From Catching Feral Dogs, to a $6.3M Seed — Embark Vet’s Funding Story.
When consumer genetic-testing products like 23andMe and AncestryDNA began to take off, biologist and dog lover Ryan Boyko saw an opportunity: harness similar technology to help consumers research their furry family members, too. He and his brother Adam, a veterinary science professor, founded Embark Vet in 2015.
With the company’s kit, a user swabs their pooch’s cheek, mails it off and awaits the results: breed identification, ancestry and genetic risks for health conditions. Popular with pet owners and professional breeders alike, it’s now the official dog DNA test of the Westminster Kennel Club Dog Show.
In an interview, Ryan shares Embark’s origin story, as well as his insights on how to secure solid investors — without chasing your tail.
So tell us about Embark Vet. What do you guys do?
We do comprehensive dog genetic testing — we tell people what breeds are present in their dogs. Obviously, there’s a lot of interest in that. Also, we report traits of over 160 canine health conditions. In many ways, it’s similar in concept to the human genetic testing companies you’ve probably heard of.
We also have a whole extra segment of customers who are breeders. There’s a lot of interest on their side in actually being able to use this to breed a healthier dog.
We had a Chesapeake Bay retriever for 13 years. He was the best. But now my family is determined to get a “doodle.” How do you feel about poodle mixes?
That’s a politically fraught question in the circles I run in now. I’m a softie for all dogs, so put a dog in front of me and I’ll be happy. My own dog is a mutt. I’m not a purist for any breeder or another. To each their own — there’s a lot of different kinds of families and needs.
Let’s talk about origin stories. How did you come up with this idea? Did you just see 23andMe and say, “hey, I could do this for dogs?”
In addition to loving dogs growing up, I wanted to do biology in college. I took a seminar in my senior year on dog evolution and cognition. The biggest takeaway was that so far, researchers have mainly looked at the genetics of a small sliver of purebred, mostly European dogs, and now they’re having all these debates about dog health and evolution.
It would be like if you sampled the royal families of Europe and then said, “We’ve got all the genetic samples we need to understand humans. We just need to analyze them in different ways.” That’s obviously not true. But that idea was not really accepted in the canine research community.
I was 21 at the time and loved field work, so I thought we should test village dogs around the world. I convinced my brother, who was working for a professor of genetics, and he convinced the professor that this was a good idea. The professor turned to him and said, “Where are we going to find somebody crazy enough to actually go around the world, capture feral dogs and take their blood?”
My brother said, “I know the person.”
How many times did you get bit?
I only got even moderately bit once, really. That was a few years later. It was just due to the carelessness that comes with a full day of work.
So you went around the world sampling all these feral dogs, and that was the basis of the database?
Yes. The company’s first summer was really successful. We got written up in The New York Times and the project took on a life of its own.
At the time, I was working in public health and big data. But I took a month or two each summer to work on this. My brother really pushed it forward. He was hired as a professor at Cornell in 2011, and we kept talking about how sad it was that nobody was building this database that could help dogs’ health.
It took until it was the right moment in both our lives. We decided to take the leap in 2015.
Let’s go to the fundraising part. You guys recently raised a round, right? How was it funded early on? Did you bootstrap it in the early days or get grants?
We spent some time looking into whether we should try to build a product and sell it to another company. But then we convinced ourselves that we could actually build a real business.
Within a week of that decision, I had my 10-year reunion at Harvard. I was talking with a few people I knew back in college, one of whom happened to be the founder and CEO of Blue Apron, Matt Salzburg.
He had just bought a dog himself and was really excited by my idea for Embark Vet. That night, he introduced me to a couple of other people he knew.
Through his connections, I raised the first real funding. It wasn’t as easy as just talking to a couple of people one night, but certainly that first round came together because of it.
Matt was later on the founding board of Embark, so he was very involved. Unfortunately — or fortunately, for me — I don’t have a story of struggling in the wilderness for years to get the first money. I will say raising the priced round — the Series A — was quite the struggle, though.
Walk us through that. I assume you used the seed round to build a product and get some market proof points. How did you run a process? How’d you build your funnel? All that good stuff, please.
We ran a process, and this is generally applicable advice: if you have good angel investors, hopefully your funnel is largely comprised of people who like you and trust your instincts.
My background isn’t in finance, and this is my first company. So it was very helpful for me to get the warm introductions, but also to be able to get perspectives from current investors. It’s going to be a tough row to hoe if you’re just making introductions on your own behalf.
Did you identify a target list of investors first and then circulate it to your angels? Or did you ask your angels who you should be talking to?
I did both. I looked around Pitchbook and a few different places. Of course, I looked at who had invested in Rover as well as pet insurance companies and things like that.
I also looked at who invested in Ancestry and 23andMe. I circulated the list among my investors to find if they had any connections. Then I could pick out the best people to introduce me to them.
How long do you think that list was?
There were about seven in the first tier of people we wanted to talk to. I didn’t have my heart set on one. As I did calls, some people moved up or down the list. It’s a little bit like speed dating. The introductions meant I had a very high success rate in getting first, second, third and even fourth conversations.
The frustrating experience I had was that while many people were intrigued by the idea, nobody at the VC firms I spoke with had expertise in dog genetics. And they weren’t experts in the veterinary business, either.
I think the narrative was hard for them to grasp initially, so the process dragged on for quite some time. It’s hard to run a business at the same time that you’re running a fundraising process.
One piece of advice: either have a really wonderful cofounder who can keep everything moving forward, or hire somebody who can. We lost opportunities to grow and to make good hires while I was busy fundraising,
Were you working pretty much full time during this period? This is something that I think a lot of founders underestimate. What was your experience like?
I would probably say it was 75 percent of my effort for three months, and my whole effort is more than 40 hours a week. First of all, there’s a lot of travel. You’re always going to improve your odds if you’re face to face with people. My first interaction with almost everyone was a phone call. If they were interested in a second meeting, I’d get some time with them in person.
I noticed that SV Angel was listed on Pitchbook as one of your investors. Were they in that first $1.5 million round, or the second round?
They were in the second round. We wound up having Founder Collective lead. Eric Paley, who’s on our board now, was the force behind the investment. They have been absolutely fantastic. I can’t recommend them more highly.
Basically, we wound up getting a term sheet from them and doing of bit of negotiation. They were initially going to put in a minority of the investment. But then in the next two weeks, partially through introductions they made and partially with the help of other folks we talked to, we wound up with four times as much money pledged as we could take. I had to go back and whittle people away.
That’s exciting. So how did you go about deciding who to focus on?
We talked to three kinds of investors. First, smaller, seed-round-focused funds like Founder Collective. Then, there were people who might be able to help in a specific ways, like those who have been in the direct-to-consumer testing business. And then, bigger funds. Essentially, that third group, we didn’t talk to.
The advice given to me was that they have plenty of money. They can lead the next round if they feel like they missed out. You’re probably less likely to get them to lead in a subsequent round if they feel like they’ve already got some skin in the game. We really didn’t talk to them again, but we went back to several of the people in the other two categories.
Are you already starting to put together the next round?
I’m very much focused on how to make this a very successful business with a positive contribution margin. Theoretically, if I can sell enough kits, I never have to take another dollar of investment. So my first, second and third goal is to figure out how to get more people to buy our product. I spend at least 80 percent of my time on that. I probably did 95 percent or more of the fundraising myself so the rest of the team could focus on product.
With that said, I’m not giving anything away when I say that we’re currently not profitable. My first job is to make sure we don’t run out of money. Everybody else loses a job if that happens. Theoretically, you can overcome anything as a company — except running out of money.
Any last pieces of advice? Is there anything you would do differently if you fundraise all over again for your next startup?
Ultimately, the only thing I can change is myself. If I’m not getting the results I want, whether it’s sales growth or investors, I always ask myself, “what can I do about this?”
It’s really easy to blame other people and become frustrated. You have to let it go. It just eats at you. It’s already hard enough to focus on the things that you do have leverage with.
This Q&A is based on an episode of Foundersuite.com’s How I Raised It podcast, which goes behind the scenes with startup founders who have raised capital.
Author: Nathan Beckord, CFA
Nathan Beckord is the CEO of Foundersuite.com a venture-backed company that makes the leading Investor CRM and Investor Updater tools for startups raising capital. Since launching the CRM in 2016, users have raised over $1Bln in seed and venture capital.
Prior to starting Foundersuite, Beckord spent ten years working with startups as interim CFO, Business Developer, and Advisor. Beckord has an MBA in Entrepreneurship, a BSC in Finance, and is a Chartered Financial Analyst (CFA). In his free time, he enjoys sailing, traveling, and climbing.
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