How Trials CEO Kim Walpole grew Trials to $300K revenue and 4 customers in 2018.

hello everyone my guest this morning is kim walpole she started her third company trials ai after her best friend was diagnosed with terminal cancer and given five months to live what began as a passion project is turned into a mission-driven venture-backed startup that is turning the clinical trials ecosystem on its head kim are you ready to take us to the top i am all right so first off anytime someone hears like clinical trials or anything med tech or related right now they just think toronto right theranos right so walk me through like what you guys do and is there a technical technical component or is it a system that you put together how does it work yeah so good question we are using artificial intelligence to fix what we believe are the two root causes of failure in clinical trials so in simple speak we're making it really easy for researchers touring clinical trials faster cheaper and easier okay and and give me a little bit more detail on how you're doing that sure so we are you know we started by training our algorithms on historic data from trials that were both successful as well as not successful medical journals basically anything we could get our hands on and that allows us to help with the study design or to speak to the study design so that we can give trial sponsors feedback uh on threats and opportunities and then once they sign off on that we feed it into our workflow system that basically acts like a gps navigating all of the stakeholders through the trial based on their role kim when was your best friend diagnosed with terminal cancer about three years ago okay and was your system able to save her or is this something afterwards when she passed just motivated you to jump in full steam on yeah unfortunately so it was a a guy paul um you know best friend for over 20 years and um he went to the doctor with a stomachache came out with five months to live and you know i had been working with tier one pharmaceutical companies for over 12 years so essentially he was like look you know folks in the space is there a clinical trial that i can get uh that you can get me in um and unfortunately you know i reached out to friends at columbia dana farber you know all of these really great research uh organizations and turns out there were only two um you know potential therapies that might have helped him but by the time that you know they would get trial ready he was um he had died and so it was one of those like life-changing altering where before it had been somebody should probably fix problems in clinical trials it was suddenly like there's a fire in me to do that and to make sure that it happens sooner than not someone who uses you versus doesn't use you in a clinical trial what's the time savings yeah so it depends there are a couple of different moving parts here on the study design side you know it takes anywhere from 9 to 12 months to do that we're cutting that down to weeks and eventually days and then as you're running the clinical trial because we are able to uh you know collect data properly work on helping actually drive the process instead of you know being a system that reacts to it uh you know the end result as far as we know it um you know can be months cut off of a an actual trial that's great and walk me through the business side now how do you make money so we're a sas based uh we have a sas based trial model uh we charge uh per user per month per trial um and a user can be anyone that interacts with the system at any level okay and who are you selling directly to is it like the hospital the person that's sick who is it yeah good question so we're selling directly to the folks that are trying to get the treatments out so those are trial sponsors johnson and johnson kinds of companies device companies uh all of those different folks okay trial sponsors got it and you'll just sell them packages based off how many patients how many users how many trials things like that so we actually sell on a tr per trial basis but then we do bundles of trials as well i see i see okay and give me a sense of like what one of these like your average customer what are they paying you per month yeah so on the way that clinical trials run is in order to get a treatment to market it takes anywhere from nine to fifteen years uh and there are there's a course of trials that have to take place so at least three trials before you get your treatment to market uh and so for us an average trial maybe a phase two trial of 350 uh users would generate about 200k on average annually yeah okay and so you're selling on average client 200 000 annual contracts yeah that's a good that's a really helpful understanding of people that are not in the medical profession good so that gives us a good sense there and then again give me the back story here so friend diagnosed about five years ago he sadly passed when did you officially start the company yeah so it was interesting in tandem of trying to get paul into a clinical trial you know this idea started to kind of mull uh in my head and you know was talking with a couple of folks about okay can we use technology to uh you know really affect a very manual process like currently people are using paper binders excel spreadsheets you know it's a really really manual process and so it would be gosh probably a couple of months that we actually started working on it because we had already been you know while we were going through this with paul kind of figuring out some things so it was 2013 then about five years ago uh no it was three years ago that paul uh died yeah yeah no that's okay so we started the company you know in 2016. officially officially okay and i think you've decided to raise capital to push this thing forward how much have you raised today and why'd you decide to raise sure so we uh bootstrapped as far as we could go um we were really fortunate because our first customers um you know while we had an mvp were willing to pay something so that we could continue to build uh the technology um and from there we um you know have kind of pulled together um this process and and you know we started with actual paying customers to start uh and then we got to the point where we decided okay we're going to need to raise capital so that we can continue to scale the company add additional people on um and we raised 750 000 back in the end of december and now we're doing a 2.5 million dollar raise as we speak correct and and give me a general sense of what the market's like today is it you feel like it's easy to raise it's going well it's more difficult that's a good question i think you know it's this is an interesting space to be in right now clinical trials is a really hot conversation and so a couple of years ago when we initially uh started thinking about raising there was definitely this sense of you know ai in clinical trials like clinical trials isn't hot as it is now you're trying to apply ai you know we're not sure about that um and so it was really interesting for us um going through that process and going okay maybe we'll wait until you know the um there's a better climate and i think right now really is we've got a lot of interest uh from investors right now we're really just uh looking to lock in our lead um but in terms of just all around interest we've got emails coming in calls let's talk so pretty exciting that's great kim that's really great congratulations and to walk me through a little bit more of the numbers there so i mean what what valuation would you love to raise at uh where conversations we're having is at a 10 million pre okay that's that's good and do you mind sharing kind of what revenues say so we get a sense of what multiple you're negotiating for so what our revenue is you know currently um we're at about 25k um mrr that's great so 25 grand a month and where were you exactly a year ago in july of 2017. oh gosh um we weren't we didn't even we were pre-revenue at that time um you know we had some folks that like i said had given us some money that they were putting towards it but it wasn't it definitely we weren't counting it yeah so you're about 300 grand right now you know annually and you want 10 million breathe so that's like a 33x kind of multiple i mean power to you in terms of negotiation power to get that do you see any risks to raising at a multiple that high for you the owner well that's a good question i mean i think again coming back to where we are in the space the way that the space is uh moving so quickly and people are really excited about um this particular approach now when we talk about our pipeline so there's there's a conversation around okay what are we generating right now but then what if you look at our sales pipeline we've got seven trials from one customer that is coming up another five trials so you know this process is a little longer and when we're talking with investors they're actually looking at our sales pipeline that's great and right now what are you working with one or two customers we actually have uh two trials that are completed we're working with four customers we've got uh five studies total and like i said we've got seven coming up we're rolling one out right now okay now if you have four coming right now paying that price you articulated earlier of 200 grand per year that put your revenue...