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Transcript of our conversation with Celine Halioua:
Immad Akhund:
- Hi everyone. Welcome to Founders in Arms with me, Immad Akhund, Founder and CEO of Mercury.
Raj Suri:
- And I'm Raj Suri, co-founder of Lima and Tribe. And today we have Celine Halioua. Welcome to the show. You're the, I believe you're the co-founder and CEO of Loyal, right? Longevity for dogs.
Celine Halioua:
- I'm the solo founder of Loyal.
Raj Suri:
- Solo founder. Okay. So no co-founder.
Celine Halioua:
- Just me from day zero.
Raj Suri:
- Yeah.
Celine Halioua:
- Contrarian to the core.
Raj Suri:
- Exactly. Yeah. Why don't you tell us a little bit about Loyal?
Celine Halioua:
- Yeah, we're a series B-ish stage company developing drugs to extend dog lifespan. The goal is to get the first drug, FDA approved for longevity and quality of life improvement. We're like a year, knock on wood, fingers crossed, caveat caveat, asterisk, asterisk, from market and it's been a, it's been a wild ride.
Immad Akhund:
- Do you have to get the normal, normal kind of FDA approval for pet drugs? I kind of assumed there was some shorter path or something.
Celine Halioua:
- Yeah, it's a center of veterinary medicine within the FDA. So it's the same governing body but a different group of people. A lot of veterinarians in addition to you know, their normal scientists. And there actually is a somewhat accelerated path, believe it or not, us being five years in and a, you know, maybe about a year from market is like pretty damn accelerated for a getting a drug approved from zero to one.
Immad Akhund:
- How, how much, how long would a human drug take?
Celine Halioua:
- Nine plus. But you'll probably fail like many, many times before you get one that takes nine years to get approved. It's it, it's a pretty brutal ride.
Raj Suri:
- Wow. What do you think of the whole process? You know, we've talked to you on the show about like regulatory capture and stuff. Maybe you can't even talk about it that much, but you know, what do you think of this? Like the process? Could it be streamlined? Is there a scope for improvement from the FDA, you know, type of thing?
Celine Halioua:
- Yeah, I mean there's always room for improvement in any organization. I actually really love working with the veterinary FDA 'cause it's very aligned, right? It's all about, you know, having your animals healthier. There isn't as much of like a political layer that I think implicitly or explicitly exists on the human side because I mean, look at all the shit that happened with Covid, right? They were, you know, getting skewered constantly in the media. No one's skewering veterinary FDA, right? And so I think they have a little bit more of like intellectual freedom. My like big contrarian take that might get me canceled from the valley is I think the best thing we could do for at least drug development on my side is giving the FDA more resources and more money. You know, one of our biggest challenges is when we submit, you know, a major dossier is that it takes six months to get a reply and that's six months of burn, like pretty high burn. And then you might get to the end of six months and be like, oh, like these 10 things are wrong and then you have to spend four months fixing them and then you resubmit it and it's another six months.
Immad Akhund:
- Are these dossiers really big?
Celine Halioua:
- Thousands of pages. Yeah.
Immad Akhund:
- Do you think AI will help? Like you could have the FDA use AI to read it and like come up with automatic responses.
Celine Halioua:
- Someone literally pitched me that yesterday. I'm sure. I think the question would be like, where would you get your training data from?
Immad Akhund:
- Yeah, I mean the FDA has training data presumably.
Celine Halioua:
- Oh yeah. But I, I don't know if they're gonna be, I mean maybe they'd be willing.
Immad Akhund:
- They're not gonna be the early adopters on this.
Celine Halioua:
- I, you know, just like imagine if AI approved a drug that like killed babies or puppies or something like that.
Immad Akhund:
- Yeah, you need a human for that.
Celine Halioua:
- Bio is very conservative. As it probably should be given, we're, you know, building medicines that like go into people's bodies and like do things to them potentially irreversibly.
Immad Akhund:
- And you think if they had more money they'd have more staff and they could go kind of like review these things? Don't you pay for it like when you submit the dossier? So can't they use the money you pay for it to run the process?
Celine Halioua:
- Yeah. Which is ridiculous. We are a tiny ass company. I don't remember how much of fees are like half a million, a million a year, something like that. For a company of our size, like the, the best federal institution or one of the best, you know, regulatory bodies in the world is semi dependent on, you know, you know tiny companies like Loyal giving it money. Like that's ridiculous. Like it should be like, I don't know, I, I think it should have a lot more funding. I'm gonna get canceled by the log now he actually invested in Loyal and he's like definitely just gonna like claw back his investment now.
Raj Suri:
- Yeah, that's right. He, he was the one on the podcast right? With Vivek talking about the, you know, how, how to reduce the FDA. Yeah. Basically. So I, I guess you're not a fan of this like approach of cut the FDA by 80% it'll go faster?
Celine Halioua:
- I mean we've seen this experiment, it's called the FAA, and we killed hundreds and hundreds of people and we have a, you know, an important American institution, you know, atrophying and potentially imploding. I'm sure there's lots of rooms of improvement. Again, I'm not an expert at all on the human side, but to me, as somebody who, you know, spends a lot of time thinking about regulatory, regulatory filings, I've never had an issue. Like the feedback we've gotten I believe was all very reasonable and it's something that any like objective scientist is like a conclusion they would've come to. It's really for us it's just been about the a, the ability to have as many interaction points as possible, right? So you can get feedback before you go and like write this thousand page dossier without ai because we don't use that. And then the ability to get the feedback faster, which just means they need to have more staff so they can commit to it.
Immad Akhund:
- I do think this like deregulation by defunding is a bad idea. Like I would rather they actually change the regulation and change something. It took my wife's green card renewal two and a half years and basically the whole immigration system was like defunded by Trump. By Trump and never refunded by Biden. So there is a massive backlog on everything and this is just like a bad way to do it. Like go simplify the laws but just like defunding these, these bodies that still have the same kind of remits and laws is just slows everything down.
Celine Halioua:
- Yep, I agree. And also on the veterinary side, they have these new regulatory, we're actually under a new reg pathway called expanded conditional approval that only opened up in 2019, which is coincidentally when I incorporated Loyal. It's super innovative, you know, and if this works really well for the FDA, I think it's a pattern we might see in other jurisdictions. So nobody made them do that from what I understand. It's they're just trying to get more dog drugs approved. So I'm a big fan. I think they're, they're doing good work. Obviously there's always optimizations but there's sure hell is optimizations within my organization too. So I'm not gonna pretend like I'm the queen of organization design.
Immad Akhund:
- Is the drug that you're developing, like, you know, does it only work on dogs or would it work on humans too? Or is do humans already have like a similar compact?
Celine Halioua:
- Well I think there's a lot of things that would actually most likely work or potentially work for extending the quality of life and numbers of years of life for the human. That's like one of the interesting things about the longevity field is there's a lot of foundational research. The question then is how do you prove it? And the proving point is where longevity gets really, really tricky. And it's actually one of the reasons I started with dogs is 'cause you can see whether something extends lifespan or not in about a five year trial. Oh, interesting. If humans, if I gave you guys a longevity drug, I'm gonna be sitting here for decades like staring at my watch, you know, and there's so many, you know, ways in which the data can get corrupted or like what if you get really into smoking, right? Like humans have all this free will and they can all go do crazy shit that impact the outcome versus a dogs for better or for worse, they're not going to McDonald's, they're not smoking, they're not getting into general aviation, right. It actually like really simplifies the ability to prove it. So T-L-D-R, I think there are like, I think mechanistically like our drugs, it, it would make sense that they would have a benefit on humans too. But proving it, we're gonna need a lot of dog here first.
Immad Akhund:
- Is there a lot of other people pushing kind of longevity for pets as a model for like eventually? So you're the only one who had this idea?
Celine Halioua:
- There was one, so I'm not the only one who's had the idea. Yeah, this idea of, you know, dogs...
Immad Akhund:
- I mean, it seems like a great idea.
Celine Halioua:
- I agree, but you would not believe how controversial of an idea this is. Sometimes like I still get in front of investors and they're like, I don't think the market's big enough. And I'm like, this is not the risk to this company. There was like a laundry list of risks to this company. The TAM is not one of them, but no…
Immad Akhund:
- 'cause you think like any dog owner would pay for this.
Celine Halioua:
- Yeah. And honestly even if it, it's like a fraction of a fraction of what we think it's gonna be, it's still gonna be a huge product. Especially relative to like a lot of software products like startup scale software products. And for context, you know, Apoquel and anti-itch drug makes about 800 million a year. HeartGuard one of the 50 billion heartworm preventatives makes half a billion a year.
Immad Akhund:
- These are, these all are for pets?
Celine Halioua:
- These are all for pets.
Immad Akhund:
- Wow.
Celine Halioua:
- Ella made an osteoarthritis drug for dogs, made 40 million in its first quarter of sales. It's a huge market. It's not as big as human, but it's more than sufficient to return some VC funds, let's just say that.
Immad Akhund:
- Well I guess it was a bit of a change of topics. So before this you were at Longevity Fund, I believe. What got you into like longevity? Do you wanna live forever or like where, where's your kind of interest in the topic coming from?
Celine Halioua:
- No, I am, I'm definitely not an immortalist, which I kind of wish I was because you see all these like high net worth and family offices...
Immad Akhund:
- Is that a term, immortalists?
Celine Halioua:
- Yeah.
Immad Akhund:
- Oh I've never heard that before.
Celine Halioua:
- People who are trying to like extend lifespan radically and some of the most popular figures in the space are the ones who claim that they're on the path to doing this. It's not like, man, I wish I had it in me to pretend I cared about that because I could probably have Loyal like double the amount of funding as it has today if I was like, we're gonna make immortal dogs and then immortal dog owners. No, that is not my interest. I actually think about longevity more around this idea of preventative medicine for age related diseases. Which is something I became, I actually got into college originally for art school and then the summer before I started, I went and did a internship at a neuro-oncology clinic internship. I was just shadowing some doctors and I met, you know, I met patients who were getting brain cancer diagnoses and other diagnoses that were just, I don't know, just the fact that there were certain diseases you could get diagnosed with with, you know, God forbid if it happens, it doesn't matter how much care effort, money you put into it, there's not anything that anybody could do for you on this planet. There's a lot of diseases like that. Most of them are age related and I don't know, I just like maybe my motivation has always been free will, like I just feel like it's ridiculous that ourselves can go rogue and that's it. And you're not gonna get to be at your kid's wedding, you're not gonna get to, you know, live past your; I just hate it. And so I got into longevity actually less about the lifespan thing, but more as a practical aspect because one of the reasons why treating age related diseases, think like Parkinson's, Alzheimer's cancers is so hard is because the disease often has a multi-decade head start on the medicine, right. You know, maybe you're diagnosed with Parkinson's when you're 80, but there's evidence suggesting that you're developing the precursors decades before. And so it's just, it's obviously always gonna be important to develop acute medicines. There's always gonna be a lot of work in that. But I was, I got really interested to this idea of like, can we reduce the risk of somebody ever getting diagnosed with that or delay the onset? And that's how I really see aging drugs more than anything else.
Immad Akhund:
- But I guess like if you were to be extremely good at preventativeness eventually you would live forever, right? Like if you, if you managed to prevent every other, like if prevent Parkinson's and cancer and heart disease and diabetes, like presumably you would get to immortal or, or do you think there's like another kind of clock that like takes regardless?
Celine Halioua:
- Yeah, I mean it's interesting. It's what do you define as a disease? Because there's acute disease, which is something, let's say baseline is zero, something going acutely wrong, right? So it's like negative five or whatever. But then there's also just normal wear and tear and breakdown, which maybe might become symptomatic as a disease but isn't actually something acutely actively going wrong. It's just the inherent physical properties of what you are made of not being designed to last for 200 years. Right? Like one example I'm thinking of is your brain, you're generally speaking, neuroscientists don't come after me. I know there's a lot of subtleties here. Generally speaking, the neurons that you, let's say enter adulthood with are the ones that you have for the rest of your life. So is there some, you know, biological just like practicality of like a neuron in its form of which we evolved it in. Humans can only last 120 years, right? That might be the case. So I don't think...
Immad Akhund:
- You could, let's say someone could like scan your brain and put in a computer and it would like run as an AI, would you take that option?
Celine Halioua:
- There's a lot of people working on that. I was actually at a conference with like a bunch of brain nerds a few weeks ago who were like having this debate of like the, what's the word, like the thesis ship and like if you could make a perfect copy of yourself and then like app operate somewhere else, but it destroys the original copy, like would you do it? Things like that. I mean, yeah. If it's between that and death, obviously.
Immad Akhund:
- Yeah. See you're an immortalist then.
Celine Halioua:
- I mean I'm very curious about where the world's gonna go, but like I am very sad that like we might miss like spacefaring humanity, but it's not really like, I'm not going after any levers that I think are going to create that anytime soon.
Immad Akhund:
- So my, my parents are quite old, like they're 74 and 84 and I've asked them and they don't wanna live forever. So I wonder if it's like something about youth where like, you know, you still feel like you have a lot to explore and maybe eventually you just get behind a border of living or maybe it's just like that, like traditional. Raj, would you want to live forever?
Raj Suri:
- Yeah, I think we've had this debate, Immad, right on some of our group chats about living forever. I've always been in, I I think everyone should want to live forever. I don't think that there's a good thing. I think it's like the, it's probably the number one problem in the developed role is that people die, you know, as, as you said Celine, like, you know, that, you know, we generally have all of our needs met, right? We, you know, where people are in general are have enough food to eat and you know, they have, you know, we, we, we generally have, I mean loneliness is a problem, but people generally have family and friends, you know, the, you know, so if you look at the Maslow's, you know, sort of hierarchy of needs, if you have your basic needs met, you know, the only other problem we have to worry about is really dying. But, so I actually, I I think there's, it's great that people like Celine and a lot of people are, are working on this, you know, life extension technology or you know, maybe they call it health span, right? They say extending your health span like you, the amount of time that you're healthy. So Celine, I'd be curious to hear, what do you think of like all the different efforts in this space? Like what are you excited about? What are you more skeptical about? Like in this space? Like there, you know, Google had like a big effort, right? For a while in this space. I think they've shut it down now. I'm not sure if they keep it...
Celine Halioua:
- It's still going.
Raj Suri:
- Still going.
Celine Halioua:
- It's just...
Raj Suri:
- What was it called? It was like...
Celine Halioua:
- Calico.
Raj Suri:
- Yeah, yeah, Calico, right? Yeah.
Celine Halioua:
- It's just, I would call it a little bit more, more of like a research and immuno-oncology org, not necessarily an aging org. I don't think there's enough good direct efforts. There's a lot of, this field is ridiculously tiny despite the fact that aging underlies most of the major or significant portion of the major medical and disease markets in the, in the us.
Raj Suri:
- Like how tiny, can you quantify that? Like is it like 10 companies working on this five comp? Like what's the efforts?
Celine Halioua:
- I would say double digits. Yeah. Like credible, credible affairs. There's a larger academic build out, but it's not really translating out. And it also just depends what you define as an aging company. But I'm talking about companies that say like, we're trying to develop drugs for aging and then there's a bunch of different strategies that people use. Right? But like, if it's just the companies that like nominally call themselves an aging company, I think it's probably double digit credible, credible outposts, which is ridiculous.
Raj Suri:
- Right, right, right. Is it because there hasn't been like a big success in this space yet?
Celine Halioua:
- Yeah. There hasn't been a big success. There's not a lot of interest from like the, from what I understand of like the classical biotech funders and outposts, you know, traditional biotech VC, which we're not funded by. And that was like kind of one of the like weird things that Loyal did is very much generally speaking like an M&A outpost, right? You take something out of academia, you put in a professional CEO, there are no Thiel Fellow CEOs in east coast biotech go and, you know, prove out this biology like has some probability of being successful. Maybe you bring it to early human studies and then you sell it to a big pharma for like high hundred, millions, low billions. That's generally the model. The ownership is much higher. The VC control is much higher.
Immad Akhund:
- It's more like the way software used to be 20 years ago. Yeah. There's a, there's a bunch of other companies that are not trying to do drug development for longevity. They're focused on kinda yeah, lifestyle management, let's say like the Bryan Johnson kind of take on it, which is like just eat more and eat like a very restricted diet. Do you, do you just categorize as completely different? Like there's like bio longevity and then there's kinda, I guess like better lifestyle stuff? Or do you put those in the same bucket?
Celine Halioua:
- I mean, I don't put 'em in the same bucket. I'm sure there's a lot more, I'm not as like caught up with that space. I'd say generally speaking, the average company in that space has default skepticism from my end because longevity is a very sexy marketing slogan. It has been the one of the sexiest marketing slogans for a very, very long time in humanity. And when you're doing something like, I don't know, enriched olive oil or like this supplement cascade, you don't have to prove jack shit and you get to just like reap all the financial outputs. So I'm sure it's like a great business for me. It's difficult. I have a bone to pick with it personally, even though of course there's, people should have their own free choice just because it takes away a little bit from the credibility of the field, which is one of the biggest issues that I have to deal with when I'm educating veterinarians and dog owners on what we're doing. Right? I am like...
Immad Akhund:
- I thought some of this stuff is proven in studies, like the olive oil thing is one of the few things I thought that was like somewhat proven, I guess? No?
Celine Halioua:
- I mean, nothing has been proven to extend lifespan in humans. There's lots of ways these studies could be like kind of crap and there, and like, just like, like, I mean it depends how you boil it down. Obviously sleeping better, obviously exercising, obviously having a lower, you know, body like fat index and higher muscle mass, like these things are obviously all gonna help you live a longer, healthier life, right? But there's like a, there's a subtlety to it, right? Where it's like what's the differential? Like, you know, is it like massive lifespan extension or is it just like, don't be unhealthy?
Immad Akhund:
- Yeah. And how much extra does that really get you?
Celine Halioua:
- Yeah.
Immad Akhund:
- I think the bit that, like it probably gets you a much healthier last 10 years of life at the minimum. Like if you're just doing exercise and all this stuff.
Celine Halioua:
- I mean, to be clear, you should definitely do that. Like you should definitely exercise, you should definitely reduce your visceral fat. You should definitely weight train. You should definitely do all these things. Where I get more skeptical is the, and here is this magical product that you could have a subscription to that's definitely gonna extend your lifespan because I like person do it. Look how cool I look. Like maybe it's legit, maybe it's not. But from my perspective, I have to then differentiate and be like, no, no, no, no guys, like, we're not developing like weird shit that's marketed around longevity. Like this is gonna be an actual like pharmaceutical product that's prescribed to extend lifespan. And that's such a big fundamental difference that I think the field needs for it to be considered an actual like legitimate industry and not just like a money grab candidly, even if those things do work, that's the issue.
Raj Suri:
- It strikes me that like something like this, what you're doing might struggle with like institutional investors, but like something like retail investors or crowdfunding might be a better way to like, you know, get resources for this because as you said, longevity is sexy. People do wanna live forever. But there's like, but I can see why institutional investors would be skeptical because they, they haven't seen a big maybe outcome in this space and it's just so different from, from other things. Like, you know, especially in Silicon Valley, like all the, you know, software stuff, SaaS and what, and AI.
Immad Akhund:
- But how, how much have you raised Celine?
Celine Halioua:
- About 140.
Immad Akhund:
- You can't get 140 from crowdfunding Raj, that, that market is not, I mean legally it's...
Celine Halioua:
- With institutionals, I a hundred percent agree with that. I actually think we're like undervalued, like assuming we are successful where we are currently I think is actually like pretty undervalued in the Silicon Valley market for all the reasons you're saying.
Immad Akhund:
- You know, so the Silicon Valley market to some extent is kinda sheep. I think if you prove it, then suddenly like every VC will wanna go fund this. I mean it's the same with actually AI, right? When OpenAI raised like eight, nine years ago, everyone was like, AI is dead. AI hasn't produced any companies forever, et cetera. I mean obviously Sam Altman was amazing at raising for it anyway, but now it's like the only thing that gets funding. So these things shift very quickly. It just needs like one or two kind of success stories. But I think it's better to be actually ahead of those anyway, because yeah, if you prove it, then you don't have as much competition versus like whoever comes afterwards.
Celine Halioua:
- Yeah. It, it definitely is difficult to raise for a company like this. So like, it's a, it's an art I've like constantly had to hone and optimize on and like have been punched in the face a few times to really understand like, how do you talk about what we're trying to do to a Silicon Valley audience?
Immad Akhund:
- I mean, how do you do it? Because you're, you're going to someone and saying like, Hey, huge TAM, I, I'm still don't have any traction revenue, but I, you know, I will. So it's like a very, yeah, fine, you can raise a seed run kinda with that idea, but how do you go raise 140 million with like, you know, this, especially you're doing it with that, you know, you're not talking to bio investors that are used to with like investing in this category. So how do you convince them?
Celine Halioua:
- Yeah, so for me it was kind of a combination of two major things. One is that it's, it's like giving people the mental models to evaluate us with, right? I think people, it, the, the difference between like a tech company or like a traditional, let's call it like B2B SaaS versus something like Loyal is, you know, with B2B SaaS, like you kind of know you, you can build it. The question is like, do people want it? Is it gonna traction? Is it product market fit? Will the economic scale, right? And so that's what you're trying to understand plus the competition angle because from what I understand, it's much easier to co compete over there. For us, the endpoint is pretty objectively valuable. You know, if we get this drug approved, it, we're, we're, I I I, the general consensus is like we'll be at least a billion dollar company, like before we even have like a drop of revenue, right? The end point is like, or the starting point in some ways is objectively valuable. Everything before it then is what is your probability of success of reaching that objectively valuable milestone of actually getting that approval. And so our fundraising rounds are really based off of A, like helping investors who don't normally invest in a space, like understand how to think about the market and how to think about the traction and then B, understand where we are relative to it. So it's like actually pretty scientific to that point where it's like, you know, here's the diff here's where we are, here's what we need for approval, here's the differential, here's how we fail, here's how we succeed, here's why I think we're gonna succeed, but here's the discount, right? Because we're not at that objective market. So that's one. And then two is really for us, this was important because there aren't that many, you know, dog drug businesses is helping them understand the economics and the economics of drugs are fucking awesome. They're so good. And people don't realize that because in bio, in in, in, in the west coast, you don't invest in that world as much or you exit before the companies often make any revenue, right? So helping them understand, you know, the cogs are great. You know, we have 10 years of federally enforced exclusivity. The TAM is huge, you know, vets are aligned. There's some market risk 'cause nobody's approved a longevity drug before. But like the baseline economics, like even at day one are gonna be like pretty good. And this is not, by the way, we're not gonna like gouge people. Like the product's gonna be double digit dollars per month for dog owners, but even be, even with that, the, because of the manufacturing optimization and like the realities of shipping, there's a, a bottle of pills per month and, and not, you don't need to have all this like crazy ad spend and CAC spend. The VCs are used to in their worlds. The numbers are actually really nice. And so that was really kind of the foundation and that was a very different like pitch style that I had to, or narrative style that almost felt gross. 'cause you're like, you know, quantifying the value of a life of a dog, which I fucking hate. But doing that was really important. 'cause my early stories, like my early raises, what we were talking about, about were very much like dog longevity. We have this idea, it's great, people love dogs, also human longevity, yay, give us money, which worked partially 'cause of ZIRP, but it did not work after the market crashed.
Raj Suri:
- Yeah. Yeah. I can see it being a challenge. I mean, you know, and, and it seems to me like the space in general is underfunded given the importance of it, right? And and hundred percent, that's why I think retail investors are actually more likely to be like putting in significant amount of, of money here with less friction for people like you Celine than than institutions. I mean, and I think retail, the power of retail is pretty, pretty high. Like, it's, it's not like, I don't think, I think you can rate hundreds of millions from retail for this problem. It's, it is definitely doable. I think
Immad Akhund:
- Raj, you would have to go public, like Mercury did a crowdfund, the maximum you can crowdfund is $5 million. So there it's like a legal limit if you're a private company.
Raj Suri:
- No, no. Like Pebble for example, the watch company raised tens of millions.
Immad Akhund:
- Oh, you're saying like do a Kickstarter thing where you pre-sell the thing?
Raj Suri:
- You could also do, yeah, you could do it that way too. I mean that's the way to do it. Just that you...
Celine Halioua:
- Oh, the FDA would kill me.
Raj Suri:
- Who would kill you?
Celine Halioua:
- The FDA. No, we can't presell.
Raj Suri:
- No? Okay. Yeah, yeah. Okay.
Immad Akhund:
- Presell would, presell would not work either Raj, like how many, you'd have to get a million people to put in like a $10 subscription. Like it's just, I think it's….
Raj Suri:
- Yeah.
Immad Akhund:
- The way actually, like some bio companies do do it is they go public very early on. Like they'll do the first FDA or like, you know, they won't be fully approved, but they'll go public as a company. I think that's the way you'd have to do it, but that would be like a high risk maneuver.
Celine Halioua:
- Yeah, I do agree on the retail invest. We actually had this exact discussion at a board meeting a couple quarters ago, which was, you know, should we go public? Because as bio company can go public, pre-revenue and you know, one of the hypotheses is like, actually, you know, the general public well might even understand this thing better. Or even like public bio investors might understand this thing better, right? When you look at human bio companies that are as close to market as we are, they're worth multiple billions, right? And to be clear, our valuations haven't been bad at all, but I'm like, why is there a 10X differential, right? Like, what the fuck's going on here? We decided not to do it because the high risk point, right? We, and we don't need the capital really. We're, we're sufficiently funded,
Immad Akhund:
- But what was, what's the high risk from your perspective?
Celine Halioua:
- Volatility. It's a milestone based business, right? You can have unexpected delays. We're doing something hard for the first time, you know, you have to, and honestly, like we have 50,000 other things that we're gonna have to get right in the next year. And I didn't wanna add being a public company, CEO on top of that and a public company reporting. But I think if we needed more capital than what we have, it would've actually been a really interesting opportunity. And I, my my, my pet hypo, my hypothesis is we would've been valued more in the public than we are private. But I'm glad we don't have to go down that path. The other thing I, we, I learned and I learned this in 23, 22, 23 when ZIRP ended and like everything was exploding and VCs were like, don't talk to me, is the sophisticated version of retail, aka like high net worth and family offices. They, they saved Loyal's bacon. We raised about 10 million in the summer of 23 from high net worths. And that's what gave us enough like runway to go out and and raise our big series B.
Immad Akhund:
- Oh, that's interesting. How did you find them?
Celine Halioua:
- Very painfully? It took me six months to raise $10 million, which is fucking terrible. But it was just like talking to people, the, it's very different, right? It's not like you run a process, it's like social. Like one of my favorite stories is one of our, one of my favorite investors of this class is the producer of a very like, well-known like movie franchise. And he was like, you know, last minute called me. He's like, oh, I'm like in like, you know, remote part of like the Hamptons like come join me. And I'm like, I've never been to the fucking Hamptons in my life. I ended up taking a thousand dollars Uber to go meet him in the Hamptons. But it turns out there's like no signal out there. So then we got lost, but then like randomly through this, like
Immad Akhund:
- Was there surge pricing or was it five miles away or something?
Celine Halioua:
- Like, it was ridiculously far away.
Immad Akhund:
- That's hilarious.
Celine Halioua:
- Ridiculously far away. But then like halfway through, like us having coffee at his house, he was like, I really like this. I'm gonna put in 3 million. Totally random, right? Yeah. And we've been talking for weeks and I was like, there's no way this guy's gonna do anything but like whatever, what do I have to lose?
Immad Akhund:
- I feel like the normal advice in Silicon Valley is don't get these kinds of investors. Like they don't understand startups and they're gonna be kinda annoying on the cap table and that kind of thing.
Celine Halioua:
- They’ve been great. They're less annoying than VCs because they're actual business people who made money.
Immad Akhund:
- Yeah. So they're too busy. Yeah, they're like angels. Yeah.
Celine Halioua:
- They know how hard it is. And C, they have a really great differentiated network and they're like cool people independently.
Raj Suri:
- Yeah, there are a lot of people like that in my, you probably have not been on the circuit. I've, I've had similar challenges to you Celine with Presto. So I've had to like, you know, scrounge for money in all these different places. We actually ended up going public just to figure it out as well. So I can give you more points from that there go. But like, you know, I've actually been on this like family office tour in New York in my, you probably don't even know about this.
Immad Akhund:
- Did you go to Hamptons?
Raj Suri:
- I didn't go to Hamptons, but I went to a bunch of family offices. Like, so like, like there's like, there's like brokers out there who like take you around to New York to all these like family offices and you meet like these head of the families, you know, it's, it's a, it's like a, from a movie or something and you know, they have like, you know, they're, they're like various like artistic families or like, I would say like, you know, there's fashion brands, there's, you know, there's like restaurant brands, there's like, you know, there's different types of like these family offices outside tech and they, they have money, they have a lot of money and they don't know anything about tech. So they're trying to learn from you. Right. And and they kind of invest based on vibes in some cases, right? So it's, yeah, it's a different market. Totally.
Immad Akhund:
- You, you did, you were not successful raising from these
Raj Suri:
- I was semi-successful. I got some money maybe around the same scale as as Celine. So I don't know if, I don't know if you can get hundreds though, right? Like from that I think there are, there are, there are some investors who would, there hundreds, you know, there's enough money out there.
Immad Akhund:
- You're thinking like a Bill Gates or something.
Raj Suri:
- Yeah, yeah, yeah, yeah. I think that, I think that's definitely possible.
Celine Halioua:
- That was the thing I learned because I, I didn't grow up from money or anything, so I didn't really like, I feel like every few years in Loyal I'm like, like a new reality of the world becomes clear to me that I learned via Loyal and like this whole like family office high net worth thing was like, I had no idea any of this existed until like two years ago. I couldn't even tell tell you what a family office was two years ago. And I think the thing I learned from this is that there is a lot of money in this world and if you want to, and if you're willing to put in the ungodly hours, you can always raise, right? You, you don't have to put pull from the same like five, 10, you know, 20 VC funds that like everybody talks about. It's way simpler in some ways if your company's hot. But I actually gave me a lot of confidence. I was like, no matter like where the tides turn in Silicon Valley, I'll always be able to raise for Loyal.
Immad Akhund:
- To come back to the retail investor thing. I was talking to a CEO of a pretty big company. I think they're like a $20 billion company, I won't say who. And he was saying that the interesting thing nowadays being a public company is, you know, there's so much passive investing. So the active funds have like almost disappeared in terms of how much impact they can have. So actually retail has become way more important because if you can become, like the price setters are basically the only active funds and retail investors, everyone else is just a price taker as a passive investor. So if you can become like a retail stock that retail is interested in, like it's one of the few ways you can actually move your stock price. So every quarter he said he, they do like special things just for retail investors and they have like a whole focus in investor relation and retail investor. So I was actually thinking like maybe eventually retail investors become the main price set is because after that it's just all algorithms and 'cause even the active investors are mostly quant funds doing algorithmic investing. Like they're not, you can't really influence them, which is like a really interesting point that like retail becomes like the main power play in terms of like price setting in a, in the public market.
Celine Halioua:
- It'd be really interesting to look at. So, you know, Tesla's big demo they had like a week ago with the autonomous robots and then the stock dipped and I wouldn't say crashed afterwards. Like that demo was like very clearly like retail focused. I'd be curious if the dip afterwards was retail driven or if it was these big funds driven, like, because that seems to happen a lot.
Immad Akhund:
- I mean it's, it's back up as of today. It's up 20% today. I don't know why.
Raj Suri:
- You know, the crazy thing to me, like actually operated at a public company. Like you can't tell you, there's actually no data as a CEO you can tell. Yeah, nobody, nobody knows why the stock goes up and down and people just spend all day like scratching their heads as to what's going on.
Immad Akhund:
- Can you not tell if it's like a retail flow or like a big fund flow just based on like the order book?
Raj Suri:
- Well you can tell, like you can tell like a chunk of orders, so you can check like, okay, this order was, but, but there's just so much noise that it's really not helpful. I think there's a big startup actually to be made in this space of like helping companies understand like their stock movements in the public markets.
Celine Halioua:
- You heard it here first. You have to let Immad invest.
Raj Suri:
- Exactly. I have a bunch of things like that from when we went public to like just like kinda head scratching moments of like, how do, why is this still so broken? You know?
Immad Akhund:
- So would you, you as a public company, CEO would've paid for a startup that helped you understand like why the price is moving?
Raj Suri:
- Yeah, absolutely. Absolutely. There's, there's just so little data out there and everyone is just like, of course it makes a big difference, right? Like you, you want to know how to change your, your communication, your strategy, your targeting. So it's a big impact thing. But there's like, but there's almost no information or no one's helping you actually, even with that. Like there's this whole like community or, or like this industry of investor relations people who are actually pretty useless. Like they, they, they don't do much at all. It's like PR it's like a little bit like, yeah, I was gonna say it's like PR, it's like a cottage industry and like…
Immad Akhund:
- You have to have it, I assume even if like you're suspicious about what they do.
Raj Suri:
- Actually I do have it, but they, they do almost nothing and they, they don't really know what's going on and you know, they're, so this whole industry actually is, is ripe for disruption. And I was shocked at how, how bad it was and the whole retail actually, like building relationships with retail investors is very hard to do as a CEO. Like, you know, you have to, like, that's why you see a lot of like people going to Twitter and stuff like that or going to StockTwits and like trying to, you know, go out there and try to like,
Immad Akhund:
- Aren't you also very limited on like what you can say, right? That's
Raj Suri:
- Yeah, everything has to be approved by lawyers. Yeah. Like when, when you communicate,
Immad Akhund:
- But I don't know if Elon Musk stuff is approved by lawyers,
Raj Suri:
- But what he is doing, he's talking to retail investors, right? Elon Musk is talking to retail investors with his tweets. Like that is what he's doing and that, that is his strategy.
Immad Akhund:
- Okay, but you, do you think that's approved by lawyers?
Raj Suri:
- It has to be, yeah. I mean you've been, he's been...
Celine Halioua:
- Didn't he get in trouble for that?
Raj Suri:
- Yeah, he's definitely been in trouble for that, but he still does it. He doesn't say crazy things anymore, but he still talks about Tesla right on, on Twitter. But he doesn't say like, oh he doesn't like pre-announce a deal. But I'll say that what he's doing is actually very common for many consumer product companies. And and some of them have gone to jail because they've said like CRE like incorrect things. You know, you could look up like Trevor Milton or something. Yeah, his, he promoted like an EV. Yeah, you could, but you know, this is after multiple warnings. The guy didn't, still didn't correct it. He still was like lying on Twitter about his company.
Immad Akhund:
- But like, is it, is it the case that you end up in jail just like accidentally or is it like you're full out lying on the internet about your company and deceiving people?
Raj Suri:
- I mean, yeah, there was a lot of lying in that case, and there was warnings and the guy didn't correct it, you know, but, but like, but you, I would say the allure was very strong, right? Because you know, to go out and because you can put out a tweet and you can increase your stock price, right? So like, you know, there's; it is just a different, different world out there. Immad, I had one question for you, like what's the toughest raise that you've been through? Kind of curious.
Immad Akhund:
- Mercury has always actually been like pretty easy. The only reason it was a little tough is because I always, I always went for like crazy valuations. Like we raised at a hundred million valuation like three weeks after we launched, which like, I don't know why actually. So anyone gave it to us. This was 2019.
Raj Suri:
- It's 'cause of you, Immad, that's why.
Immad Akhund:
- I mean, I think the pitch was good, but it didn't deserve a hundred million valuation. So that's what made it hard. But it was never too hard. And my previous company, it was a real struggle, right? We had, we had a social network that was like gr you know, it had like 10 million installs. It was, it was like, this is back when mobile social networks were like a thing, but obviously like crappy retention. So like we were as young entrepreneurs very excited, we're like, oh look at this crazy installs. And like, you know, we showed them all these graphs so that anyone that dug into it would like say no. And I think we spent like a solid six months to a year kind of trying to raise it. No, go to the family offices. Maybe that was a mistake and we just got a no, it was just like, it was like, okay, we just didn't raise and then we had to like, you know, we had to become profitable in like a sixish month, six month time period. Our previous investor, Union Square Ventures gave us a million, which I have no idea why they gave it to us, but they were just like, it was a million, see if we could survive. And we did. But that was the hottest. I think that's so depressing If you like go fundraise and just completely come back with nothing. That's, that was extreme. Yeah. That was extremely depressing. But that's happened a few times to me. And honestly I didn't deserve it. Like at in hindsight it's not like, and any time it's happened to me, I didn't like come back and say, wow, these investors really missed out. It was mostly like, yep, I pretty much didn't deserve it and they kinda recognized that, so I don't like hold it against them.
Raj Suri:
- Yeah, it's, it's, it is soul crushing, you know, when you, when you spend so much time and, and I mean even, even in the best cases, right? Like you still get a lot of rejection even if you have a, you know, unless you have a preemptive or something. Right? Like, you know, and that, that's what's difficult I think as a, as a founder is like dealing with the rejection. But I'll say I, I, presto like, it, it was one of the craziest, you know, when I look back on it, craziest period because we were raising every three to six months and like we were constantly running outta money 'cause we were doing like hardware stuff and you know, selling to like, you know, doing big enterprise deals and we were, there was a lot of times where I came back with nothing, you know, especially early on and you, no one was investing in hardware 10 years ago, 10, 15 years ago, I would say. Right? And so it, it was definitely challenging. I think Celine, probably, you've probably, you know, had some of these experiences probably in the crash, right? Where it's been very challenging to raise.
Celine Halioua:
- Yeah, I mean I, I originally went out for a series B in Q4 of 2022 and failed miserably. I'd never, I'd always had like, you know, I started, I incorporated Loyal October, 2019 with like a preemptive term sheet, right? And in our series A was like peak ZIRP. So that was easy. And then I went out for a series B in Q4 of 22, which like I think ended up being one of the worst quarters for growth rounds in a long time.
Immad Akhund:
- Yeah, by far.
Celine Halioua:
- And my pitch was wrong, right? Because I didn't, you know, I hadn't been forced to understand the business as well as I do now because everything had been so easy and yeah, I like, I like, I just like failed. I failed and that was what then triggered me learning about this whole like high net worth family office world. 'cause I was like, well shit, we gotta hit this like milestone and this milestone to bring it back all the way to the front was only gonna happen in nine months from now because of the FDA.
Immad Akhund:
- Did someone advise you and say, Hey, go to the family offices or was it just like your, you just didn't wanna give up at that point?
Celine Halioua:
- It was actually Blake Scholl at Boom. He's been very successful. I mean, so they're building supersonic jets, super fucking expensive. Kind of similar to Loyal though, where, you know, the endpoint's objectively valuable. It's just like capital risk predominantly and execution risk of course. And he's been pretty successful raising from, you know, individuals and families much more than, you know, I have been at Loyal. So yeah, that was where I learned the initial idea from. And then I just kind of like meandered my way through like the networks.
Raj Suri:
- I would, I would say there's like several pockets of money that most Silicon Valley founders don't know. I'll just share a little bit because it might be helpful to some people, right? Yeah. There's, there's like, yeah, there are these like wealthy, you know, there's a family offices, there's wealthy individuals and, and there's a lot of wealthy individuals, especially in the us Like there's a lot of billionaires who are like, would invest if they just met you, you know? Right. Like there, there's, there's, so there's a lot of money out there just in the US There's also a lot of international capital, which most founders don't know about. Like, there's, there's piles of, of money in the Middle East and, and China, you know, Singapore, you know, back in the day, you know, when, when we weren't at war with Russia there, there was a lot of money in Russia. So like the, you know, Europe is actually less well known, you know, less likely to fund it, but there's still money there. So like, you know, there's pockets of money, there's a lot of money in the world in general and was founders who are struggling to raise and they need to raise, they can't get profitability otherwise, you know, they should think very creatively about how to, how to go out and race. Cause depending on just the VC ecosystem is a mistake, you know, it's a, it's a, they are kind of like sheep. They kind of follow each other. So, you know, you have to diversify away from that and just hopefully helps some people if they realize that.
Celine Halioua:
- Yeah. And build the networks before you need it because those networks like VC networks are inherently transactional. That's why you can raise a round in four weeks, six weeks, that shit don't fly with family offices and like, you know, random individuals, like they wanna know you, they wanna know what you care about, what you're doing. They wanna see execution, which is one of the reasons why it took us such a long time.
Raj Suri:
- Right. And some of the VCs themselves, they raise money and most VCs raise money from LPs. Those LPs are a reasonable target for, for startups, you know? Right. Like there are like endowments out there, there's big, there's, you know, there's a lot of big piles of money out there that founders can go to directly.
Immad Akhund:
- I mean, all of this sounds way harder than choosing from a VC. I mean, I think that the lesson is maybe if you can, if you fit the VC box, go do that. That's like maybe a reasonable road. If you don't, then like don't give up necessarily. And there's a lot of other options out there.
Raj Suri:
- There's another startup idea here though, right?
Immad Akhund:
- Yeah, there is. It seems like a, it seems like a marketplace that connects these wealthy people to ideas would be good.
Raj Suri:
- Yeah. VCs are basically rent seeking off their ability to raise capital, right? They, they go out and do the work and then they, they charge a premium basically for the service of their...
Immad Akhund:
- Yeah, I mean they're classic middleman for sure.
Raj Suri:
- Yeah.
Immad Akhund:
- Yeah, yeah, yeah. Yeah. They're quite an expensive middleman actually, you know, as the management fees...
Raj Suri:
- They, they are very expensive. Yeah. 'cause people will be willing to pay higher, you know, valuations for you just because they'd be less savvy and stuff like that.
Celine Halioua:
- Yeah. Yeah. I mean we've had that too. We've had like another like, like private equity, like top guns or whatever and they're like, we won't at all put our money in VC funds because this like management fee structures ridiculous. And they just do really sophisticated diligence at an invest and they're not cheap at all because they're like, they like in like the whole PE model is like ramping up very quickly in all these different industries and getting comfortable understanding the fundamentals and then making an unemotional "Yeah, no."
Immad Akhund:
- That's interesting.
Celine Halioua:
- So really like that pool, I totally agree that with Immad, like, I don't know if it's worth it if you can just go and raise a good round from VCs. Like, to be clear, our series B was like led by Bain Cap. Like we went like trad, but if you're doing something weird or the market's weird, it is really good differentiation. And it can be also really helpful for building your org.
Immad Akhund:
- I feel like Angel has tried to build a marketplace between like ideas and, and this kind of more traditional capital. I don't know why, I guess it didn't work that well because, you know, it's.
Raj Suri:
- I don't know if you can automate it with a website. I, it has to be like a more like traditional; like a human networking type thing needs to exist. Yeah.
Celine Halioua:
- Cause you need the quality, right? Or otherwise...
Raj Suri:
- Yeah, on both sides really.
Celine Halioua:
- Yeah.
Raj Suri:
- Yeah. And needs to be a bit of a matching service, but, but there is more that can be done here for sure. I think there, there's a lot. Celine I have one, I know we're almost outta time. I have one question for you. I'm just wondering what your like kind of life or career kind of path as a founder is doing a biotech startup? I mean, this is something that I've not done and Immad's not done. Like, it's, it's very binary, isn't it? Like you get to a point where like either the drug works and you're like gonna be very successful or the, or the drug's not gonna work. Or is it less binary than it seems because there's all these incremental steps, you know, that give you confidence along the way?
Celine Halioua:
- For dogs, there's a lot of incremental steps. I mean we've, this was actually again, like to the fundraising point, like one of my big learnings is we've had the data that, you know, me and objective experts would say like, okay, this is going to earn, you know, this is gonna be sufficient for efficacy approval for years. And so I have felt confident for years that this will, you know, eventually get approved. Really then the question is like, how long would it take? And you know, one of the big risks of oil in the early days was, you know, could we actually create the regulatory path for a lifespan extension drug? Because we, as far as I'm aware, we have created the first reg path for that. And so for me, I think it's actually the, the, the bigger question is right, like you, you just get delayed in the weirdest of ways that you don't expect and it like humbles you. I, I had a vacation recently ruined by an unexpected like six month launch delay. You know, that kind of shit happens. But yeah, you actually like it. It depends what you go after. I think you have to be clever in a design. For us, I feel a hundred percent con certain that our thesis is correct. You could extend a dog's lifespan with a drug and that you know, the mechanisms we're targeting, you know, should reasonably, you know, extend quality of life and years of life. Right? Then everything else is how do you prove it? Can you manufacture it at scale, at the standards that are necessary? How do you commercialize it? You know, do you run the safety studies and da, da, da everything correctly? Which I think is most biotech companies to be clear, don't work in that way, but it's one of the beauties of the dog business is that you can get pretty quickly, like compelling evidence.
Raj Suri:
- Yeah. Great. Well thank you so much for joining us today. This was super fun and a lot of war stories exchanged, so that's always good. Hopefully it helps some people out there and all the best. You're doing some great work. Thank you everyone for listening to the podcast today. Feel free to follow us on all the regular channels or join our group chat on Tribe and we'll see you next week.
Immad Akhund:
- Yeah, good chatting Celine. Maybe you can come back when you're approved.
Celine Halioua:
- Fingers crossed. Or when Loyal has imploded and I'm like scarred.
Immad Akhund:
- Yeah, either story will be good.
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