We partner with Trailblazers, founders whose innovative ideas are reimagining their industries. This series aims to highlight disruptive companies and the leaders who built them.
Nick Delmonico, Co-Founder and CEO of Strados Labs, speaks on the founding story of Strados Labs, the FDA's approval process for medical devices, and his experience working with Blu Ventures.
Tell us about the origins of Strados Labs.
While in graduate school, I attended a local healthcare hackathon event at Jefferson Hospital System in Philadelphia, where they brought together doctors, engineers, and patients from the community to think about healthcare problems that everyone wanted to solve. At the event, I hopped on the stage with my inhaler and told the audience my story of suffering from asthma my entire life, and my struggle to note when my symptoms are occurring and if they're getting better; so why isn’t there a technology that can detect wheezing and coughing events earlier and help prevent hospitalizations? After my presentation, many people expressed interest in developing this idea. I had the great fortune of meeting my co inventor, Dr. Kan Au: a neurologist and critical care physician with a background in biomedical engineering from Brown University. We worked evenings to develop the technology and, from there, I pitched and won Temple University’s top business plan competition.
How have accelerators and other initiatives helped you along the way?
Accelerators are essential in the early stages of a company. Our first accelerator program was a makerspace called NextFab, based in Philadelphia. We also worked with Ben Franklin Technology Partners which has a grant matching program and they generously matched our $50k funding from winning the business plan competition. The accelerator provided us with another $25k in funding and the medical engineers on staff helped us build our product offering and prototypes. Once we graduated from Ben Franklin, we joined HAX 2018, an accelerator program through SOSV that invested another $250k. We ultimately received just under $400k of capital from accelerators, grants and business plan competitions to build the first prototype and refine our value proposition, which prepared us to pitch for our seed round.
Securing FDA approval must be an onerous process. Can you discuss your journey and its impact on the company?
The FDA has several pathways for the different types of medical technologies that exist. Medical devices are the most complicated pathway as they need to provide enough evidence that, once the device reaches the marketplace, it is “safe and effective in its intended use.” There are two pathways to approval: PMA and PMN (510(k)). We have followed the510(k) pathway as it is considered to be the fastest process of approval. It’s pretty prescriptive as to what you have to do to meet the requirements for testing your product. It allowed us to market our technology as a wearable device worn by patients in the comfort of their home (prescribed by a doctor), which is really the first stepping stone of clearances for our technology. Now that it is in the market, we can discuss the benefits to the patient wearing our device. We can also now sell to life sciences companies and academic research centers who will use it in conjunction with the trials that they run for their drugs or devices.
To expand commercially into health systems, we need to cross another regulatory clearance hurdle that requires more data on the patients such as worsening symptoms, rehospitalizations, how often they are experiencing these symptoms, efficacy of the treatment, and other factors. Without this additional regulatory clearance, it would be very difficult to expand so it is definitely a barrier to entry.
Switching gears, what was it like to work with the team at Blu?
Working with Blu has been really great for a few reasons: transparency, the diligence process, and advice. As a founder looking for investors, transparency from an investor is really important, because it means that they don't want to waste your time. They know how busy you are. And they also want to put you on a pathway to being successful in fundraising, either with the same group or elsewhere. So working with Joe, in particular, has been great, giving helpful advice on fundraising plans and strategy that we’ve acted on. Secondly, the team had excellent diligence questions that in my view were appropriate. What's valuable about this technology? Why are you and your team the ones to do it? And where are you going next so that we can understand the value that will be created over the lifetime of the investment? Pradeep’s prior experience in pharma was invaluable, which we leveraged in building out our pipeline.
Any advice or lessons learned?
I've certainly learned a great deal throughout my journey. One of the biggest lessons I’ve learned is that a skilled and experienced team is paramount to any company’s success. I know that it's always the thing that sounds cliche, but you need people who have the skill set to build something from zero to one, and the interest and passion for it. Especially as a first time founder, getting experience working with people with technical backgrounds is critical. I can't imagine not having the guidance of my co-founder who came from med tech and had a successful exit. We are learning a great deal together.
Anything else you would like to add?
It may sound a bit obvious, but founders need to be prepared to talk to a lot of investors. VCs pass on raises for many reasons. One reason for passing could be because it's not a good fit for the VC. I’ve learned over the years that venture groups have a particular set of criteria for making investment decisions. If it's not a good fit for them, you probably don't want that investor anyway because it means that there's going to be a misalignment of strategy and vision moving forward. But always ask for who they think might be a better fit. This is how I met Blu Ventures. I would just always encourage founders, especially first time capital raisers, to ask that follow up question to expand their ecosystem and network.
What is on the horizon for Strados? Anything new with product development? You mentioned a potential Series A round later this year. Assuming you receive this funding, how would you deploy it?
We are expanding into over 22 countries in 2024 up from 7 in the prior year, a big milestone for our operational team. We also have several new product expansion plans to our platform including patient reported outcomes (PRO) features and integrations with additional pulmonary devices used in clinical trials. Our algorithms for cough and wheeze detection are also exceeding our performance expectations and we plan to submit them for regulatory clearances within the year. Due to our rapid growth and increasing demand for our solution, we plan to raise a Series A to continue our growth trajectory and expand more rapidly into new market applications for our technology.
A new direction we are also excited about is incorporating our RESP technology as a digital therapeutic to aid in patient compliance and improve outcomes. If patients with chronic cough and advanced pulmonary disease can be shown to be compliant to the therapy regimen with clear improvement in symptoms, it helps them improve quality of life and reduce healthcare costs, which is core to our mission here at Strados Labs.
If you'd like to learn more about Strados Labs, please visit their website to schedule a demo.
This article is part of an ongoing series by Blu Venture Investors to celebrate leaders in innovation and spotlight portfolio companies. Please click here to read more articles on the BVI Blog. Answers have been edited for clarity.