Single Pass is a local OC company solving the unique problem physicians face when conducting biopsies. David Friedman was the Deal Lead for Single Pass. In today’s “Angel’s Angle”, David will be sharing the 5 reasons TCA Invested in Single Pass.

Interviewer (SR): Stefani Rios

Interviewee (DF): David Friedman 

SR: Why did TCA invest in Single Pass?

DF: I believe in the overall product. They have this continuous innovation in an area that I saw was opportunistic, with a technology that could serve as a platform for future growth. I have certain criteria a company has to fulfill before I bring it to the rest of TCA for consideration:

1. Market Size Matters

  • DF: There is a market for cauterization of deep biopsies. The market started very niche; however there is potential to expand the market size. In the biopsy market there are a lot of potential problems. If a biopsy patient has complications it could lead to a longer hospital stay and more pain. So yes there is a demand for this product. SIngle Pass started with biopsies of breast tissue and they can go into other areas, such as the liver. It seemed to correlate with what the doctors were saying. I came to the conclusion that there is big potential to expand market size.

2. Unique Technology or IP is a Must 

  • DF: Single Pass is the only electrical cauterization device that can fit inside a guidewire. Product patents  are heavily reliant on the wording used within the patent. Based upon the team, it seemed like they had that patent locked up. 

3. Have a Unique Business Model and Logical Financial Assumptions

  • DF: I don’t take the financials seriously. This sounds crazy, because we’re looking at an exit but I’m trying to understand the underlying logic of how they put together the financials.  I look at the underlying assumptions and how they build up the model, more so than the model itself. So recurring revenue stream type companies are a little different than pure technology companies. I believe that given their logic and business model shows strong exit potential with a potential for a good exit. 

 4.  High Exit Potential 

  • DF: The valuation was relatively low, given what we had seen in other businesses, given the stage they were at, and  where they were relative to getting FDA approval. Therefore there was a high potential for an exit even if they have an earlier exit with the potential for a good return. We believe that we can get a 10+ X return on our investment or a 40% ARR if they are acquired early.

  5. Trust in the Team

  • DF: If I could score these categories, I would say this category makes up more than half  of my decision. I looked at the CEO, the team, the advisory board and they are all very skilled at what they do. I have to trust the CEO to do it right. If I don’t have a good feeling, [I] won’t invest. 

SR: Thank you for sharing these quality insights. It is interesting getting to know a little bit more about how investors think through investments. Do you have any advice for entrepreneurs?

DF: When pitching, especially if your company is super technical (like a biotech company), you must speak in a language everyone can understand. If I cannot follow along or keep up, that’s it. I will not invest. I want them to make it personal to me. I want them to tell me and show me how it would affect me or my family or company so I can walk in their shoes and then build that relationship. For example,  if Imagine your wife or family member needing a deep biopsy of breast tissue. You don’t want them to have a bad experience. What we have is a solution that prevents having the problem of being in a hospital because you have a bleed. I can understand these simple statements and I can get on board. This is crucial so I understand that from an application or benefit point of view. 

The views, information, or opinions expressed during the interview series is solely those of the individuals involved and do not necessarily represent those of Tech Coast Angels and its employees, consultants and interns. Tech Coast Angels is not responsible and does not verify for accuracy any of the information contained in the podcast series available for listening on this site. The primary purpose of this interview series is to inform. This Interview series does not constitute medical or other professional advice or services.