Three Philadelphia-area startups secured hundreds of thousands of dollars in growth capital from The Lion's Den, a "Shark Tank"-like production hosted by local investors.
Dozens of local startup founders, from early-stage companies to fast-growing technology and life sciences firms, pitched their ventures during the Philadelphia Alliance for Capital and Technologies’ 2021 Capital Conference on Thursday with three finalists selected to pitch to The Lion’s Den.
Natural hair care company Naturaz, direct-to-consumer arch support company Fulton, and nicotine tech startup Hale Therapeutics made the cut this year, snagging a combined $775,000 from the "lions."
Back for its seventh year, this year's Lion's Den included Michael Wells, managing director at Princeton Biopharma Capital Partners; Robert Keith, president of Nouveau Capital; Mikal C. Harden, founder of Juno Capital; Max Kanevsky, CEO of Pinnacle 21 and founder of OpenCDISC; and Dr. Robert Corrato, founder of Versalus Health. Marc R. Lederman, general partner at NewSpring Capital, moderated the event on Thursday evening.
First to present was Hale Therapeutics, a Philadelphia firm developing a nicotine vaporizer designed to wean smokers and vapers off of nicotine. The product is made to mimic, not interrupt, nicotine users’ regular habits and behavior while reducing their intake.
Rather than putting the responsibility for reducing nicotine intake in users’ hands the way products like Nicorette or Nicoderm do, Hale’s vaporizer is connected to a smartphone app that tracks use and gradually reduces nicotine intake using its own algorithm, CEO Josh Israel said during his presentation.
“This is our way of fighting fire with fire,” Israel said.
Hale’s device is not yet available to purchase. It will likely cost $50, plus a $20 to $100 monthly subscription, depending on how much the user smokes, for a typical 12-month program. The startup has several patents pending for its dual-capsule delivery system, and it is gearing up to get regulatory approval in the United States and the United Kingdom, Israel said.
Hale is looking to raise a $4 million seed round, and the company already has $2 million committed from investors. The startup secured deals with Keith and Corrato, who offered a combined $200,000 depending on the terms and conditions of the deal.
“I think this is a really interesting product and an approach to the market that really I have not seen out there,” Corrato said. “At least as a physician, I have not seen anything that makes me feel that there's anything else that has had the kind of success that I’m potentially thinking you have here.”
Up next was natural hair care company Naturaz. Founded by Carnegie Mellon University graduate and chemist Mumbi Dunjwa, Naturaz developed three-part hair care systems with natural and organic ingredients for people with curly hair.
The hair care system was created to help nourish and repair hair that’s been damaged from heat and chemical treatment. Naturaz serves clients with larger curls as well as those with tighter ringlets and coils.
“I am our customer,” Dunjwa said. “I get her, and she gets us."
The Collegeville-based startup offers its products online, with a subscription or single products available. Naturaz is marketing its product line to professional women ages 25 to 65 who shop online and are health conscious, Dunjwa said.
Naturaz joined the natural hair care industry at a time where it’s growing quickly. Grandview Research valued the industry at $8.7 billion in 2019, with an expected compound annual growth rate of 4.7% from 2020 to 2027. Dunjwa is seeking an exit into large beauty companies like Procter & Gamble or Johnson & Johnson.
Naturaz received investments from all five lions during her pitch, for a total $225,000 committed. Several lions said their investment was contingent on whether they could get other investors who work in the beauty industry to join them.
Dunjwa sought $1 million, and she has already raised a combined $125,000 from Benjamin Franklin Technology Partners, the Bucks Built Startup Fund and another investor.
Naturaz wasn’t the only startup to get deals with all five lions. Fulton, a direct-to-consumer arch support company, scored a deal for $350,000 to grow the startup.
Fulton developed an insole for shoes made of cork, natural latex foam and vegan cactus leather that molds to the wearer’s foot while providing arch support. The insole retails for $48 and costs about $4 to produce. The startup launched seven months ago and has already generated $100,000 in revenue and sold out its inventory twice.
The startup is looking to raise $1.5 million to hire employees and scale the company, and it has already raised $400,000. Several lions offered investments between $50,000 and $100,000, depending on the terms of the deal.
Fulton Co-founders Libie Motchan and Daniel Nelson met at the University of Pennsylvania while studying for their MBAs at The Wharton School.
Fulton is going after the market dominated by Dr. Scholl’s, with the founders saying they want to fill the gaps left between expensive medical orthopedic care and the "crusty" insole aisle at the drugstore.
Motchan cited other "stale" industries modernized by new companies, such as Supergoop!’s impact on the sunscreen industry and Quip for toothbrushes, and the opportunity to build a "wellness" brand with Fulton.
“In the footwear wellness category, there's Dr. Scholl's, and that sleeping giant has been there for decades, and there's been no innovation in the category,” she said. “The opportunity is really obvious.”
