New York Angels is Investing in Tech to Provide Better Nutrition for Preterm Infants

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The best angel investments do well by doing good and invest in the products that improve people’s lives. Today, we beat Beth Schinkel, the founder of Mother’s Milk is Best, which is a device designed to help preterm infants thrive by concentrating mother’s milk to enhance feedings, promote growth, and strengthen immunity. Beth says the investment by the New York Angels and her other investors has helped unlock her company’s incredible potential.

Welcome back to this New York Angels edition of the Angel Nest. I’m David Hemingway. I’m a five-time founder and a member of the New York Angels where we fund and mentor great young companies.

New York Angel member, Ray Farrell, co-led the NYA investment in Mother’s Milk is Best. And he joins us today along with Beth Schinkel, who is a neonatal intensive care nurse and a nutritionist. Beth joins us today from just outside of my old hometown of Boston, Massachusetts.

Ray and I are here in New York. Thanks so much for being here, everyone. Good morning.

So a little later out, we’re also gonna meet Peter Bodenheimer. He’s the new executive director of the New York Angels. And he’ll tell us how he plans to use his extensive experience to keep NYA front and center in the world of startup investing.

But now we wanna talk to Ray Farrell. Ray, tell us how you met Beth and how you got interested in Mother’s Milk is Best. Yeah, sure.

I first met Beth just in our normal New York Angels screening session. She came and applied to the group for funding. But then as she was pitching, it started to strike more and more personal chords.

It’s not often that it happens this way as well, but my wife and I lived this journey. We had 26 week old quadruplets in the NICU for over three months. And they were born between a pound and a half and two pounds and went through that rollercoaster.

And some of the issues that we faced were exactly what Beth’s product is designed to address. And that’s the condition of NEC. Beth can talk more about that.

And also they had severe grade three and grade four brain bleeds. And the neonatologists at the time were really stressing the importance of getting natural mother’s milk to help resolve and avoid some of those issues. So that’s really the hook for me personally, how I decided to follow the deal.

Yeah, often our best investments are the ones that solve our own problems, right? Yeah, sure. Beth, you’re about to begin clinical trials and you’ve been fast tracked for FDA approval. So you’re clearly tackling a very important problem.

Tell us how your device works. So our device works by very simply removing some of the water from milk by a passive osmotic process. So it’s a very simple device and really a very simple concept that I came up with when I worked in NICUs and I had seen babies get sick from getting formula fortifiers added to their mother’s milk.

And so realizing that there was this need for a way to get babies more of the benefits of their mother’s own milk without adding formula, I looked for options and when I didn’t find one, I continued to look and then develop the concept of the U-Milk concentration device. And then I met my co-founder and we started to build the devices ourselves and go through the studies and test it. And then we’ve since done a lot of research that just proves the concept, but it’s a really simple design and it’s a device that I think has been needed since preemies have been born.

So despite the fact that it’s very simple, it’s something that I think we’re looking forward to being in NICUs and I think it’s really gonna fill a need and a niche. There’s a big market, I think, for babies who require high nutrients and families that wanna give their babies their mother’s own milk without giving formula. So tell us how you got non-dilutive funding for Mother’s Milk is Best.

You did a tremendous job building the product and bringing in non-dilutive funding, which is great for founders and great for future investors. So we applied for NIH funding and a lot of the NIH funding, there’s a small business innovation program that is available to small businesses, for-profit businesses. And so having established as a C-Corp, we were able to apply for funding from the NIH and we got grants from the state, but we also got grants from the NIH and we’ve been able to move really far along through the process.

Like as we’re right now, we’re going through, we’re submitting to FDA and we’re in discussions with FDA because there’s like a breakthrough technology designation that we have that will make that process a bit more efficient to go through FDA for release to market. And the NIH funding has really enabled us to have like the studies done that would not necessarily be the priority of somebody who’s investing. Like, so that is something that is beneficial for that long-term outcome, but it’s also something that we needed to apply it for this kind of funding.

And then it was beneficial to get the angel investment because that funding allowed us to use other funding like grant funding where we needed reimbursement. And so you’re unable to spend a lot of grant funding before you have to spend the funding or spend money and then get reimbursed for it by the grants. And so that meant that we were, despite the having been awarded millions of dollars of non-dilutive funding, we weren’t actually able to speed up how quickly our company could work and go through FDA because we didn’t have access to funds.

So we didn’t have cash in the bank. And so getting the angel investment really helped us move much more quickly. Yeah.

Ray, do you look for companies that have had a lot of non-dilutive funding? Is that a huge benefit? Yeah, for sure. But really for different reasons though, it helps to provide good validation of the idea that you have an interest from programs like the SBIR program, which are excellent to help founders further develop and save their precious resources of time and money and stay on task to develop the product and prove it out and early validation from customer feedback and things like that. Beth, how big can the market be for Mother’s Milk is Best? So the initial market is neonatal intensive care unit and that is premature babies, which are 10% of the US population and possibly a little over 10% worldwide for infants born.

However, there are medical conditions that require infants to need higher nutrient feedings. And so there’s actually a much larger market for infants such as infants with cardiac conditions that require high nutrient, low volume feedings. So this is something that is larger than the NICU market, but that’s our initial market.

We move into commercialization and market launch. Our initial market is in the NICU, but it’s greater than a billion dollars for our total addressable market once we’re in, despite the fact that it’s a really small population of babies of like one in 10 are premature, but there are other babies that are requiring high nutrient feedings. So that is what we see for the market.

I’d like to hear a little bit from both of you about the process of raising money from New York Angels. Beth, how did you find that process? That’s not something that’s native to you as a neonatal nurse, right? No, it wasn’t. However, I think the process was really, it was an easy process in that we met with the New York Angels, we were invited to come and present and pitched.

And then when we followed up, we had Ray, fortunately Ray was one of our leads. And so we had somebody who championed our business as like a potential investment opportunity. And so that was really helpful.

And I think the understanding of what it is. So there are a lot of opportunities to pitch, but not all are things that are necessarily like gonna lead to investment. So I think for us, it was learning a lot about that process.

And so the New York Angels was very straightforward and helpful. And we understood that they do invest in companies that are pre FDA release to market, which was really helpful because that’s not a lot of groups. And so not that I think there are many groups out there, but it was just that as we were going through, that was something that was very important to us because of the critical timing as we’re moving forward and going through that FDA evaluation.

Yeah, and Ray, you really, in early stage investing, you really need a founder with vision. And obviously you saw that in Beth. Absolutely.

I mean, to me, that’s really the important part of the decision process, whether to invest or not. The business opportunity, of course, is important and the market and all of the normal things like that. But I think if you talk to most early stage investors, perhaps the factor that they wait the most is their beliefs and feelings about the founders.

And that was certainly the case here. And beyond that process and the funds of the investment, we really pride ourselves in trying to bring much more leverage in terms of the networks available to help the founders succeed. And I think it works really well.

And I’m really glad to be a part of New York Angels and humbled by it, actually. It’s a great group. Beth, have you found your investors to be helpful in ways other than bringing capital? Yes, I think that it’s been very helpful to get feedback on market commercialization.

People who, many investors have already launched their own businesses. So sometimes they have really specific, important skills or knowledge and have the ability to share that experience. For example, Ray works with Patent Law because we’ve got multiple patents, both issued and some that are still pending for just as we’re expanding intellectual property.

That was something that was just helpful to have his insight because we do obviously work with our own patent attorney, but it’s really helpful to have investors who are knowledgeable about all the different areas of business, not just how a device might work, but also how businesses launch, how they change over time. I knew that there was huge potential and I knew that there was the desire. People want this, they want this device.

So I knew that that was there, but I also knew that we had to bring in people to help us with the company to help it develop and grow. And I think that that’s a huge thing with when you have the right investors, they support the company and its development. That’s great.

Beth Schinkel, co-founder of Mother’s Milk is Best and Ray Farrell, the co-lead for her seed round at the New York Angels. Thanks so much for joining us today and for telling us about this truly remarkable innovation for preterm babies and their moms. It’s really been a pleasure.

Now we have a new executive director at the New York Angels and we’re delighted to welcome him here. He is Peter Bodenheimer, an experienced founder and investor. He served as the catalyst for many ventures as an advisor to Peak Bridge Ventures and Arpeggio Ventures.

New York investors will likely remember Peter for his role as partner and managing director at Foodex, which was the first and most active early stage accelerator program focused on modernizing and improving the global food system. I think that’s where Peter and I met. Welcome, Peter.

It’s a pleasure to welcome you to the Angel Nest. Welcome to New York Angels, if I’m not too late for that. And tell me, how are you settling in? Settling in beautifully.

I joined at the end of March. I think it was March 24th to be exact. And so it’s been a wild ride so far.

New York Angels is a storied organization and to be able to step in and get to meet what makes it really special, which I think I’ve said many times to many people, the members, the Angels. It’s 150 incredible people that are very active and doing deals. And there was no adjustment period.

It was jump in. I think in my first month, there were three deals that all aggregated over a million dollars in investment from the group. And that opened my eyes to just how different New York Angels is from a lot of places.

Yeah, it’s incredible. I think we probably represent one of the more professional angel groups in that a lot of our investors, that’s what we do. That’s what we do on a full-time basis.

And when I joined New York Angels many years ago, the thing that struck me was just the diversity of experience. I mean, almost nothing comes into New York Angels where someone hasn’t done it or been there, or at least know someone who’s done it. Well, the bad joke I like to tell is New York Angels is like a venture fund with 150 general partners who all bring their own experience, their own network, and also their own opinions.

So it’s an incredible group, but you’re right. When we look at the deal flow that we see, and to give you a sense, in our last month, we had over 300 companies apply for funding from New York Angels. There is almost never a company where we can’t point to a member and say, this person does this industry back and forth.

They have a ton of experience. They’ve invested in it. They’ve worked in it.

We can get their input and their expertise applied to that. So there are very few types of companies that we can’t look at and evaluate seriously because of that membership. Right.

Now, Peter, you bring a very unique perspective because you’ve been on each side of the table. You’ve been a founder, you’ve been an investor, you’ve been an advisor, right? What areas are you focusing on to make NYA even more- I think it’s more of a round table, and I’ve been in every seat at the round table. There you go.

There you go. So given that, where do you start to make NYA even more successful? Kind of where are you focusing? Well, I think given my background, I do take a founder-centric approach. I think what’s important, to be very frank, I think that in some circles, angel groups get a rap for being a lot of time and a lot of investment from a founder with no sure thing, which, of course, in any investment relationship, there’s no sure thing.

But I think traditionally, some angel groups got a rap of being pretty slow and founders would start to veer away from them. And so that’s why I anchor on what is that founder experience? How do we respect them and their time in particular, because that’s the most valuable asset you have when you’re at the early stages. Where do you spend your time and your effort? And so I think everything that we do has to be seen through the lens of how do we move this quickly? How do we get to a yes or a no as quickly as possible? Because we’re not gonna invest in everything.

In fact, we’re gonna invest in a very small percentage of the things that we see. But if we can still respect the work that all of these founders are putting in, I think that word spreads. It’s good for us as a group.

It’s good for the founders. I wanna make sure that we’re always giving the best, most critical and accurate feedback we can to founders, because that will help them be better prepared whether they come back and revisit New York Angels or go find other funding elsewhere. And I think that word will spread and that’s good for us and that’s good for them.

So I take a founder-centric approach, but at the end of the day, my responsibility as well is to the wellbeing of the organization and working with the 150 plus individuals that are investing that make up the organization. So there are occasionally competing interests, but it’s really about finding that balance where we’re serving our founders, but we’re also serving the membership and we’re trying to find those deals where everybody can win. Right.

I think a lot of New York Angels would tell you that the best part is being involved with the individual companies. And trying to bring value. And we’ve talked to a lot of founders on this podcast who have said that New York Angels is pretty good at that, but that’s something we could always get better at.

And as a founder, I bet you’re gonna be able to help us with that. Well, it’s funny. I think you bring that up.

And the truth is founders aren’t always great at asking for help. And you’ve got this incredible group of people as we’ve discussed, but they’re not in the business. And what I used to tell companies when I did a lot of advising, or even when I was a partner at SOSV on the Food X Accelerator, is this is your company.

You’re always gonna know it better than I can as an investor. So you need to tell me what I can do to help you. And I think that is something that in the investment world, whether Angels, VCs, any private equity, whatever it is, everyone likes to talk about being value add and how they bring a lot more than capital, but that’s a two-way street.

And I think most people can bring a lot of value outside of the money they bring to a deal, but the founders have to be engaged with their investors and not just when they’re coming for a next round of capital. The best way to ensure that you get that next round of funding is to be engaged with your investors along the way so that they can connect those dots and see, you know, founder A said they’re gonna do this, they’re gonna do that, and now they’re doing it. So I feel more comfortable about continuing to back them as they proceed through this journey of building a business.

Right, and those relationships actually help the founder understand where the investors can be helpful, right? So it takes a little homework on both sides, I think. Well, it is. I believe that fundamentally investing, no matter what stage and what type of investing, is a relationship business.

And if you don’t know the people that you’re working with, it’s hard to maximize the value that you’re bringing to them. And so I think that’s something that I’d like to continue to work on. I think we do a good job of it.

And of course, again, I’ll keep saying this is individuals. And so some individuals are better at this than others, and some are more comfortable with it, and some have more time for it. But the more that we are directly engaged with the founders we back, the better off we are and the better off they are.

That’s just a core belief that I have. The New York ecosystem has just blossomed so dramatically in the last few years. I’m curious about some of your ideas for us to integrate more with accelerators, maybe even early stage VCs.

Are there things you think we can do there to be even more visible? I do. I mean, I think that accelerators are in an interesting time. You’ve got the YCs of the world that have just gotten so large.

I think their latest batch that they’re doing four times a year is 250 companies. You’re talking about 1,000 companies a year. So I think you’re seeing some of the smaller accelerators really struggle to keep up.

But at the end of the day, that’s still a really good source of deals for us. And I think the relationships we have there, we have some members that have led on sort of ecosystem development. And I think this is an important part of it is we are a member-led organization.

I would argue that we’re one of the more professional angel groups that you’ll find. We have resources that we put to bear in order to best execute what we do. But at the end of the day, we have a small team and a small staff.

And so the member engagement, working and leading these initiatives really makes a huge difference for us. So Doug Pearson and Alyssa Tam lead our ecosystem group, and they have done a phenomenal job building bridges into some of these accelerators. But I think the next step is how do we then take those deals and move them into what I call the machine, which is how we evaluate deals, process deals, and then ultimately invest or don’t invest in a way that really, again, comes back to how can we do that as efficiently and effectively as possible so that you don’t end up seeing a company at an accelerator demo day or even before a demo day when you’re mentoring and doing work with these accelerators that then has to go all the way to the back of the line when they come through the organization.

So those are the kinds of things that we’re looking at and thinking about and working on so that we have a path in for these companies that have been sort of pre-vetted in a way that’s really gonna allow us to make that determination quickly so that if it’s not a fit, they can move on and look at funding elsewhere. So I think that’s a big part of it. And again, the earlier, the better, right? So if we can have our membership working, whether it’s as mentors or advisors or even just going to a pitch event, like a pitch practice event for an accelerator and sharing their feedback and getting to know these companies.

I mentioned earlier this idea of connecting the dots. I think the earlier you got to see where that first dot is, the easier it is to start to build that line and say, all right, well, this is the stage they need to get to next. Are they gonna do that? Oh, they hit that dot.

All right, what’s the next one? What’s the next one? And that gives, that sort of everything they do as a founder builds or diminishes credibility. And the more they connect those dots, the more credibility they build. And then one of our investors at New York Angels builds that high confidence in a company and wants to bring them through the process in a way that I think gives them a better chance of getting investment from us.

Great. Peter Bodenheimer, the new executive director at New York Angels. We’ll be checking back in with you frequently.

Thanks so much. Thanks so much, David. You can learn more about joining New York Angels or applying for funding for your startup at newyorkangels.com. And you can find contact information for our guests today or reach me with your comments or questions or suggestions, all of which are welcome at theangelnest.com. A reminder that we don’t make or recommend investments at The Angel Nest and this program is for informational purposes only.

We produce The Angel Nest from New York, the home of the New York Angels with help from Rob Higley and David Newhoff. I’m David Hemingway. Thanks for tuning in.

So long until next time.