Logic might suggest that the startups we cover that generate the most interest are in the buzziest, most broadly understandable markets.

But that’s not always the case.

Often, it’s the startups doing something most people don’t need, but that could make a huge impact with a highly targeted market. I’ve been surprised by some of the companies that have resonated with readers.

One company we covered early in PreSeed Now’s life, back in 2022, that falls into that bracket is Exciting Instruments. They’re making impressive progress, so I thought it was time to take another look.

We’ll have more new startups for you next week.

– Martin

How Exciting Instruments is lining up a big market for looking small

When we last met University of Sheffield spinout Exciting Instruments, they were in the early stages of their journey to commercialise a new way of studying single molecules.

As I wrote at the time:

Now, almost three years later, they’ve come a long way. Earlier this week, I visited their shiny new office in Sheffield city centre, fresh from its recent official opening by the mayor of South Yorkshire.

I spoke to CEO Tim Craggs about what the startup has done since we spoke, and what’s next.

This conversation has been edited for clarity.

MB = Martin SFP Bryant, TC = Tim Craggs

MB: You raised your first investment round, totalling £4 million, late last year. How is life now at Exciting Instruments?

TC: Exciting is the word, right? We took debt financing right at the start. We funded the business through our customer sales, which was amazing for a business that makes a hard tech product. We’ve landed it on user benches across the US, across the UK, across Europe.

Prior to the funding round, we were maybe two, three, going on to four people. We're now up to 14 in a very short space of time, which is exactly what you want to do with with that seed stage capital, to invest in the people to really grow the business.

The whole point of what we're doing is trying to make things super easy for the widest possible user base of these types of measurements. That started in academia, and the first thing we had to do was actually provide the instrument. And then once we did that, we went back to our users and asked ‘what do you like, what don't you like?’ And they said ‘we love it’. And I was like, what? It's scientific instrument. That's a bit weird.

I think one of the things that people love about it is the they get an answer straight away on the screen, they get instant feedback that their sample is good. Before you click go, and have to wait, 30 minutes or 10 seconds, depending on what you're doing, for the data, you know it's going to work, which is great.

But what they did say was it would be really great to have a bit more support with the analysis. So we've now built that out, and that will be coming out in the next couple of weeks for our beta testers.

And then the next part of that is the reagent generation. We're developing that part. So we're just setting them up and knocking down the different parts of the process, making it really easy for everybody, and by doing so, enabling a wider proportion of people to use these types of measurements.

MB: How have the use cases for the product evolved since 2022?

TC: The first market and use case that we saw was academic research labs. I solved a problem I had, so I was pretty much our first customer, in fact, because I knew all of the pain points, and I knew what we were building for.

And we've now sold close to 15 instruments into academia, with more on the books coming through. But on the back of the investment, we're developing the instrument for pharma and for biotech. That involves more throughput, so it's now got the capability for uninterrupted work on a 96-well plate, for example, so you don't need to be at the instrument all the time. It will just automatically go through and get data.

The other use is not just research, but screening for specific assays. In pharma and biotech, it's important you solve a problem that they've got, rather than just giving them a tool that can do everything. There's less use for a Swiss army knife', it's more about fitting into workflows and making work 10 times faster, reducing costs, or whatever it is you need to make a sale. The value proposition has got to be really clear.

That's where assay development comes in. It also opens up, a recurring revenue option for us, which is obviously really important from the investors perspective and just from our own perspective - not having to go after a new customer every time. Now you've got people who are using the instrument and then buying the consumable on a regular basis as they're doing it.

So that for us is a really critical area, and that's really the R&D focus, and that's the both from the engineering side on the new instrument we’re developing, but also on the science side, from the from the assay development.

MB: How has the team evolved?

TC: We've gone from being not even four people for most of the last four years, to then from February until now in July, we've hired nearly 10 people.

It was myself and Robert Bell as a co-founding team, and a lead scientist and lead engineer. And we've now got two extra scientists, two extra hardware engineers working on the v2 instrument for pharma and biotech, an extra software engineer, and we've built out the commercial side as well.

We've got Paul Wheeler as CCO. He has come from previous roles in other really successful single-molecule startups. He's seen this space before and that, but he's also seen the corporate side. We also have Jessica May Price on marketing and lead generation

We're just opening a Central European sales office and and also a Boston [USA] sales office. They’re big opportunities for us, and so we're now starting to start to grow and capitalise on those markets.

MB: What’s the competitive landscape like these days? Is there anyone else encroaching on your turf?

TC: I think we’ve still got first-mover advantage in this space at this stage. I think, because of the multidisciplinary nature of what we do–the fact that we're doing hardware, software, wetware, the science and the assays, as well as everything else–I think that's a really interesting mix.

A lot of other instrument companies will just sell you an instrument and that's it. And there may be some consumable around that, but it's not so much.

What we're trying to do is really solve specific problems for people. And I think that adds significant value. And so in that sense, I think we've found a really nice niche in this space. We've seen a hole, and we're now filling it, and we're not seeing too many people rushing in.

In life science tools, there's a lot of complementarity. Rather than specific competition. You're all competing for the same money at the end, so it is competitive. But it's less about people doing exactly the same thing, it's more about people solving a similar problem in a different way.

And so it’s about being able to articulate your strengths and advantages, the benefits of your method. Sometimes your method will be the best one for various reasons, and sometimes somebody else’s would be the best one. But actually, people often will need access to a plethora of these different methods, because they'll need to use the tool that works best in the situation they're in.

MB: Your decision to go down the venture debt route was interesting one, because not many very early stage companies do that. What was the thinking behind that? And looking back, how do you think it went?

TC: We had got to a point where we'd had around £150,000 of grant funding and a £120,000 of a convertible note from the university. And we had got the first two orders, but we needed to buy bits to actually build them.

So that was when we went out for the venture debt, because we had the orders. We knew the sales were there.

We set our bar at ‘as long as we're not breaking the laws of physics, it's fine’. We'd got these two orders and we were pretty sure we were going to be able to fulfil them, although we hadn't actually built the final version of the instrument yet, so there was some risk. But that's why we took the venture debt at that point, specifically to fund the the delivery of those first couple of instruments and and give us that little bit more runway.

And it worked really well, because by the time we got to closing the funding round in November, we'd already paid the venture debt and the other convertible loan notes that we'd taken on. We'd done nearly £2 million in revenue by that point.

We had the prototype in my lab before we'd spun out of the university, so we could show what was possible, and we could demonstrate preliminary data and other things. And so we went out, we just cracked on, and we actually sold it. So we were able to fund the first three and a half years of the company's existence through through sales, which is great and but kind of special for a hard tech company.

MB: What's your vision now for where you take this? What's the long term vision for the growth?

TC: We're keen to build this to be absolutely colossal. We're looking to build a company of significant scale and value.

We're already global. We're already in the US, in the UK, across Europe. We've got people banging on the door asking to distribute for us in China, in Japan, and, you across Asia. We need to be sensible about that. We need to be careful around the partnerships that we're making, and make sure that we do this properly and sensibly. But there is absolute appetite and pull from really big markets, which is exciting.

For me, the real inflection point is into pharma. We've got three or four advanced conversations in tier one pharma firms, where we've signed NDAs, and we're having very detailed discussions about the instrument, which workflows it can sit in, how many they would need, all of this kind of stuff.

And as we step into pharma and biotech, and as we start to develop the consumable that will be a part of that, that sets us up really nicely, because if you're generating a chunk of cash in a recurring revenue model off the back of the of the instrument at a pretty reasonable margin, then that that becomes very interesting.

And then the last piece is probably the most emotionally interesting; what if the molecule that you detect is the first cancer biomarker, not the stage-three tumour? What if it's the first aggregation event, not the plaque on the brain in dementia? We've already got a working assay for the early detection of Parkinson's.

I think, that the there is so much scope for growing the company, making sensible commercial decisions along the way, so that we're maximising revenue in each of our markets.

We're tackling the markets in order of the barriers to entry, and regulation and compliance and all that kind of stuff. So the academic market was first, and then Pharma is another level, it's a step up in terms of the requirements, and then obviously diagnostics takes us into clinical trials and other things.

For us, it is quite a linear route. There is a focus here. Although it feels like there's a lot that has to happen, we're actually able to extract value at every point in this process. It's the same instrument and the same physics, ultimately, that enables all of these different things.

And so what we what we have here is a platform, a true platform technology that we can then grow on top of ourselves as we start to grow into these different spaces.

MB: What do you think is going to be the biggest challenge for you as you push forward into these new opportunities?

TC: Time and focus, if I'm really honest, because there are so many different applications of this method, and what we've got to do is make sure that we are making the right commercial decisions around the order in which we tackle all of the different possibilities out there.

We need to make sure that we are ultimately revenue generating, which we already are, but we need to really feed that flywheel, because if we can keep that going nicely, then that enables everything else.

So I think that the real challenge is having such a massive smorgasbord of things to choose from. How do we assess the best route through our product roadmap to enable us to work as efficiently as possible, but still to extract the most value.

Back next week

We’ll have a brand new startup in your inbox on Tuesday. See you then!

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