East Meets West: Exploring the nuances of US and European Investments. An interview with Gitte Pedersen.

We interviewed Gitte Pedersen CEO and Co-founder of Genomic Expression, a Boston based Biotechnology startup, which offers next generation cures for cancer. We compared with her the differences in investment approaches between the two continents for her 4-year-old technology startup.

Graduated from a master in chemical engineering, Gitte Pedersen has more than 20 years in the biotech and pharma industry. She is the CEO and co-founder of Genomic Expression, and also a member of the advisory board of Impulse4Women. 

---

Impulse4Women: Gitte, could you tell us more about your experience as co-founder of Genomic Expression?

I think every founder needs to ask themselves, what is the one big problem they want to solve? Because doing any start up is very hard work, and it's not a nine to five. I founded Genomic Expression with my brother, Morten Pedersen, We spoke to many friends and colleagues in the industry.

The problem that my brother and I are passionate about solving is that most cancer patients don’t survive, despite the fact that we have tried to cure cancer for many decades. It is a very heterogeneous disease, and it's driven by genetic changes that cause the cells either to forget to die or to accelerate growth.

We analyse what's going on in the tissue in order to better navigate the patients into better treatment options, That gives us a significant amount of information to better navigate patients into either drugs that could work or clinical studies.

And we have taken this concept from idea to product and launch. Thus, we're fully operating as a fully licensed clinical lab in the US in Boston, Massachusetts.  

I4W:  Tell us about your first round for investment? 

I got my first investment from an American Impact Investment Angel group, and the second round was actually easy. It was a fun story. It was just about the time when crowdfunding became possible. Nonetheless, I did an anti crowdfunding round where I created my own website. I got some help doing landing pages, a website, password protected and targeted through my network, specifically high net worth individuals that were willing to invest.

When we launched that, it took us two weeks to get the first check. I'm talking about closing and getting money deposited into the bank account. So that was pretty amazing. I haven't talked about that for quite a while. It was a very diverse and international investor group, all high net worth individuals, because that was our criteria.

To be an accredited investor in the USA you have to have more than a million euro or dollars in assets if you are investing in a US based company tor more than $200,000 in yearly income., The investors have to sign off that they qualify. In my  last round, I would have lost my bets because I got Harvard Business Angels as my lead.

I4W:  You have both European and American investors. Which of them did fund you first?

It was US investors. There's only one place in Europe where they have deep domain knowledge in next generation sequencing, and that is in Oxford. That's where Oxford gene technology was established. So that's the investor based around those geographical areas. One of the things that I will say about the difference between the US and Europe is that Europe operates individually by country and if you go from Denmark to the UK, they ask, why don't you have local investors? 

In the US, if you have the right technology and the right team, both equally important, and you are  at the right stage, you can raise money.

I4W:  Can you share some insight regarding funding? 

It was very clear that our local investors in the US had an idea what genomics or sequencing was. Fundamentally, investors invest in things they are comfortable with and familiar with. So you need to talk to people who have knowledge in the field, we were able to do that and get some of these investors to invest very early on. 

At this point, we have a very diverse investor base, both European and US based. 
When you get to a certain stage, once you start generating revenue - we have doubled our revenue every year for the last three years - then it's easier. The technology apparently works and people want to pay for it. Right? So it's less about the idea, and it's more about the plan and the team executing it, especially the commercialization plan.

Every step, there's another hill and any company can die on it. I interviewed CEOs for some of my predecessors, and some of them died on that hill. So it was very important for me to work through derisking those next steps, to put a plan together that is probable and less risky, to be able to attract investors that are interested.

I4W:  Have you noticed some differences between European and American investments? Is there less money available in Europe?

The other thing is a cultural difference, I would say, and there are even cultural differences between the East Coast and the West Coast. In the US, you have investors that have disrupted every single industry in the past except for healthcare. They are still trying to disrupt healthcare. I think there are some cracks opening right now, post pandemic that we also play into, but their mindset is very different because their question is, okay, this is great, how big can it get? They also believe that the winner takes it all, therefore it is a completely different mindset.

The East Coast investors are more conservative and closer culturally to Europe. They want to see scientific data. They're more scientifically driven. If you say disrupt to them, they get scared and run away. And the same is true to a certain extent for Europe. I think that the check sizes are also different in the East Coast, you can still raise serious Series A instead of drip investing. In my space we seen$100 million series A. I have yet to see that in Europe, I think you are typically offered less money at the same valuation or less valuation in Europe.
 

I4W: How to minimize the investment risk? Would simplifying the investment process be a solution?

There are many ways you can decrease investment risk. You can invest at a later stage and at that stage  you can look at traction. You have different KPIs once you are commercial, e.g. cost of acquisition of a customer, how fast you acquire customers and more. 

Early stage in life science is super risky because you have no idea whether it works yet. Investors do invest, so you just have to find the right investors that like to invest at that stage. They look for the stage, industry, technological competences, scientific competences and if they have had success in your space, they're more likely to cut another check in that space. Of course, if you're a direct competitor to a portfolio company, forget about it. They're not going to invest in direct competitors. At least the majority of them will not.

I4W: What can be said regarding the check sizes in the average investment in the US and EU?

In the US, the check sizes are bigger on larger valuations, but you typically have to be a US based company to do that. However, in Europe they tend to be a little smaller and lower valuations. I would say this to any startup, don't get hooked on the valuation. Make sure you and your investors are aligned on the path to success because you will become what your investors believe.

Once you have  investors , they will significantly influence the path. I believe it's more important that the visions are aligned and that you reach your milestones according to plan, then the valuation. If you do that well, there will be more money.

I4W: And last question for Impulse4Women community,  what would you say to encourage more women to start their own company and get fund?

I would say that as a female founder, there are a lot of investors that are very interested in diversifying their portfolio. My advice if you are a female founder is to focus on them because they are looking for you. I always take a look at the VC partner profile. I want to see that they have female partners. I take that as an indication that they enjoy working with women. If it's an all male group, maybe working with women is not a priority for them. That would be my immediate assumption, or maybe they just don’t know how to do it. 

I recommend you work on your communication. Communication is the most important skill if you want to be an entrepreneur. Learning how to communicate with investors is key. All the Business angels and investors I pitched didn’t know about the healthcare industry. I had to present my research and business plan in order to reach my investment goals, hence, communication is key. You need to understand who they are when you talk to them: do the investors have a scientific background or do they have non-scientific background? In addition, you need to be able to pitch to both levels of scientific understanding in order to get them on board.

Once you have investors in, it's very important to communicate and do it consistently on a regular basis. They don't like to wait a year to hear from you. They want to know what's going on.

I4W: Thanks a lot Gitte for your insight.