BiomeSense, a Chicago-based biotech company, closed a $3 million funding round this week with participation from both existing and new investors.
The oversubscribed funding round will help with the company's commercial launch, which is expected to happen within the year, according to CEO Kevin Honaker.
Honaker said that as Covid and other external factors "disintegrated supply lines overnight," the funding round, which he described as more of a "Covid or seed-2 round," became necessary to get BiomeSense to the finish line.
"You had parts that took months that should have taken days," he told Chicago Inno. "Initially our seed round was meant to get us to a certain milestone, but because of Covid, we weren't able to get there, so like a lot of companies we raised another smaller round."
Honaker also said the funding round was "extraordinarily difficult" and much harder than previous raises. BiomeSense previously closed a $2 million seed funding round in 2019.
"We started raising almost exactly a year ago, and if you were following the market that was basically when it collapsed," he said. "Within a week or two, you started to see funding fall off a cliff, and then over the summer VCs just pulled back. So here I am starting a funding round trying to build momentum and nobody is even answering my emails, which didn't happen before."
Honaker couldn't even get in the door at times and heard from multiple VCs that said that no money was going out of their portfolio at the time.
Making the most of Chicago
Founded in 2018, BiomeSense is developing tools to collect, store and analyze the human gut microbiome — the collection of microbes such as bacteria, fungi, viruses and their genes that can affect health and how we respond to certain environmental substances.
As a biotech company, Honaker has found Chicago to be somewhat "up and down" as a life-sciences hub.
While the city has a "notorious reputation" for having weak access to capital, something that other local startups have alluded to as well, he's found it to be a great environment to scale and build the team.
"We spent some time in San Francisco so I can do this direct one-to-one comparison, and the costs are not even close. So you're saving a lot of money on runway and other expenses," he said. "If you had told me five years ago that Chicago would have been such a good place to scale this company, I wouldn't have believed you but it's turned out a lot better than I thought."
One of the "downs" he's found, however, is available space for BiomeSense to grow. Where to go from here remains a big open question for BiomeSense, according to Honaker, with Chicago's supply and availability concerns moving forward.
While some see Chicago as a good location for tech and life sciences, and Michael Fassnacht, president and CEO of World Business Chicago, predicts more life-sciences companies to relocate to the area this year, there's a growing need for lab space in Chicago and it's not just from BiomeSense.
"We did a survey not too long ago and we couldn't find anything that we felt would have fit what we needed," Honaker said. "It is a little surprising given how much they've been building that we're still struggling to find space appropriate for our size and budget."
"Depending on where we would scale next, whether it would be Chicago or somewhere else, that would certainly be the biggest consideration because we can't scale if there's no space for us," he said.
