Stories of Inception; Caspar @ AminoChain

Volume III

TLDR; More maniacs. AminoChain publicly announced $7.8m in funding led by Andreessen Horowitz.

Inception stage investing is largely about timing.

Sometimes founders aren’t quite ready to make the jump, sometimes they move exceptionally fast and skip over the friends & family round.

In the case of Caspar Barnes, we met him as an electric academic, an optimist full of big ideas to change the world. He hadn’t graduated yet, but there was something about him.

One of my Partners, Roslyn Jin, met Caspar and just had one of those gut feelings you get when you meet magical people.

Caspar was still finishing up his double Masters, one in Banking & Corporate Finance at London Business School and one in Biomedical Informatics, Stem Cell Engineering, and Cancer Biology from Columbia University.

Needless to say, very little time to start a company with all of that going on.

Roslyn kept in touch, and in the Summer of 2022, Caspar joined us with the idea to work on a decentralized marketplace for donated stem cells—the idea was to get allogenic stem cell donations to patients with blood cancer faster. As you’ll read below, that was a kernel of an idea that became the decentralized biobanking network and infrastructure that AminoChain is today.

Just like the previous installments of Stories of Inception, with Zayd & Erno, it was extremely clear that Caspar was someone we wanted to back. His execution was simply off the charts.

Without a technical co-founder, Caspar went to a blockchain hackathon early in the program and inspired a team of engineers to join him, for free, hacking the product together, and ultimately winning the competition.

One of those engineers ultimately joined him as a co-founder.

This is one of our first signals of self-reliance in underwriting Caspar. He didn’t wait on Antler to match him with potential co-founders, he didn’t wait to build his product, he went out and made it all happen. He always does.

And it’s important to remember the timing of all of this too.

Building and investing into blockchain and web3 in the Summer of 2022 was not cool. We were on the other side of the 2020-2021 hype cycle and in the middle of what many were calling “crypto winter.”

On top of those headwinds, if we wanted to make progress, we would also have to get biobanks and hospital systems—organizations that typically take years to crack as customers—to buy into the promise of a nascent and ambiguous technology, and to become pioneers in the future of healthcare.

Let’s back up. What is AminoChain?

AminoChain powers the modern handling of biosamples by connecting data across healthcare institutions.

AminoChain’s software plugs into the inventory management systems of biobanks and turns that inventory into a shoppable specimen center like Amazon.com, so that healthcare institutions can purchase stem cells, blood cells, breast cancer tissue, eyeballs, and anything else a biobank might be preserving.

Notice I didn’t say blockchain.

Yes, a blockchain infrastructure is being used, and while that’s important, it’s really not what’s most important to biobanks, healthcare companies, or investors. What’s most important is that there’s a durable business with real and measurable customer value being created.

The same is true of AI right now. During hype cycles, you have to look beyond the technology and into its durability, demand, and quantifiable customer value.

In AminoChains’ case, blockchain is a beautiful solution to a complex problem.

It stems from three core areas:

1. Consent & Patient Data

2. Operational Execution

3. Incentives

Consent & Patient Data

In the world we live in, when you donate blood, stem cells, or any biomaterial you have two options: single use consent or broad consent. You can either allow your donation to be used for one thing or for anything.

The byproduct of this is a an absurd amount of biomaterial locked up in the world’s biobanks, being stored uselessly because they were mostly donated under single use consent.

In order to use these excess samples for anything beyond their original intended purposes, hopeful procurers must first search and identify the samples they want, inquire about them manually, and then the biobank must contact patients for “reconsent.”

Wildly inefficient and difficult to manage.

And that’s just the process to purchase, not even transact, ship, or produce derivative materials, but reconsent is the first problem that technology can solve.

When the biodata is read by the inventory management system, and transferred into AminoChain securely, the software can help to automate reconsent. This is the first step in building a world that straddles single use and broad consent, enabling a future of “personalized consent” for every donor on the planet to contribute more intelligently to science.

But it’s not quite that simple.

There are regulations around patient data, namely the Health Insurance Portability and Accountability Act, better known as “HIPAA.” It’s purpose is essentially to set standards for the electronic exchange, privacy and security of health information. The byproduct is a myriad of inefficiencies in patient data across the industry. That said, it does exist for good reason—to protect patients and their data.

So how do you reconcile the need to protect patient data with the opportunity to leverage this data into better healthcare for the global population?

This is where zero-knowledge comes in, or “ZK” as it’s known in the crypto and blockchain world. Essentially, what ZK allows for is the obfuscation of Personally Identifiable Information, or “PII,” while still enabling a process by which the accuracy of the data can be verified.

Said differently, ZK is essentially a black box where specific patient data isn’t transacted, but the values and accuracy of those values within the data are.

Understanding the treatment of data in a blockchain and ZK environment is fundamental to understanding why a company like AminoChain is a durable solution to an exceptionally large problem, and what VC’s would consider an “adjacent possibility.”

The broader point on consent and patient data is that biobanks and procurers of biomaterial need a solution to unlocking the billions of dollars of donated material being stored, but until recently, it was wholly inefficient.

AminoChain changes all of that.

Operational Execution

The second point to know is how this material is transacted. If a procurer can find the sample and if the biobank can get a reconsent authorization from the patient, then the material needs to be sold and transferred. To do this, biobanks execute something called a Material Transfer Agreement, or MTA.

These are legal documents that enable the transfer of the material, and they’re also used for derivate products, such as blood being turned into plasma.

It just so happens that using a smart contract, another feature and advantage of the blockchain, is an elegant solution to replace an MTA. In other words, turning biobank inventory into tokenized assets and obfuscating the patient data with ZK can finally be financially and legally transacted efficiently and automatically, removing much of the need for cumbersome legal processes and redlines between biobanks and procurers due to HIPAA.

It’s a beautiful application of blockchain to improve real world processes.

But AminoChain doesn’t stop at the legal transaction, they’ve also taken it as far as to integrate logistics and payments too.

Now, instead of entire teams of people needed to search for and respond to inquires about biomaterials, you have software. Instead of months-long legal processes to procure the materials, it can be near instantaneous. Instead of managing the logistics of shipping biomaterial in a safe and preservative way, the requirements and carriers are matched seamlessly. And instead of managing accounts payable and receivable within a nightmarish healthcare setting, you have payment rails embedded.

What essentially has long been the equivalent of unconnected antique book stores around the world, is now an interconnected and fully digital Amazon-like storefront for the entire world’s biomaterial.

Taken together, real and material value is created across all stakeholders.

Biobanks see new revenue.

Healthcare institutions and researchers have greater access to materials they need.

And patients receive the benefit of new discoveries, new treatments, and ultimately a higher quality of care.

But that’s not all. The donors will be rewarded too.

Incentives

And last, but not least—in fact, probably among a million other potential opportunities as a byproduct of AminoChain’s existence—is the ability to incentivize donors.

Right now, the world’s biobanks are made up mainly of material from well-studied populations. Biomaterials from underrepresented groups, along with cells from rare conditions by definition, are very hard to come by. There’s a lack of trust in the healthcare system from these populations, patient recruitment is challenging, and there’s a broad misunderstanding around the complexity or pain of being a donor.

Because of the tokenization and obfuscation of patient data I mentioned above, donors can now become part of the supply chain of improving healthcare, not only in a physical, but in financial sense too.

Said differently, instead of simply donating stem cells out of the goodness of your heart, a smart contract can enable donors to get paid for participating in science, and be rewarded for their contribution to research.

This can all be done through a royalty system that is assigned to the biomaterial.

You can think of it as an non-fungible token, or NFT, whereby you’re selling your samples as if they were a song or a piece of art, and then being paid each time it’s transacted in the future.

With this new possibility, we can now incentivize underrepresented populations and owners of rare biomaterial to contribute to science in a way that benefits all of humanity. These donors can contribute to research and the development of personalized medicine in a way that was never possible before, and they can make money in the process.

Creating these pathways for donors to receive compensation is a fundamentally different approach to donating biomaterial like cancer cells and stem cells.

With donations and available biomaterial being the crucial bottleneck to unlocking major advancements in healthcare, AminoChain stands to not only be the Amazon.com of biomaterial, but the key healthcare infrastructure innovation that humanity needs in order to move ourselves forward toward personalized medicine, discovering treatments of rare diseases, and in turn, saving countless lives for centuries to come.

But at inception, investing is still all about the maniacs.

Of course, if you’ve followed along in my writing, you know that good ideas are a dime a dozen, and that it’s really all about execution.

We already touched on Caspar’s magic in his interview. His ability to inspire exceptional people to join him—and at no cost mind you. And we touched on his insanely bold ambitions to change the world.

But it’s more than that.

Caspar is technical to a degree, he can get by, but he’s definitely not a hardcore 10X engineer. The fact that he can build though, that he can speak the language of blockchain developers, that he can inspire them toward a shared objective, that he can interpret patents and execute on creating his own, and that he deeply understands the technical feasibility is not just important, but importantly only half of the equation—Caspar can also sell.

Whether on stage or flexing his academic prowess in a healthcare setting, Caspar can hang with the most brilliant minds in the field. He speaks the language not only of the developers, but of the customers. He understand the business impact of time and money savings, the upside of producing new revenue streams, and the fundamentals by which biobanks and healthcare institutions create value.

In selling, this is crucial. You cannot just share a good idea or an interesting demonstration, you need to be able to articulate the product as a good business decision, with real customer value, and demonstrable ROI.

Jeff Weiner and Brian Rumao from LinkedIn and Next Play Ventures call this—the ability to have a technological vision, product sensibility, business acumen, leadership, and resourcefulness—the “Five-Tool Superstar” (link here).

To take it one step deeper, resourcefulness.

Like I said, in the Summer of 2022, blockchain investors were running for the hills. They pumped a bunch of money into crypto at objectively stupid valuations and then held no board seats or had any control. Their LP’s were probably not so happy with them, and as a result, there wasn’t much capital for blockchain companies in 2022 or 2023—even those creating demonstrable value and fundamentally strong applications of the technology.

Caspar only started with $160,000 and 12 months later when he raised a $2M pre-seed he still had $80,000 in the bank. He’s a cockroach as they say. Impossible to kill. $1 might as well be infinite runway.

At 12 months, he had two biobanks willing to partner, some publications and press that went live, and a pretty decent (but not yet magical) product.

At month 16, with a small amount of traction, he had developed a relationship with one of the best firms in the valley—Andreessen Horowitz—and found himself with an unusual offer from a big multi-stage fund—$750K.

With that check, and the borrowed credibility of a16z’s brand, Caspar raised a very oversubscribed $2M pre-seed.

Four months later, still spending virtually nothing, a16z saw what we as his first investors had always known from those very first weeks of inception—Casper is an absolute force and a total maniac.

In that same time, the team onboarded new biobanks and grew the biomaterial samples north of 60,000 on the platform along with hundreds of procurers shopping the specimen center.

Today, just a few months later, that number is north of 160,000 samples, and growing at a seemingly exponential rate.

Looking back, there have been countless moments on the journey from inception to seed where our conviction has been reaffirmed. Some that I can share, and some that I probably shouldn’t.

Whether it’s the hundreds and hundreds of customers calls, or the incredible reception from the industry at events Caspar has presented at around the world, you just get a sense that no matter what stands in his way, this guy is going to change the world.

He’s an autodidact that taught himself into three degrees, the value of blockchain, and the biobanking industry. More recently, I even had the privilege of writing his recommendation to Harvard Medical School, and he is currently pursuing yet another degree part-time while founding AminoChain as he continues to further his credibility in the field.

He’s an inspiring leader that never let availability of capital determine is fate. In fact, he didn’t even spend the money when he had it, but instead inspired world class people to partner with him as teammates, customers, and investors committing their own time, capital, and relationships to his vision.

Of course, there are more personal moments we’ve shared too, where any other logical person might have given up or found the obstacles insurmountable, but not Caspar. Every single time we have had one of those moments his conviction deepens and his execution dials in further. It’s as if challenges light a fire under his creativity, and the mere idea of doing something others see as impossible is itself the reason to get up in the morning.

This is not only a company that has the potential to completely revolutionize the world, but it’s led by a founder who has what it takes to do so too.

And when it comes to investing at inception, spending time with the founders and truly getting to know them, is the only way to back legendary leaders when others aren’t willing to take the risk that early.

See you Monday.