A fast-rising Cincinnati startup that drew nearly $20 million in venture funding has ceased operations, and the company remains quiet on details as it pursues the sale of its remaining intellectual property.
Eccrine Systems, which was developing a technology to analyze sweat for use in medicine, industry and sport, ended its lease at an area incubator in June and laid off its entire staff over a period of four months earlier this year, although further information is scarce.
Eccrine CEO Gavi Begtrup did not respond to messages; an attempt to reach former co-founder and executive chairman Bob Beech was unsuccessful; and Jason Heikenfeld, fellow Eccrine Systems co-founder, said in an email that he is “unable to comment at this time.” Another email sent to the company’s general inbox was returned as undeliverable, although its social media accounts and website are still active.
CincyTech CEO Mike Venerable was also largely mum on details. CincyTech, the region’s largest seed fund, was instrumental in getting Eccrine off the ground and was the lead investor in its funding raises, which included a seed round and a Series A and B.
Venerable told me the company “is pursuing the best outcome for its remaining strategic assets,” largely its tech and intellectual property portfolio. That action is typical when a company reaches this stage and is trying to appease its stakeholders.
He declined further comment.
Many startups fail – the most commonly cited figure is nine out of 10 – and those in high-science are even more vulnerable to risk given their higher expenses related to tech development. But Eccrine, founded in 2013, was one of Cincinnati’s most promising and propped up companies.
The original concept was developed by Heikenfeld, a University of Cincinnati professor, after he received a request from the Air Force Research Laboratory at Wright-Patterson Air Force Base near Dayton to monitor the health of its pilots. Sweat carries the same biomarkers collected from blood, urine and saliva but is less invasive – no needles, cups or swabs are needed.
The company grew aggressively. Eccrine reported having 50 employees in 2019 and consistently ranked as one of the top local startups to watch. It was also one of the region's best-funded startups, according to Courier research. CincyInno put the firm’s total VC funding at around $18.7 million earlier this year. Eccrine Systems, according to its website, owns or exclusively controls more than 100 issued and filed patents related to the continuous, on-body measurement of sweat analytes.
Multiple sources said the layoffs happened gradually. The first round took place in February and affected about half the organization. The remaining took place between April and June.
On June 3, the company auctioned nearly 750 lots of newer lab equipment, tools and office furniture. Worley Auctioneers, located in South Lebanon, handled that transaction. Its team declined to comment.
The company also ended its lease at an area incubator this summer. Eccrine had operated out of the Hamilton County Business Center in Norwood since 2015. Pat Longo, HCDC’s president and CEO, told me Eccrine was a tenant there until the mid-June. It had no remaining employees, he said, when it vacated that month. It occupied roughly 12,000 square feet between offices and labs.
Eccrine’s lease was month-to-month, which is not unusual at HCDC, and Longo said the company was communicative with him about its transition out. He deferred any other questions about the reason for the company’s departure to its leadership team.
“There was nothing negative from our side, and we planned accordingly,” Longo said. “We’ve probably filled about a third of [Eccrine’s] vacant space and are actively trying to find others.”
Eccrine’s partners included state, national and federal stakeholders. The startup had received several contracts from the U.S. Air Force. In April 2019, Eccrine announced a collaboration with a Silicon Valley chipmaker, Maxim Integrated Products Inc., to help it develop and scale its biosensor systems.
Maxim Ventures also invested in Eccrine as part of that collaboration, although the amount was not disclosed. At the time, Shailendra Mahajan, managing director of Maxim Ventures, called Eccrine “an undisputed leader” in its category. He said Maxium Ventures saw “great value” in Eccrine’s biosensors for use in health care, and eventually, other markets.
Mahajan did not respond to multiple messages seeking comment.
A JobsOhio official said his organization was “disappointed” by the news. In January 2019, Eccrine Systems received a $400,000 JobsOhio economic development grant to expand its R&D capabilities and essentially double its workforce to 100 employees over the next three years. In a release last year, Aaron Pitts, JobsOhio senior managing director for health care, called Eccrine Systems “an Ohio success story.”
Eccrine had been steadily expanding its IP portfolio, officials said, and the funds were meant to help it accelerate development.
"It's an exciting time to be at Eccrine,” Begtrup, Eccrine's CEO, said at the time. “We continue to hire to support our commercial launch and expansion of our pipeline.”
Traditionally, JobsOhio grants like Eccrine’s are reimbursement-based and tied to incentives. In a statement to the Courier, Matt Englehart, a JobsOhio spokesperson, said just under $50,000 of that $400,000 grant had been paid to the company.
“We take the stewardship of our dollars seriously,” Englehart told me. “We will look for options to return dollars from this project to economic development so we can provide Ohio’s workers opportunity during these difficult economic times.”
