Startup investing was the name of the game at Milwaukee Startup Week on Friday.
In a morning Open Deal Screening Meeting, Golden Angels Investors heard pitches from two Wisconsin startups and shared their investing strategy with the audience.
Kenneth Iwinski of Wisconsin Rapids-based enhanced enteral nutrition company Synesis LLC and Sherry Zhang of Brookfield-based genomic nutrition firm GenoPalate Inc. presented their firms, their value proposition and their funding requests, and then members of Golden Angels talked about what they liked or didn’t like about each as an investment opportunity.
Synesis makes an enteral nutrition product – the daily nutrition delivered to people with swallowing disorders.
“80 percent of the products on the market is what we refer to as standard formulations,” Iwinski said.
The challenge with the standard formulations on the market is their makeup can lead to the degradation of the gut barrier function, he said. This can lead to diarrhea, cramping and infection, and affects about 35 percent of patients using the products.
“It’s not a well-understood problem,” he said. “It’s generally recognized as a common problem.”
Synesis has created a formulation, called Phytality,that includes tannins that help prevent the gut barrier degradation.
The company is targeting the $1.5 billion home enteral market, which is expected to grow at 6 percent per year through 2022, Iwinski said. It is seeking $750,000 in initial capital from the Golden Angels to produce and develop its formula.
Synesis projects it will grow to $17 million in revenue by year five post-funding. Ultimately, its goal is to be acquired by a larger player in the home enteral nutrition market, such as Abbott Nutrition or Nestle Health Science.
“We think we’re on to something here and if we can show efficacy in terms of getting it to market…we certainly think (large companies) will be interested in this,” Iwinski said.
The attendees asked Synesis about its patent protections, efficacy risk and margins, and Golden Angels director Tim Keane led a discussion of the growth potential and pros and cons of investing in the company.
GenoPalate, which is currently participating in gener8tor, offers personalized nutrition recommendations to individuals via genomic sequencing.
Zhang has a doctorate in molecular biology and is an assistant professor at the Medical College of Wisconsin.
Customers can buy the…