Virpi Muhonen has always been fascinated by the workings of things and, in particular, the mechanics of the human body. As a scientist and CEO of Askel Healthcare, Virpi is now able to combine this fascination with another passion, helping people, and animals.
From scientist to entrepreneur
Naturally, a fascination with the workings of the human body led Virpi to a career in science, and in particular research into cartilage repair. In 2010 Virpi and her future business partner and Askel Healthcare co-founder, Anne-Marie Haaparanta, achieved government research funding in their native Finland. This initial funding allowed them to lay the foundations towards finding a solution to cartilage damage.
Damaged cartilage is a common problem that occurs regularly for all kinds of people. However, fixing damaged cartilage is a problem that scientists, doctors and orthopedic professionals have struggled with for decades.
This is why, once Virpi and her team had reached their breakthrough, they felt a moral and social obligation to share their findings broader than just within the scientific community. Hence, they wanted to make sure this breakthrough was pushed forward commercially. So that it could begin to benefit people and animals as soon as possible and this was how Askel Healthcare was born.
A solution that works in tune with each individual
Virpi says that the key difference to her solution is taking a biological approach:
Cartilage tissue is very unique; it is unlike any other part of your body, both in how it works and what it is made up of. We also don’t have a lot of it, and when it gets damaged, it has almost no capacity the
To create our solution we began working together with our team of stem cell biologists, orthopedic specialists and material scientists. We created scaffolding that replaces the damaged tissue and supports and enables the healing mechanism inside a person’s body to start working. In this way we are helping each individual to heal themselves.
The product itself is a piece of fabric that is surgically inserted, and it doesn’t look like much when you first see it, but the beauty lies in the minute scale of the structure. Imagine scaffolding on a building, it needs to be built upwards. Our product follows the same process; we add the scaffolding to the tissue where the missing piece of cartilage is. The new cells come from the bone marrow under the cartilage which attaches itself to the scaffold. This creates an environment that tells the cells that they need to start creating cartilage tissue. In a way, it creates a kind of bio-reactor inside the human body.
An opportunity for all creatures great and small
Developments towards a cure for and remedies to cartilage repair have so far been disappointing. High-levels of regulation and cynicism in the industry have meant that from a human perspective there is still a lot of work to be done before the product is ready for market.
So far, however, there has been a great deal of success helping out or four-legged friends. Building a strong data set from clinical veterinary patients such as dogs and horses is hugely important for the human development side, as this enables us to show the orthopedics the impact that our product, COPLA® Scaffold, has. For a dog it could mean that it no longer develops osteoarthritis after its cartilage damage operation and for a race horse it could mean that it could be back competing soon after surgery.
From a business perspective the veterinary market also offers huge opportunities for growth and by building revenue from this sector we really hope to get the company moving while at the same time treating as many veterinary patients as possible.
As a startup in the medical device field we always have to look at things from a financial perspective and seek out new ways to help with funding. This means that to maintain our business we have to have a survival mentality, despite the fact that we already have a great product and solution for such a huge problem.
We have a vast network of advisors and industry experts to help us; however, coming from a scientific background, we had little to no experience in sourcing business funding. When we officially started the company in the spring of 2017 we were lucky to receive some Angel investment through a private investor and by the same summer we had 4 people on payroll. But, we needed more investment to keep things going or else the company would have ceased to exist by the autumn.
If we were to get a substantial investment in a very short space of time we had to get creative. That’s when we thought of crowdfunding our business, leading us to one of the top crowdsourced investment platforms in Finland. By telling our story in an honest and transparent way we won the hearts and minds of over 300 new investors overnight — more than enough for us to take the next step on our journey.
Managing the crowd
All of a sudden we had 300 new investors onboard who we knew next to nothing about. We also realized our only communications with them would easily be only when we invited them to shareholders meetings. So it began to dawn on us that we would struggle to manage our cap table and future Venture Capitalists (VCs) might even shy away due to the difficulty in managing the sheer number of investors.
So, we had to think, how can we turn this around? We had 300 individuals that have actually given us money, so we know they have to believe in us on some level. Three-hundred people with 300 different skillsets. Who are they, how can we get them involved and how can we manage this in an efficient way? Sending emails is not really the solution; neither can we realistically call each individual investor. We could see no clear way for us to leverage the potential that we had until we were introduced to the CrowdWorks platform.
“By telling our story in an honest and transparent way we won the hearts and minds of over 300 new investors overnight.”
Building a true community
Through the CrowdWorks platform we were able to create our very own Askel Healthcare Investor Community by seamlessly on-boarding all our existing investors.
Crowdfunding investors, in our experience, are not like your average investors. Unlike traditional investors their motivation is not purely financial. They invest because they believe in you, your story and your potential to make a lasting difference. Our investors are highly motivated individuals who really do care about what we are trying to achieve.
The feedback we’ve received from our community is that the barriers to reach out to us have been lowered. This has hugely improved how our investors view their investment, by knowing that they can reach out if and when they need to they feel much more confident in the safety of their investments.
Thanks to this, shareholder meetings are now far more relaxed and our community really appreciates our operational transparency and the feeling of being involved and kept up to date on key developments. As a consequence, not only do they truly feel part of our company, but they can, in a very real way, influence our direction. I think that’s the best way to do it, simple but very effective.
Growing with the community
By always keeping our investors in the loop we have also been able to find further investment through our community. Shortly after our initial crowdfunding campaign we applied for a research & development loan from the Business Finland Funding Agency and were told we could get a six-figure loan if we could increase our own capital to certain level. So, we used our platform to reach out to our community and the community answered our call. They said to us that we should have an open round of investment so that they could pitch in, it was really amazing. We collected a six-figure sum from our community in just a matter of days. This allowed us to go back the Business Finland Funding Agency and say that our current investors are truly invested in us and we ended up getting the go ahead for the full loan.
Turning investors into a true force
If you don’t know anything about your 300 plus investors the likelihood is that the next investor will see them as trouble, and as we now approach our A-level investment round with corporate VCs the work CrowdWorks does is even more important. They helped us get to know our investors so that they became an invaluable asset to, and part of, our company, no matter whether they invested thousands or tens of thousands, they’ve shown that they are still there to support us. When this support is established it grows momentum and our community becomes a real asset and a force that cannot be ignored by VCs or anybody else.