate insights – a unique strength of generative AI technology is that it can quickly process large amounts of data.

Freeing financial advisors from mundanity
Generative AI will enable the construction of new “co-pilots” for financial advisors. Seeking to cut costs in an environment of fee compression, firms are eager to automate routine tasks. Those tasks include reviewing legal documents, opening accounts, preparing client presentations, adjusting asset allocation, requesting query service, addressing ad hoc questions, and other activities beyond their core role of advising clients, which currently take up 36 per cent of advisors’ time. Put another way: the average advisor spends more than two hours “behind the scenes” for every hour they spend with clients.

One way that CIO offices have attempted to streamline these processes is through the creation of in-house research databases. However, advisors still burn much of their workday conducting research, digesting information, and surfacing the most relevant insights in response to specific questions by their clients. It’s important to remember that most of those clients are seeking intuitive responses from a human they trust, rather than highly technical or precise answers.

Generative AI can swiftly perform the synthesising legwork for an advisor, who can then spend more face-to-face time with the client, create suggestions, and ponder implications for their personal portfolios.

Some incumbents (such as Morgan Stanley) are taking the time to build these solutions in-house. However, legacy tech debt means that they usually take a long time to build – for example, Bank of America spent 10 years and $100 million to build its proprietary Merrill One Wealth Management platform. Others are understandably open to partnerships – see JP Morgan’s and TIFIN’s initiative to develop AI-enabled fintech companies. Meanwhile, startups such as Parcha envision a co-pilot that goes beyond answering questions and can instead complete tasks autonomously.

Many startups have built compelling AI-enabled products for advisors: Muse finds tax deductions and credits; Toggle assists advisors with investment research and addresses client questions based on the firm’s proprietary research; Greenlite and Parcha AI assist wealth management companies with KYC review and fraud reduction; and OneAdvisory is automating the collection of client data and account opening while maintaining data synchronisation across the advisor tech stack. In the past, companies such as DriveWealth helped fintech players build investment products for their end users. Going forward, we see a similar opportunity for API-based solutions that help fintechs build GenAI-enabled co-pilots for wealth managers.

Over the last five years, a few trends have emerged that create opportunities for GenAI-enabled wealth management solutions:

Growing data pools: The amount of data available to wealth advisors (from their internal systems, partners, third parties, and elsewhere) has significantly increased over the past decade. If advisors can quickly understand and harness this data they will be well-positioned to optimise financial planning for their clients, and offer tailored products and data-driven advice.

PE involvement: A wave of consolidation in the wealth management industry, with significant participation from private equity firms, would suggest an easier go-to-market path for startups by selling to a single decision maker who oversees many advisors. A GenAI solution that gives advisors more time to reach new customers would be an attractive tool in a PE firm’s search for cost-cutting and efficiency-boosting tools.

End-to-end options: We have also seen the emergence of end-to-end RIA tech stacks from companies like Farther Wealth, Zoe Financial, and Savvy Wealth. Financial data is currently fragmented across a broad advisor tech stack, which hampers the ability to take advantage of GenAI in this field. However, an end-to-end solution could create a proprietary data lake to effectively power GenAI tools. These platforms also have no legacy tech debt, reduce per-head-cost of growing an advisory business, and could therefore accelerate AI adoption in the industry.

Increasing budget share: Finally, wealth managers are spending more on software – an extra 10 per cent of wealth managers’ budgets have gone to third-party tech purchases since 2018, mainly to replace the industry’s 20-to-30 year-old existing stack. This means that advisors have cause and budget to seek out new solutions, and a wedge with generative AI could be a great catalyst to switch.

Implications for wealth management
While it’s still early, it is clear that generative AI will have a profound impact on the wealth management industry. Here are a few potential effects we see:

– Automated creation of individualised client summaries and tailored performance reports en masse, portfolio synthesis for advisors prior to client meetings, and much more – all powered by GenAI;

– With more time on their hands, advisors will expend more effort on deepening and expanding their client base. Co-pilots will also cut the cost of service delivery, reduce the duration of client meetings, and make room for more self-serve and bespoke services;

– By allowing fewer advisors to serve more customers, AI-enabled tools should also expand margins for the larger companies in the F-Prime Fintech Index over time. Meanwhile, GenAI would expand the capabilities for the industry’s best wealth managers, allowing them to win significant market share. However, poor-performing managers may lose clients as they flock to high performers with increased capacity; and

– Finally, as the cost of advisory services decrease, financial advice will continue on a trend of democratisation.

In 2022, we released a report highlighting the trends affecting the wealth and asset management sector. When we release our next report, we expect generative AI will have planted seed across the advisor value chain.

This story originally appeared in WealthBriefing.

A Venture Capitalist’s Perspective on Robotics

robotics investment

Despite the expectations of past science fiction writers, robots are still far from common in our everyday lives, notes the venture capitalist community. More than a fifth of the 21st century has now passed, and the worlds of The Jetsons and Lost in Space still feel like projections of a distant future.

However, away from the domestic lives that most of us inhabit daily, robots have suddenly become pervasive in some industries. Self-driving cars are moving from research labs to the road, Boston Dynamics continues to release incredible video demos — and many investors are starting to take notice.

What has changed to drive this acceleration in both the technological capability and deployment of robotics? Venture capitalists see three key factors:

1. Labor costs continue to rise and are now 45% above 2000 levels.
2. The cost of robotics components has dropped, so innovators can piece together existing platforms and spend more time focusing on the truly groundbreaking elements of their technology. For example, the cost of a robotic arm has fallen 90% since 2000. In business speak, this means nobody has to “reinvent the wheel” every time they want to build a new robotics solution.
3. Software has advanced to the point that it can support robotics technology with complex tasks, buoyed by a 400% increase in AI investment over the past five years.

Where the Money is Flowing

The robotics space changes rapidly, with constantly rotating “hot sectors,” tweaks to business models, and shifting investment and exit dynamics. To better understand the industry landscape, F-Prime Capital recently completed a comprehensive analysis of more than 1,250 robotics companies that raised funding over the past five years.

In the resulting report, we found that $90 billion worth of funding had gone to the robotics industry since 2018, representing roughly 10% of overall investments in tech.

vertical robotics

We identified three main categories for robotics investment:

Autonomous vehicles — public roads only

Vertical robotics — use-case specific and mostly focused on industrial settings

Enabling systems — hardware and software components that others can use to build complete solutions

Autonomous vehicles (AVs) accounted for more than 50% of robotics funding in most years. However, as investors began to question the paths to commercialization for many companies in the sector, AVs saw a stark decline in 2022.

Vertical robotics companies now take the majority of venture funding available for robotics technology. Within this, logistics, defense, medical, and manufacturing applications tend to attract the most investment capital.

However, as we’ll discuss below, the fall in investment that began in 2022 is on track to continue through 2023.

early robotics unicorns av lidar

Another way to trace this shift in focus from AV to vertical robotics is to observe the types of unicorns that have emerged in the space. The 2018 and 2019 crops of robotics unicorns clustered in the AV and enabling lidar space — several of which have since shut down — while the 2021 and 2022 crops tend to center around vertical robotics.

This year has been challenging for startup fundraising, and robotics is no different. The first half of 2023 saw investments decline more than 50% relative to 2022, which itself was down 30% from the heights of 2021.

Fortunately, the second half of 2023 is looking more promising, with several high-profile funding rounds for companies like Anduril, Aurora, and Stack AV.

deal count in robotics

A deeper dive into the funding environment, however, shows a wide range of behavior by stage. Early-stage deals have shown a relatively modest decline in 2023, whereas mid- and late-stage deals have been far more challenging. This is largely attributable to overvalued earlier-stage companies that raised at the height of the market, which are now facing valuation expectation mismatches when they re-engage investors for their next round of funding.

The exit environment has also created challenges for robotics startups. IPOs and SPACs have ground to a halt in the past 18 months, while mergers and acquisitions are down 50% since 2021.

However, even in the best of times, the vast majority of M&A deals since 2018 have been worth less than $250 million, with only a handful of notable exits. Among them: Auris’ $5.75 billion acquisition by Johnson & Johnson in 2019, and Uber ATG’s acquisition by Aurora for $4 billion in 2020.

Public market performance has also been mixed, with robotics companies that have built scaled, high-growth businesses faring best — Symbotic, AutoStore, PROCEPT Biorobotics, and Hesai Technology are the standouts here. For others, valuations have significantly reset.

exits m&a in robotics

What’s next for venture capital and robotics?

The boom in autonomous vehicle investment catalyzed a new generation of robotics entrepreneurs and engineers. They are now using that know-how to build startups that solve real customer pain points.

As venture capitalists, we believe the industry remains in its early innings. Indeed, the exit environment is still maturing, and hardware businesses still face an additional layer of complexity compared to pure software businesses.

But for those with experience in the industry — and who understand its unique metrics and business models — it is clear that opportunity is growing at an accelerated rate.

Founders should be aware the era of exiting a business based on little more than “promising technology” is over — you must eventually build a real business. Tech demos do not equal commercial success, and investors have wised up to the fact that production deployments delivering measurable ROI trump pilot customers who are “excited by the technology” every time.

As demonstrated by the data outlined above, it’s also important to note that, for now, capital remains scarce. Founders must build capital-efficient businesses to entice investors. For many, capital efficiency, or a lack thereof, can make or break a founder’s pitch.

Today’s robotics founders have several tailwinds at their back: technological acceleration, labor shortages, stagnant productivity gains, and a cadre of investors who are increasingly interested in the category. Those who can learn the hard-fought lessons of the past five years — including the experience of AV companies and the macro rise and fall in tech investment dollars — are well-placed to find success in this unique category.

Originally published in The Robot Report

Check out the full State of Robotics report here.

Behind the Breakthrough: Q&A with Lyn Baranowski, Avalyn Pharma

“It was really striking to me how little research and development was going on despite how serious these diseases are. Many of them are deadly, and patients have very few treatment options. I thought that there was a lot of good that I could do personally to try to bring some new treatments to market.”

There are more than 200 types of Interstitial Lung Diseases (ILD), and the most severe cases, which include Idiopathic Pulmonary Fibrosis (IPF) and Progressive Pulmonary Fibrosis (PPF), have a patient survival time closer to 3-5 years from diagnosis without a lung transplant. The disease severity is what sets the life expectancy apart for IPF and PPF and currently approved therapeutics for these respiratory illnesses can slow disease progression but carry significant side effects that limit their use. Baranowski saw an opportunity to address a large unmet need and eventually made her way to Avalyn Pharma, which was built on the mission to develop inhalable medicines that minimize systemic exposure and are more precisely targeted to the lungs. She feels she can have the most impact serving in roles at smaller companies, where “you can really see and feel the outcome of your day and how you spend time in terms of driving the company forward.”

On the heels of Avalyn’s tremendous success with an oversubscribed $175 million Series C financing in September, Baranowski shares more about her background, leading and advancing Avalyn, and insights into her leadership style.

What motivated you to join Avalyn Pharma?

My career began at Novartis, where I primarily focused on the commercial, financial, and strategic aspects of the business. It was there that I was exposed to the significant unmet needs in lung diseases, particularly in rare conditions like pulmonary fibrosis, cystic fibrosis, and pulmonary hypertension. I observed the lack of research and development in these areas and recognized the severity of these diseases, often with limited treatment options.

Driven by a desire to make a positive impact, I left Novartis to work at a New York family office involved in venture capital-style investing. My biggest investment in those years was in Pearl Therapeutics, a company working on combination therapies for asthma and COPD. This experience provided valuable insights into inhalation drug delivery.

Over the years, I discovered my passion for working in smaller companies, building teams, drug pipelines, and making a difference. Despite limited resources, I found it rewarding to be entrepreneurial and witness the tangible impact of our efforts. I was heavily involved in the respiratory therapeutic area which is why my passion for addressing rare lung diseases continues to grow and I’m excited about the potential to make a positive impact in this field.

What differentiates Avalyn from other IPF and ILD players in the industry?

Most lung-focused companies still prioritize systemic drug delivery and in the case of IPF, inhaled delivery is a distinctive approach. At Avalyn, we focus on pulmonary fibrosis, a deadly disease that falls under the umbrella of interstitial lung diseases, and despite its severity, there are only two approved drugs for this condition, pirfenidone and nintedanib, both of which are administered orally. These oral medications are often poorly tolerated, leading to a high rate of discontinuation, with only 30% of patients in the U.S. taking them.

Our therapeutic focus is to improve treatment by delivering these drugs through inhalation. This approach enhances drug concentration in the lungs, improving clinical efficacy, while reducing systemic exposure, resulting in better tolerability. Inhaled delivery is itself incredibly challenging and complicated, so you really have to think about the way to deliver the medicine, how often you deliver the medicine, what the formulation is, and what the device is. It has the potential to make effective drugs more accessible and tolerable for patients, potentially extending their lives and improving their overall health. This shift in perspective is a learning curve for our field, and we hope the market will follow suit, positioning us for future success.

Avalyn’s executive leadership team and board of directors is 50% women. What’s that like, and how does it compare to the industry as a whole?

Are there any companies in our industry whose board is half women? I don’t think so. I’m incredibly proud of that. We’ve also just hired a bunch of fabulous women who aren’t necessarily on our leadership team but are VP-level. I care about hiring people who care about their jobs and patients, and I think that’s again, the right way to align as a team and be motivated.

What advice would you give to the next generation of female leaders?

Do not shy away from being empathetic. As a woman, it is important to remain committed to embracing this part of our identity. I believe in being authentic and accept that it’s perfectly fine for me to get a little emotional when a patient shares their story with us. Making a difference for patients is what drives me and I’m often touched by the stories they share with us about what living with their disease is like. It’s a natural and genuine response, and I’m proud of it.

What’s been the most rewarding part since joining Avalyn in 2022?

I love telling the story of the company, so it’s a lot of fun for me to sit down with doctors, investors, analysts, or people we’ve recently hired at Avalyn and tell them what we’re up to. It’s empowering to watch people go from not fully understanding to a moment of excitement and realization of the impact we can have.

We also just completed a $175 million financing at the end of September which feels like a huge accomplishment, especially in today’s market, and has enabled me to start hiring great people. Whether it is people that I’ve worked with before or have always wanted to work with, it feels great to now have an incredible team that we’re building and together, we’re going to do a lot of good for a lot of patients. At the end of the day, 95% of the fun I have at work has to do with the people I work with and how much I enjoy working with them.

What’s one lesson you’ve learned so far as CEO?

Don’t be afraid to be passionate and be yourself. I’m genuinely passionate about what I’m working on, and I know it translates to my peers because I’ve been told it’s infectious. If you can do that and lean into what you’re good at, then people respond to it. And, if you don’t know the answer, that’s okay. Ask your colleagues for help, advice, and feedback.

How has F-Prime been supportive during your tenure as CEO?

When I started at Avalyn a year ago, F-Prime’s Ketan Patel and Brian Yordy were invaluable and provided me with essential context regarding our historical data and the market’s overarching trends. They both possess a unique perspective when interpreting data, which enriched my own understanding and enhanced my capabilities.

How would you describe your leadership style?

I am very much a lead by example kind of person. I love talking things through and collaborating and getting people’s input. If I have a strong opinion, I’ll tell you, but often I like to hear from the team, and I think people like to be heard. At Avalyn, we’re all about integrity and keeping the patients that we’re trying to serve at the center of our focus. To me, that’s the right thing to do, but it is also the right thing for our business. If we can make decisions about how to develop our drugs with patients in mind, it means we bring drugs to market that are going to be able to impact their lives positively.

At the end of the day, we all work in this industry because we care about making a difference in patients’ lives and if we can keep that as our driver and our mission, it’s a great way to remind people of why we all wake up in the morning and what we’re trying to do together.

What makes you most hopeful about Avalyn’s future on the heels of a successful series C fundraise?

We’re in the process of launching a significant clinical trial for inhaled pirfenidone (AP01), and our focus is on diligently executing the study startup. This trial is set to be a large, well-controlled global effort, representing a crucial step forward for inhaled pirfenidone’s path to market, which is a very exciting development.

The capital we just raised also allows us to do the next stage of work with AP02 (inhaled nintedanib), which is the second lead clinical asset, and continue our efforts on the preclinical work for the fixed-dose combo of the two together. By transitioning from one mechanism to two, this combination therapy has the potential to revolutionize our field.

A lot of exciting initiatives are going on and it is my priority to build the company, grow the team, and do all the important work to set us up for success for the next stage.

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Software Buying Has Changed Forever

Software buyers are now more sophisticated than ever. In an early age of software sales, suited-and-booted Oracle salespeople were taking buyers out to dinner and educating them about a solution while engaging in a formal discovery and RFP process. It was an excessive and long sales cycle, with buyers learning about a product and building a trusted relationship with a small number of sellers. This formal dance led to a mediocre problem-solution fit, no concept of after-sale customer success — and still came with a big-ticket price tag.

Today, buyers are far more savvy and educated software purchasers, and range from CIOs to departmental teams. They know the right questions to ask and if they don’t, formal and informal networks exist for virtually every job function — from CISO slack channels to engineering manager meetups to conferences for finance heads and HR leaders. Public forums like G2 Crowd and Capterra have digitized formal review services (which now include feedback from peers as well as experts) while data-driven buyer intelligence platforms like Vendr support the full procurement lifecycle.

Buyers now come to vendors already understanding their needs and how it will work with their tech stack, and it’s very likely they already know which solution is best for them. With hundreds of B2B SaaS companies in our global portfolio, we have had a front-row seat as these interactions between reps and prospects changed over time, and this market transparency has been an incredible forcing function for software vendors to step up their game — from product to sales to customer success and beyond. And as a result, the existing tools of managing customer engagement are no longer sufficient. Software vendors and their sales and marketing teams need solutions that help them engage with better-educated customers at precisely the moments customers want that interaction.

Enter Warmly, which is building the world’s first AI-driven, autonomous sales orchestration solution to help software vendors thrive in this digitally-enabled, fast moving environment. Warmly intelligently alerts sales and marketing reps when a potential customer engages across channels, complete with context about the prospect’s role and network. Warmly automatically sends intent-based outreach on behalf of the sales team, which frees time for higher value activities like building relationships with customers or personalizing messaging. It allows sales teams to scalably interact with prospects in a way that is productive and personalized for both parties. We believe Warmly can be a foundational solution for this type of event-driven sales future.

Congrats to founders Maximus Greenwald, Carina Boo, Alan Zhao, and the visionary team at Warmly on their $11M Series A funding from Felicis, NFX, Zoom Ventures, Maven, and F-Prime Capital.

Behind the Build: Q&A with Stephen Smith, NOCD

Colored by his own experience with OCD, Stephen Smith helped create NOCD, a digital health startup to address this chronic and severe psychiatric condition that affects one in 40 people, which is over 180 million people globally.

NOCD is dedicated to helping people with OCD and related conditions receive effective, affordable, and convenient treatment. Therapy is delivered through a virtual platform, which offers members live video sessions with a licensed therapist who specializes in Exposure and Response Prevention (ERP) therapy –the gold-standard treatment for OCD. The platform also offers interim support between sessions from peer communities and self-help tools. It’s a model that Smith wishes he had access to when he was first navigating the disorder.

Smith explained, “I realized that my journey with OCD sadly was the norm, not the exception, and it didn’t have to be that way, considering how effective ERP can be for most with the condition.” In ERP therapy, an individual is encouraged to confront the stimuli that trigger distress related to their obsessions, while also resisting the urge to perform compulsions to reduce that distress.

As the success of ERP often depends on consistently practicing exposures outside of therapy sessions, Smith identified that “the problem was operational in nature, not clinical, which meant it could be solved.” That was the catalyst for the inception of NOCD, and an on-demand platform was developed to identify, engage, and manage people with OCD more effectively, affordably, and conveniently.

What motivated you to start NOCD?

I didn’t start experiencing severe OCD symptoms until I was a sophomore in college. Prior to my OCD onset, life was great. I was playing quarterback at a small university in Texas, doing very well academically, and thriving socially. However, my life changed on a dime once I returned home to the Chicagoland area for summer break. One evening, I started having strange fears that made me question my core values and character. Unlike other fears that naturally went away over time, these were different. They felt stuck in my head, and the harder I tried to make them go away, the worse they became. Because I didn’t realize that these were hallmark OCD symptoms, I sought help from a generalist psychologist in my area. He misdiagnosed and mistreated me, teaching me strategies that weren’t just ineffective but were harmful in retrospect. I got worse and saw several other providers who similarly misdiagnosed and mistreated me, causing me to become constantly distressed, develop severe depression, halt my football career, leave school, and eventually become housebound.

While housebound, I spent most of my time compulsively searching Google, to disprove my recurring, unwanted, fears and relieve my debilitating anxiety. This put me in a position to find a forum for other people going through the same experience. They defined their symptoms as OCD and shared how they regained their life by doing ERP Therapy. I felt like I had a breakthrough and immediately searched for ERP Therapy. That’s when I ran into a whole other set of barriers: There was only one licensed therapist in my area who specialized in ERP, and it cost over $300 per session to work with her. Moreover, she had a seven-month waitlist, preventing me from getting help even if I could find a way to pay for the care. It was a disaster, but a family member helped me eventually get off the waitlist, cover the cost of the treatment, and see the provider. The experience completely changed my life. The ERP specialist diagnosed me with OCD, started me on ERP Therapy, and helped me see transformational results after only a handful of months. The progress allowed me to eventually return to school, restart my football career, and finish my degree. While at school, I had an opportunity to reflect on my journey, ultimately forming my vision for NOCD.

What differentiates NOCD from other telehealth providers in the industry? In what ways have you achieved success where others in the field have fallen short?

NOCD is the only OCD-specialty provider in the industry that accepts insurance for over 140 million Americans in all 50 states and has a wait time of less than 7 days on average. Further, we offer care that is a hybrid of “tech and touch,” an integrated treatment experience that helps people not only during sessions, but also between sessions when their therapist isn’t available. Consequently, in the largest peer-reviewed OCD treatment study ever conducted, NOCD Therapy was proven to drive significant reductions in OCD severity in half the amount of time than standard ERP Therapy.

What’s been the most rewarding part of your tenure with NOCD to date?

One of the most rewarding parts of my tenure with NOCD is seeing the outcomes we generate for our members, particularly their personal anecdotes because they are a testament to the profound impact of our efforts. OCD can feel really isolating and we make it a priority to bring together the OCD community so that no one feels alone. Also, it’s been very rewarding watching several people on our team develop professionally over the years. We’ve had people who joined the company out of college who are now directors or VPs. They’ve flourished here, and they’ll be able to work anywhere they choose down the road.

How would you describe your leadership style?

Although my sports background makes me competitive, I pride myself on being involved. My style is to form strong relationships with people on our team at all levels, so I can ensure they feel happy, healthy, and properly supported. I try to lead by example and push the tempo operationally, so people can be in a situation that allows them to achieve beyond their personal expectations and move mountains in the industry.

What’s one lesson you’ve learned so far as Co-Founder and CEO?

As Co-founder and CEO, there comes a time when the success of the company is completely based on how well key people in the company perform. Therefore, it’s up to me to not only find excellent talent but also to groom and develop talent.

What does the future look like for NOCD?

F-Prime has been crucial in helping my team and me understand how to scale NOCD in such a way that it withstands the test of time. We have “product-market fit,” with patients, providers, and payers, so now we’re focused on efficiently scaling to reach millions of people globally in need of evidence-based care.

Our company is excited about the opportunity to scale with partners who are interested in identifying people with OCD and related conditions. For instance, we would like to make at least one preferred psychiatrist partner in each U.S. state that we serve, to allow us to expand medication management operations. We don’t offer medication management services, for context. Seeing our members get better makes me most hopeful about NOCD’s future—many of them not only experience life-changing outcomes but sometimes even life-saving outcomes.

What’s the best piece of professional advice you’ve ever received?

Build a product that people don’t just like, but love. It is the key to building a generational company. We take that advice seriously every day at NOCD.

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Tracking the Industry Rebound with the F-Prime Fintech Index

Introducing our upgraded tool for tracking public fintech markets

Last month, we launched our new version of the F-Prime Fintech Index. Users can now explore:

Adaptive visual multiples and benchmarks
Head-to-head company comparisons
Adaptive sector and vertical-specific benchmarks
Time series of historical metrics by sector and revenue growth
Company and sector comparisons by revenue, growth, margins, multiples, and more.

Using these new tools, we wanted to share some key insights.

Fintech is Recovering

While the F-Prime Fintech Index took the steepest decline of all the indexes we’re tracking in 2021 and 2022 — plummeting 72% in 2022 — it has also experienced the sharpest rebound over the last 12 months, climbing 67%. While this is still far from its peak, fintech businesses continue to grow and we expect to see more IPOs return to the market over the next few years.

f-prime fintech index

In terms of market capitalization, Shopify, Paypal, MercadoLibre, Nubank, and Square are all leading the F-Prime Fintech Index. These companies are also top contenders for revenue.

f-prime fintech index company comparison

For the top ten companies in the F-Prime Fintech Index, median growth rate remains stable at 57 percent despite the changes in valuation.

growth rate company comparison f-prime fintech index

Meanwhile, there has been a large recalculation of revenue multiples. Median growth rate companies (those that grew LTM revenue by 20-40 percent) are now trading at 5x. Throughout 2020 and 2021, they regularly traded at more than 10x.

multiples f-prime fintech index

Payments

f-prime fintech index

FIS, Paypal and Adyen have the largest payment volume, with $2.2T, $1.4T, and $829B respectively.

f-prime fintech index

Meanwhile, MercadoLibre, Shopify and dLocal have the highest take rate.

f-prime fintech index

Finally, dLocal, Marqeta and PagSeguro top the TPV growth chart.

Banking and WAM

In terms of users, disruptors like Nubank and Nerdwallet are catching up to large incumbents like Chase. Their growth rates are high — 33 and 7 percent, respectively — with considerably lower CAC.

f-prime fintech index

Of course, Chase clearly has a much, much higher market cap — $410B vs $37B for Nubank — as it can extract more value with multiple lines of business, the most profitable of which are Consumer & Community Banking and Asset & Wealth management. It remains to be seen if the challengers can monetize users as successfully as incumbents.

f-prime fintech index

Despite an ongoing “crypto winter” that has reduced the number of users and overall holdings for companies like Coinbase, crypto companies are still managing large numbers of both. Meanwhile, equity trading disruptors like Robinhood are also quickly catching up to traditional incumbents like Charles Schwab in terms of number of users, with 15.9M vs 34.1M and a 34 percent growth rate. At the current rate, Robinhood could eclipse Charles Schwab’s user numbers by 2026.

However, much like in the banking sector, incumbents like Schwab retain considerably higher AUM and can monetize users more effectively. It remains to be seen whether challengers like Robinhood can challenge incumbents in terms of monetization.

Explore the Index

The F-Prime Fintech Index is a free resource, and a great place to see what’s really going on in the industry. Questions? Insights? Get in touch here.

Fintech in Q3 — And Loads of New Functionality for the F-Prime Fintech Index!

Profitable Fintechs That Demonstrate Sustained High Growth Are Rewarded With Big Multiples in Q3. The Rest — Not So Much.

Headline: This quarter, we wanted to show how the Index has performed over the past year. After the significant decline in fintech stocks alongside the broader tech sector in 2021 and 2022, fintech disruptors have quietly recovered a lot of ground over the last twelve months. The F-Prime Fintech Index is up 80%+ LTM, though still ~60% off its 2021 highs. The F-Prime Fintech Index continues to outperform other indexes we’re tracking: the Emerging Cloud Index was up ~6%, Nasdaq grew ~27%, and the S&P 500 climbed ~19% over the past year.

Despite a year-to-date rebound, the F-Prime Fintech Index lost $74B in market cap in Q3, with the median market cap decreasing from $2.8B to $2.4B. Payments companies Adyen, Shopify, and Block drove 75% of the decline, losing $31B, $13B, and $13B respectively in market capitalization in the wake of earnings and profitability misses, plus headwinds in the overall market.

Multiples: Companies that continue to grow rapidly (that is, 40%+ YoY) have seen an increase in multiples to 5x, up from 3.8x last quarter. Investors are rewarding sustained high-growth with higher multiples — a reversion to historical valuations and a change from our last update. For the first time since Q4 2021, high-growth companies are garnering higher multiples than medium growth companies (see the flip in the chart above), despite the fact that most have not achieved profitability.

However, most high-growth companies are still trading significantly below their 2021 multiples, on average reaching ~40% of their Q4 2021 multiples. A few companies have nonetheless exceeded their 2021 multiples, rewarded for their sustained high growth and profitability. Well done, Wise — 72% YoY growth and 12% profit margins.

By sub-sector: Sectors that experienced significant valuation re-ratings in 2022 saw the biggest bounce back in Q3. Multiples in the lending vertical rebounded from 1.1x in Q4 2022 to 6.1x this quarter. Category leader Affirm increased to 6.8x from 3.7x; however, removing Funding Circle from the Index and Lufax’s lack of multiples (due to its negative enterprise value) account for ~50% of the increase in average lending multiples.

Macro and real-estate sector concerns continue to weigh on the proptech vertical which is still trading at ~1x, though better than 0.5x at the beginning of the year. Meanwhile, all proptech companies in the F-Prime Fintech Index saw multiples increase, with Blend seeing a jump to 2x from 0.8x.

While the durability of payments businesses has garnered stable multiples (4.5x for the past year), a few — Shopify, Flywire, Mercado Libre, Remitly, and Wise — have seen improvements in multiples. Likewise, B2B SaaS companies have continued to attain the highest multiples (more details below).

Index removals: While M&A activity continues to increase in both public and private markets, no F-Prime Fintech Index companies were acquired this quarter. However, Bright Health Group (BHG) no longer met our criteria and was removed from the Index.

F-Prime’s Summer Internship Program: Meet our 2023 interns and fellows

Thank you to our interns and fellow for their contributions this summer and for choosing F-Prime!

This summer, F-Prime was thrilled to welcome a talented cohort of interns and fellows to our Cambridge and London offices to help with competitive landscape analysis, sourcing, founder calls, and more. Read on to learn what it’s like to join our internship program.

“I have been able to explore new thematic areas in which the team was still building its knowledge base. By getting deep into the science and innovation through meeting entrepreneurs and academics, I have added to the team’s thinking and identified potential plays which culminated in presentations to the partners. A special shout out to Ana and Martin for the mentorship and support over the summer!”

“My time was split between assisting with an ongoing deal — leading a summer exploration project — and taking part in meetings with potential investments. I’ve had a great time in all of these activities, but I particularly enjoyed being an integral part of a deal team. Between self-guided research into standards of care, calls with key opinion leaders, diving into the relevant primary literature, and doing some basic market forecasting, I was able to leverage the clinical and research training I’ve received and develop so many new skills along the way.”

“I have been researching the biotech landscape of foreign markets and performing due diligence on interesting licensing opportunities abroad. I have also participated in many introductory and follow-up meetings with prospective US-based companies, where my research expertise and previous work experience have been invaluable in helping me evaluate each opportunity. I’ve learned a lot throughout the summer and was able to connect with people at all professional levels and across disciplines. One important skill I’ve been able to develop during my time at F-Prime is learning how to become versed in a new area of science within days, which is quite different from my Ph.D. experience of developing deep expertise in one area over many years.”

“I joined the F-Prime/FBRI team primarily due to the invaluable opportunity to collaborate with individuals deeply committed to fostering and accelerating my personal learning and professional growth. Although it is a lean team, I am fortunate because it translates to more one-on-one attention. I am getting opportunities to actively participate in diverse projects that make me feel valued as an individual, and that my contributions are noticed and appreciated (even as an intern!).”

“I was drawn to F-Prime because of the learning culture at the firm. I wanted to play a role in the translation of good ideas into real medicines and the firm has amazing people doing exactly that. On virtually every topic I encounter, there is a resident expert at the firm who can help me in framing my thinking. This ability to get to the right answer faster makes everyone more productive.

I also want to highlight that the deals the firm sees are a function of its reputation. People want to invest with F-Prime because they know they’ll not only receive capital but also an engaged partner who can help them along the trajectory of the company. This means that we see some of the most interesting ideas that will shape the future of medicine and often get to take part in their realization.”

“One of the exhilarating projects I’ve been involved in is the thematic research on Gen AI x Fintech. The possibilities with breakthrough technology like Gen AI are awe-inspiring. I find it fascinating to delve into its potential for the future and hear how visionary entrepreneurs contemplate disrupting the financial services landscape. It’s been an incredible journey so far, and I’m eagerly looking forward to sharing the outcomes of our research.”

“I have always planned to spin out my PhD research but had no idea how VCs actually decide to fund these projects. I joined to learn how other spinouts and startups pitch to VCs and learn about the decision processes that VCs make.”

Applications for 2024 are not open yet, but if you are interested in learning more, please send an email to careers@fprimecapital.com.

Technologies Enabling the Future of Robotics

In June, F-Prime co-hosted Robotics Invest, an invite-only summit packed with keynotes, panels, and case studies featuring the robotics industry’s most experienced investors, founders, and operators. During her time there, Betsy Mulé took advantage of this unusual concentration of tech industry talent by interviewing several founders — Yaro Tenzer of RightHand Robotics, Helen Greiner of Tertill and iRobot, Rajat Bhageria of Chef Robotics, David Morczinek of AirWorks and David Johnson of Dexai Robotics — about the state of the industry.

Here, they discuss the technologies that are enabling the current wave of robotics innovation, and what the future of the industry might look like.

Recorded at Robotics Invest