Investing in North Carolina’s Startup Ecosystem with Cape Fear BioCapital

In a recent episode of "What's the Buzz?!", host Chris Frew sat down with Dave Ousterout, a Co-Founder and General Partner of Cape Fear BioCapital, to discuss the firm’s mission, the strength of North Carolina’s biotech ecosystem, and what lay ahead for early-stage life science startups in the region.

The Birth of Cape Fear BioCapital

After his time as CSO at Locus Bio, Dave Ousterout wanted to continue shaping North Carolina’s biotech scene. Teaming up with Ed Field and Jimmy Melton, they launched Cape Fear BioCapital—a firm dedicated to investing exclusively in North Carolina-based biotech startups. Their goal is to unlock the state’s immense potential in research and innovation while ensuring promising companies have the resources they need to succeed.

Investing Beyond the Check

For Cape Fear, investing isn’t just about writing checks. With a background in operating and scaling companies, the team takes a hands-on approach, offering early-stage startups not just funding but also mentorship, strategy, and honest feedback. Even when they said no, they make sure founders walked away with insights that could help them grow. It’s all a part of their commitment to fostering a strong, collaborative biotech community.

North Carolina: A Biotech Powerhouse

North Carolina has all the ingredients for a thriving biotech hub—world-class universities (Duke, UNC, NC State), a deep talent pool, and rapidly expanding infrastructure. Cape Fear BioCapital tapped into this ecosystem to help build companies that followed traditional biotech growth pathways while pushing the boundaries of innovation.

Looking Ahead: Scaling Up Biotech in NC

With a bold goal to launch 40 seed-stage biotech companies over the next decade, Cape Fear BioCapital aims to play the long game—cultivating startups, supporting new management teams, and helping the state produce its next biotech unicorns. This episode underscores the power of collaboration in North Carolina’s biotech scene, reinforcing the idea that by working together, the state can cement its place as a major player in the industry.

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Transcript:

Chris Frew [00:00:04]:

Good afternoon, everybody. Chris Frew here with BioBuzz for another episode of What's the Buzz?! Where we're talking with ecosystem builders, industry leaders, people who are really investing, growing and building the innovation ecosystems where they're at. And today, I'm super excited to have Dave Ousterout on the call. Dave is a founding partner and managing director at Cape Fear Bio Capital from the Research Triangle in North Carolina. So, Dave, welcome.

Dave Ousterout [00:00:35]:

Hey, thank you. Thank you very much, Chris. And thanks for giving us an opportunity with BioBuzz to tell a little bit about North Carolina and what we're up to in biotech here.

Chris Frew [00:00:43]:

Yeah, I'm excited for the conversation today. These are my favorite kind of podcasts to do and conversations to have because, you know, it's, you know, every ecosystem is different and we operate in Philadelphia, we do a lot up there in the Capital Region, Virginia and North Carolina. And every ecosystem is different, has different elements that kind of make them special and they have different things they're working on. So these are always great conversations because you, you know, one, I always learn something. But two, I think our audience really learns a lot about what's going on and where the heat map is for the region and what groups like you are doing. So we're excited about that. A couple of little housekeeping items for everybody. One, this is live on YouTube, Facebook and LinkedIn.

Chris Frew [00:01:28]:

So please give us a, like, give us a follow. Follow our YouTube channel. We're really growing that we're doing a lot more of these. And, you know, our mission at BioBuzz is to really help ecosystems thrive and better connect talent with opportunity, whether that's at employers or with investors or with one another as collaborators and partners. So we're thrilled to play that role throughout many of the top biotech hubs. And we're continuing to expand in the new year. So if you've got a story that you want to share, please reach out and we'd love to tell it. Just like we're going to be talking to Dave about the Cape Fear BioCapital story, which we're gonna.

Chris Frew [00:02:06]:

So with all the housekeeping out of the way, Dave, let's, let's jump in. Tell us a little bit about yourself and Cape Fear. I'm really love to hear kind of really what you're working on.

Dave Ousterout [00:02:17]:

Yeah, as you know, we could probably talk about this all afternoon, so it'll be fun to pack in the 30 minutes. Just a quick about me. So I'm a scientist by training. I came down here in 2009 to do my PhD at Duke. Started with a new professor who had come to Duke, Charlie Gersback. He was working on this crazy thing called gene editing at the time. And, you know, I still remember sitting there, someone telling us, in no way is anyone going to let you cut a gene in order to then fix it in a human. It's kind of an interesting first dose of what the skepticism is behind something that's really innovative and pushing things.

Dave Ousterout [00:02:54]:

I went there to learn how to build a lab. So I thought, and then a lot of people that are in grad school, right around my third year, like, what am I doing with my life? Started thinking a little bit outside of that, and for some reason, fell on this idea of going between business and science. That took me to the dark side in consulting for a couple of years, but that was kind of a great training ground. And I got pulled back to North Carolina after that to found a company here locally called Locus Bio. Worked with Paul Garafalo, the CEO there. I was sort of the technical talent. And then, you know, he's a seasoned pharma vet. And the two of us really, you know, built that company over the six years I was there as CSO.

Dave Ousterout [00:03:32]:

And that kind of gave me the training around, you know, what does it take to build something in North Carolina? We got our money actually from the West Coast originally. TechCrunch article of all things, kind of finally got us on the radar after, I think we did the classic, you get 100 pitches and 99 or no. But the one yes was finally our breakthrough. And then, long story short, we raised over 150 million from the trifecta of government, of strategic pharma, of institutional venture, and started the phase two. And I stepped down at that point about a few years ago and started thinking, okay, what's next? I don't want to leave North Carolina. I love this place. It's where my family is, it's where my community is. And you started looking around.

Dave Ousterout [00:04:15]:

It's kind of the genesis in one part of Cape Fear. And go, what do I go do, right? I want to do R and D. We are an incredible CDMO sort of beacon. We were talking before this, another billion-dollar investment coming to our state. We have incredible talent. We have Duke, UNC and State. I crawled all around those things. North Carolina Biotech Center, right? And just kind of came back to one clear realization.

Dave Ousterout [00:04:41]:

We have to build new things. We have to keep building new things, right? This isn't just you walking out on the street and there's another startup and another startup. We have people working on those things. They're just not seen and pulling those things together. So the talent, the technology, the science, the funding into our infrastructure, we have incredible lab facilities, which was not the case even, you know, seven, eight years ago, when there just wasn't much.

Chris Frew [00:05:05]:

Right.

Dave Ousterout [00:05:05]:

And that, for me is sort of the long and short of the career I've been building to this point, where what I want to do, kind of unintentionally, is now be an investor that helps transform that early landscape in biotech here. Because I really do believe, and I think a lot of folks do here in North Carolina, there's just something here around R&D that needs to get unlocked. And from there, I think a very bright future.

Chris Frew [00:05:31]:

Yeah, that's great. I mean, you're transitioning into this role as an investor, but it sounds like you don't want to give up the builder. It sounds to me like you're a builder at heart.

Dave Ousterout [00:05:43]:

Yeah. That's why it's kind of fun to do a venture firm. I was chatting with a friend of mine here, Owen. He's the CEO of Tavros Therapeutics. Shout out, Owen. They're doing some great things and just telling him, you know, figuring out there's multiple legal entities, they all need bank accounts, like, I don't know, I like that stuff. Building a website again, there's those of us that are in that 0 to 10, I call it, bucket of just liking to figure stuff out when we are in spades. We have a lot of other people that are really good at growth in scale.

Chris Frew [00:06:13]:

Right.

Dave Ousterout [00:06:14]:

And so, yeah, I'm an investor. That kind of just fell into it because I think we have to.

Chris Frew [00:06:19]:

Right.

Dave Ousterout [00:06:20]:

So that is the same story, I think, with our other two general partners, Ed Field and Jimmy Melton. A lot of people know Ed from BioLabs and what he's been building there over the past decade. And Jimmy has done quite a number of things, but most recently at Carolina Research Ventures, trying to help seed this early R&D out of the universities. And none of us thought we would be investors at this point. All of us are operators at our core. And to an extent, that's what we're hoping to bring also to these companies. It's not just capital. And I get that it's a bit of a trope to say we help you operate, we get in shoulder to shoulder with you, but I kind of Have a little bit of a mantra of telling people the truth, contacting everybody back, being honest with them about what we see, getting other investor feedback, and being a conduit for them to hear the truth.

Chris Frew [00:07:10]:

Right.

Dave Ousterout [00:07:10]:

Like, so when we say we're operators turned investors, what we mean is we've taken the lumps.

Chris Frew [00:07:16]:

Right.

Dave Ousterout [00:07:17]:

And for us, we just see that we can do it here, but we want more people to do it here together. And I think that's the thing that brought us together with Cape Fear.

Chris Frew [00:07:26]:

Yeah. Where did that philosophy come from? Of, you know, it. It seems like. I don't want to say this. I don't want to piss off any investors, but that, you know, I know a lot of investors, you know, it's a no. It's a no. You know, move on. You know, it sounds like.

Chris Frew [00:07:40]:

Sounds like you're taking a little bit more of a community approach or a little bit more of a different approach to that. I'm so curious where that philosophy really kind of emerged from.

Dave Ousterout [00:07:51]:

You know, I have a little sign that says, "Be a force for good". Sometimes good does mean telling people no. But with a why? Going out on a limb that I know somebody is going to say, "Dave's a jerk, he said this...". I don't care. I care about you hearing at least some part of the truth that I see. And hopefully it's grounded in something that's not just an opinion.

Chris Frew [00:08:13]:

Right.

Dave Ousterout [00:08:14]:

And again, like, I went through the hundred conversations to get the one yes. I'm no stranger to it. The way we got to that, yes was by hearing from investors who had the courage to tell us why they weren't going to invest. We called it the layer cake. We put five layers on that cake and we ate it until we got to the yes. And that, for me, was a pretty transformative moment. That, as an investor, I can't write a check to everybody. I can only write so many, and those are the bets that I have to make.

Dave Ousterout [00:08:47]:

And for another subset, it's not going to be about money. It's about trying to make introductions. It's trying to make the ecosystem.

Chris Frew [00:08:54]:

Right.

Dave Ousterout [00:08:54]:

Like, you're not going to know this other person that I've traveled and met. You're not going to know this technology that I think you would be a great fit for. And even if it doesn't benefit me and my firm, if it creates more here locally, it matters.

Chris Frew [00:09:07]:

Right.

Dave Ousterout [00:09:07]:

So that's the sort of constellation from a "No, it's not a fit, and we can't do it". To a "Yes, we want to help you and everything in between". And it is truly born out of having been on the other side of the table, hating when you get ghosted. The number one thing I hear, I will always respond, not hearing why. I will always tell you, getting a pithy reasoning. I will get on a phone call and chat with you more and give you the truth, and again, try to be, I think, productive in that truth. And it's the same thing.

Dave Ousterout [00:09:36]:

I know Ed and Jimmy are lockstep with me in that.

Chris Frew [00:09:41]:

You know, Dave, I love that. And you know, I love the analogy of the layer cake. And you know, what I'm hearing out of you is it's like your investment philosophy is one, you have a local investment philosophy, but you're not just investing capital, you're investing in those. No, but here's why you're investing in the. No, no, but try this other investor. Those are all forms of investment. It's not a capital investment. Right, but when you have an investment firm that has a local approach, you're going to be probably bumping into these guys down at the boxcar or somewhere else, right? So that other investment that you all are making in your time and your kind of honest feedback, I mean, that's a type of layer kick that you're all dishing out down there as well.

Chris Frew [00:10:27]:

So I really. And I think that those are the things that do build ecosystems, right? And those are the things that I was at a big, huge entrepreneurship event yesterday, and something that kept coming up is like culture, right? And what, you know, you know what the. You all are in the formation of making, doing,and culture building, right? You know, if other investors go, man, Dave and Ed and Jimmy and them, they're like, they're doing it differently. We got to do it differently. And then when you get it, when you make investments or when you give people nos, but they have that experience with you that kind of lives on, you know, just like your experience is living on.

Dave Ousterout [00:11:06]:

Yeah, 100%. Right. I mean, we have to try and do good by everybody, right? And we have a sort of philosophy of we're not going to run through you. If you're in the way, we're going to run by you. And if you want to join us, we encourage that. Like, we will work with anybody and everybody. There's just to put it this way, right? There's way more to do down here than we are doing. And we are nowhere near that saturation point where it's a zero-sum game.

Dave Ousterout [00:11:33]:

So everybody needs to be in the boat rowing together. But not everybody wants to be on our boat and we get that. So if we lead the way and people think that's a good idea, that's a measure of success that we're looking for.

Chris Frew [00:11:44]:

You create some waves that people can start wave surfing.

Dave Ousterout [00:11:47]:

Exactly.

Chris Frew [00:11:49]:

So are there some other groups down there that are doing some early-stage investing and some investing in the ecosystem? Tell us a little bit more. Take a step back into the broader picture. Because what is that early-stage ecosystem like?

Dave Ousterout [00:12:02]:

Yeah, so first I'll say Cape Fear is unique in that we are exclusive to North Carolina. If the company doesn't operate here, we do not invest in it. That's a mandate. Technology and people can come in. Ideally, they don't leave again, but it has to be here. So I think that is incredibly unique. We do have other ventures here that have been really successful in helping local companies, though they invest elsewhere as well. Right.

Dave Ousterout [00:12:29]:

So I'll just name one at the beginning is KDT and Phil Grayski. They just raised a new fund. It's north of 100 million. You know, they're just, I think they're on their fourth fund in six, seven, eight years.

Chris Frew [00:12:41]:

Right.

Dave Ousterout [00:12:41]:

Like if somebody on fund one, I'm like, that's the bar.

Chris Frew [00:12:44]:

Right.

Dave Ousterout [00:12:44]:

And Phil does a lot for the community. You know, he brought on another Duke student, Blair, and I know that they're working with, for example, the Council for Entrepreneurial Development or CED is a local ecosystem player here. They sit on the board, they try to help with conferences and organize those things. They try to get, you know, a happy hour we have locally to bring together entrepreneurs and just lament about the everyday plight of trying to build something from scratch. So to your point on going beyond just the check, right. They write checks, by the way. They do a lot to try and promote the things that are local. There's a couple of groups, so Pappas as well as Hatteras, these are the well-known ones, They've been around for a long time.

Dave Ousterout [00:13:30]:

They have a lot of success stories.

Chris Frew [00:13:32]:

Right.

Dave Ousterout [00:13:32]:

Tune Therapeutics is a pretty big play down here in the epigenetics space. They back that from some of the earliest days and are bringing the right teams to it. And they put a lot of effort into that. And you know, I think that they are a magnet for outside traditional investors. Meaning, you know, it's pretty hard to get a Boston-based firm to invest down here. They like you to be down the street, right. And they built relationships with those people and act on behalf of them in that sense. Right.

Dave Ousterout [00:13:59]:

They're obviously independent firms, but they bring that confidence in that track record that is a magnet for external money.

Chris Frew [00:14:05]:

Right.

Dave Ousterout [00:14:06]:

And we have all sorts of little things cropping up everywhere.

Chris Frew [00:14:09]:

Right.

Dave Ousterout [00:14:09]:

Kineticos is here. They're working on the Antimicrobial Resistance fund. That's a pretty interesting niche. Not a lot of people invest in there, if any at all. And they're really bold in doing so. I think we have a lot of Southeast institutionals that are rabid.

Chris Frew [00:14:24]:

Right.

Dave Ousterout [00:14:24]:

But they're not necessarily biopharma specialists, but they want the Southeast to grow. And I'll shout out one specifically is Second F in Raleigh run by Bill Spruill. I think they just embody what it means to have a success of your own and reinvest it into your community. Bill often talks about importing wealth. I personally have never looked at wealth as a thing that's desirable to an extent thing like make $100 million. Right. He's the first person that's ever really convinced me it's not about that. It's about if you get there, it means how many others benefit with you.

Dave Ousterout [00:15:00]:

And he has personally, through his companies, minted other millionaires that are then able to put their money into the area or their talent because they can afford to do so. And he sees that brighter future. So anyway, hopefully that's a bit of characteristically long-winded answer. We have a lot of people doing really good things all over the place. What we need to do is focus them on the best and grow from there.

Chris Frew [00:15:25]:

That's a great overview. I mean, we talked a little bit about that culture before.

Chris Frew [00:15:31]:

Right.

Chris Frew [00:15:31]:

Like you know, Bill said is, I think.

Chris Frew [00:15:34]:

Right.

Chris Frew [00:15:34]:

And if you have a culture where people are giving back, that money will stay. And I've seen this in other ecosystems. If the culture isn't like that, those successful exits that that money doesn't stay, it goes and parks in a real estate trust and a yacht down in, in, in. In Florida. Yeah. So that there, that is a really important element that you all seem like you really have in that ecosystem. What are the things that you've identified, though? You mentioned unlocking the research. That something quite hasn't really unlocked some of that early-stage research or that commercialization talk.

Chris Frew [00:16:14]:

I'd love to hear you kind of, you know, talk about some of those things that you've identified or that are on your radar with your team on ways that you can kind of help to unlock some of that.

Dave Ousterout [00:16:24]:

Yeah, it's a great question. So this fund, the first fund, in Cape Fear is essentially a proof of concept. It's letting us ask some pretty interesting questions, like, does an accelerator model, a venture studio model make sense? A much more traditional venture check? What does that mean?

Chris Frew [00:16:42]:

Right.

Dave Ousterout [00:16:43]:

And where's that flavor in between of helping operate? So there's sort of like bucket one, like, how do you invest? The second bucket is, where do you get your ideas from?

Chris Frew [00:16:52]:

Right.

Dave Ousterout [00:16:52]:

We've had chats with folks who are like, you know, run a more competitive process. Let anybody move. People want to move here, right? Like, let them move. Let them go work at a BioLabs at an are at a Longfellow facility and get their idea on paper into the lab. Right. Duke, UNC, and State, they produce a lot of really interesting research. Like I'll highlight, one group is Eschelman Innovation. Over at UNC, John Bamforth and his team have been working extremely hard to figure out not only what's a good concept at UNC, but take that from the science and make it commercializable.

Dave Ousterout [00:17:29]:

And that, I think, is the culture shift that's starting to happen locally. And with all culture shifts, there are clashes. Should there be the ivory tower where you're doing things for research, or should you be doing research for commercial purposes? Is that appropriate? My answer to all this is, why would you do biomedical research if it can't get into the world and help people? It's just that simple. And I think there's a lot of people that share that. Jeff Welch at New Ventures at Duke is doing the exact same thing, trying to grab things early and shepherd them into something that's a commercializable investable entity. So when we kind of look at the ingredients, we have the substrate, but we don't have the money. We need to figure out the right model. On the talent side I mentioned, we have people that can do the growth stage.

Dave Ousterout [00:18:12]:

So, 30 plus, like shout out Mike Dombeck and some of the Arcelics crew, he got there and helped grow to a $5 billion organization.

Chris Frew [00:18:21]:

Right.

Dave Ousterout [00:18:21]:

And he's looking to do something again, and I want him to. So this is a little pressure to him if he's ever watching this. But it's a great example of these people are everywhere. I keep meeting them every single day, and they fall into that. I know how to scale a company, and I know how to enjoy figuring out the bank account, the website, HR, hiring people, making the first mistakes, and begging everybody for money. Like, all those things are really hard to do in the initial part. And the bridge putting them together, I think, it is one of the key tricks to making it successful down here. These people exist, they have incredible experience.

Dave Ousterout [00:18:58]:

They need to be pulled in together and work together to build a handful of really good things. Rather than let's just say, let's say 30 people build 30 things. I'd rather see 30 people build 30, 10 things. That is a key trick here.

Chris Frew [00:19:13]:

Yeah. So is that part of what this first concept fund is doing, is kind of working with UNC and Duke and some of the schools and, and just identifying where are those 10 swim lanes that we can kind of really, you know, invest further in.

Dave Ousterout [00:19:30]:

Exactly. So yeah, our goal is it's pretty simple.

Chris Frew [00:19:32]:

Right.

Dave Ousterout [00:19:32]:

We will work with anybody and everybody on the best idea that we can think of. So what does that really look like in practice? Even though we're in the first fund? The 10-year goal is to build 40 seed-stage quality companies running a traditional biotech play. And I use those words really specifically, that means you have a platform, you identify a lead indication, you build a product, you put it into IND enabling, you run a phase one, you run a phase two, you try to exit it.

Chris Frew [00:20:01]:

Right.

Dave Ousterout [00:20:01]:

Like this is sort of the world that we live in. In a very classic biotech model. Some go all the distance to commercial, some go public, some many fall.

Chris Frew [00:20:11]:

Right.

Dave Ousterout [00:20:12]:

But the key is you run it again and again and again with the right team. Great science. And we have that in spades. We just don't do that at scale. If we do that, if we do that, we will. If you believe in power law in VC, which I tell people basically just the rule is 1 in 10 become huge, 9 somewhere else. Okay, great. That's four new unicorns down here.

Dave Ousterout [00:20:39]:

That's four management teams that are minted. That's another decade of growth from those four teams that brought the success. Of course, it returns to our investors who took the bet that there is that potential down here that hasn't been pulled together.

Chris Frew [00:20:53]:

Right.

Dave Ousterout [00:20:53]:

That's why we think it's exclusive to North Carolina is the key. Yeah, there are great teams and great ideas elsewhere, but hitting critical mass here and investing specifically here is really hard to do. And it's worth it if we get there.

Chris Frew [00:21:08]:

Well, I think you're making a great argument for that. I'm curious also. North Carolina has a lot of incredible assets. You've talked about a lot of them today already. Some of what North Carolina is known for is that you said 30 plus those, those companies that can scale and operate the CDMOs, the large CRO landscape. How does the current asset map of the triangle there... How does that de-risk what you're doing? Like, have you, like, love to hear kind of your thoughts on that.

Chris Frew [00:21:42]:

Like, why, you know, why should other investors be like, look, when and when the Cape Fear team gets it right, it's de-risked at phase two.

Dave Ousterout [00:21:51]:

Yeah, it'd be great if we could take things all the way that far. I think right now it's more of they set up an investable concept, right? So that means what they're looking at is they know the dollars and years to value out, right? And they can judge an asset and they can see a team that's qualified to take it the distance and then decide, is this what we want to invest in? Because it's always about the team, then it's about the technology, and then there's some table stakes, right? Like, you got to have a big market that's venture investable. There are many ways to fund things that can help rare populations, like super rare populations. Venture is a very difficult one to do with it, right? So when you bring up the CDMO part, what I hear in that is a lot of talent that knows how to develop drugs at different stages across different therapeutic areas and diseases. What they don't necessarily do, well, quote unquote, is the biotech side of it, right? Where you have to be a bit more creative. There's pivoting. You know, you think you have the world's best platform, you figure out a flaw in it, and you work around it. So maybe that means your initial indication wasn't appropriate, so you have to change.

Dave Ousterout [00:22:54]:

So one group described it to me recently as, there's a management team out there. Doesn't matter the disease that they work on. They run the same process that makes them successful every time, right? Like, and so CDMO, that's kind of a change. You become a very detailed specialist, but you developed how many different drugs, and then you're in a larger organization which has structure to it. Unlike the chaotic startup world, where I don't know where my paycheck's going to come from in 12 months. And you have to believe, like, this is the ultimate, put the gas in the rocket, get on out there and hope you get refilled if you want to go to the moon, right? That's not a comfortable place for a lot of people, understandably and rightfully, but still, the talent's here and there are people. If there were exciting biotechs that would say, I want to try that for once, I can always go back, right? So I think that that's a pool of people that I've seen accessed at Locus and that we can keep doing again and again and again.

Dave Ousterout [00:23:49]:

We have tens of thousands of these professionals.

Chris Frew [00:23:52]:

Right.

Dave Ousterout [00:23:52]:

And surely some of them are as odd as me to decide, let's go try something completely different.

Chris Frew [00:24:02]:

I think you hit the nail. The talent, you know, investors are investing in management teams and people and leaders. But you know, as you grow a company the talent is critical. And, and to your point, like there are, there's a tremendous amount of talent out there. So to me that, that is something that de-risks, you know. You know, I think North Carolina of any region, has the capacity for another 10 to 40 startups with just the talent pool that's down there.

Dave Ousterout [00:24:29]:

Easily. Yeah, easily.

Chris Frew [00:24:31]:

Right.

Dave Ousterout [00:24:31]:

And I think it's capital-constrained. So someone asked a little bit about collaborating with, you know, NC Biotech Center and NC Innovation.

Chris Frew [00:24:37]:

Right.

Dave Ousterout [00:24:38]:

Perfect for us. Shout out to Mike Carnes and his whole team at NCBC. Right. They're out there writing grants. What we're trying to do is get in there and write those grants with them and then fund alongside them.

Chris Frew [00:24:50]:

Right.

Dave Ousterout [00:24:50]:

That's a long-term goal. We don't have any specific relationship with them, but it's a resource that we recognize we can amplify. So to your point on that, right, getting to 10 to 40 is going to take a lot of money. It's not the talent, it's not the basic ingredients, it's the money.

Chris Frew [00:25:05]:

Right.

Dave Ousterout [00:25:06]:

And that's why I think there's not really, there's not fiefdoms we can do down here. We all got to work together. We don't have to work together every time, but we need to work together on enough things that we hit that mass and more money comes in.

Chris Frew [00:25:18]:

Yeah. I was at a big investor conference yesterday and I talked to 18 different startups in the course of the day and the, the amount of co investing from the repeat co investors in different groups was really, you know, you know, tremendous to me to, so to your point, you know, with the NC Biotechnology center, you know, the, and the community.

Chris Frew [00:25:43]:

Right.

Chris Frew [00:25:44]:

You said the community like working together as a community, like the right ecosystems do get that. Right. And they understand how to connect the right people to the grant programs at the right time and then make sure that, you know, that those grant programs de-risk those introductions to the Cape Fear folks. So it's a system that ends up working together.

Dave Ousterout [00:26:06]:

Yeah, absolutely.

Chris Frew [00:26:07]:

Right.

Dave Ousterout [00:26:07]:

And I'll take that as a bit of a moment to just quickly what we do, right, we are writing checks. What we do is we write the first check and we try to write it into a note or a safe. We go on Carta, we go into data and we tell you what's the middle of the market. The idea is it's fair to founders and enticing to investors. We write the first half a million dollar check to try and help you with the 12 to 18 months, two to $3 million that we get that co-investment in together and lift this thing out the right way. When we say right way, again, traditional biotech play. Get the right indication, develop a product, get it on the IND enabling path, put value inflections that people expect to see at that stage of venture.

Chris Frew [00:26:50]:

Right.

Dave Ousterout [00:26:51]:

So that's, that's really what we do. We get some confusion. We can't write more money than that. That's what we do today.

Chris Frew [00:26:56]:

Right.

Dave Ousterout [00:26:57]:

We work exclusively on co-investment. The sort of running thing is we want to do it, but we won't do it alone.

Chris Frew [00:27:03]:

Right.

Dave Ousterout [00:27:04]:

There's some different models around how much ownership you should have. Even the co-investment model, is not our goal. Our goal is eight great companies in the next couple of years that we co-invest in that get put into a position where they are the magnets for additional venture capital. Right. So I think that's hard to do in practice. It means that we've got to go out and meet. If there's eight companies and you need three, you can do the math. We got a few dozen investors that we got to know just to get into that funnel.

Dave Ousterout [00:27:33]:

But that's the work we want to do.

Chris Frew [00:27:34]:

Right.

Dave Ousterout [00:27:34]:

And I think being a central source for technologies, talent and capital is a stated goal, but it's not. We don't want to be the only ones holding that. We just think that there's a need to nucleate it today.

Chris Frew [00:27:47]:

Yeah, yeah. The time is now. Well, Dave, this has been awesome. I'm really excited about everything you're doing. I mean it sounds like, you know, you've really approached this with a very strategic and approach and you know, one that really kind of, you know, leans in on bringing the community along and leveraging and working together with the community to do it. And I love the North Carolina focused investment. I mean there's a lot to that. You know, biotech hubs are built.

Chris Frew [00:28:21]:

There's a reason there's hubs because, you know, you need that center of gravity. And it sounds like, it sounds like you and your team and there's several others down that are really investing that center of gravity for the triangle down there. So I'm excited to see what you do and what's in the future. Are there any foreshadowings, anything you want to share about kind of what's to come in 2025, or any other highlights before we wrap up?

Dave Ousterout [00:28:48]:

Yeah, sure. First off, I'd also say it's North Carolina as a whole. I think I, you know, I get in trouble if I just talk about RTP. RTP is a magnet, a hub, but there's a ton going on across North Carolina. Someone brought up NC Innovation, right. Like, really trying to galvanize that piece. I think in 2025, the main expectation I'd set is we're trying to get out there and prove it.

Chris Frew [00:29:09]:

Right.

Dave Ousterout [00:29:10]:

So we know that there's. We have to put it out there and do it. We're looking for people who really want to build a company, know they can't build it alone, and want to build it with us. We know that we have limitations in the capital we can provide, and we know we're figuring it out for the first time. So I always invite people. I'm a guinea pig. You want to hang out? You want to be another guinea pig? Let's go do it. So we're talking anyone who's an entrepreneur, anyone who's got an idea, anyone who's looking for an idea, right? Like, we're not trying to reinvent the VC wheel.

Dave Ousterout [00:29:39]:

We're trying to be another spoke of it in RTP. And if you guys want to build together, we're here to do it.

Chris Frew [00:29:46]:

I love it. I love it. What? You're on a path to building some good things down there. I also want to, as we wrap up, I forgot to do this in the beginning, but I also want to mention another group down in North Carolina that's doing a lot and always has invested in North Carolina, which is Kymanox. They're our sponsor for these. What's the blood series for this for December. And I know Stephen Perry very well. He's very invested in.

Chris Frew [00:30:11]:

In supporting the ecosystem in North Carolina down there. And he's everywhere.

Dave Ousterout [00:30:15]:

I saw things at Lone Rider Brewing here yesterday with them. So, yeah, definitely shout out them. And Stephen. Yeah, waiting on that coffee, man.

Chris Frew [00:30:23]:

All right, there you go. Hopefully, he's tuning in and listening to that, and you guys will be doing the coffee soon. But just another example of all the right things are down there and it's time to pull them all together and start rowing the same direction.

Dave Ousterout [00:30:38]:

Absolutely. And thank you again for giving us the spotlight today and really excited for North Carolina in the next decade.

Chris Frew [00:30:43]:

Awesome. Well, I am too. Dave, let's talk again next year. Can we do that and do an update on where things are at?

Dave Ousterout [00:30:50]:

That would be awesome.

Chris Frew [00:30:51]:

Awesome. Well, thank you all for tuning in today. Dave, thank you for sharing your story and everything you're working on to support the ecosystem. Please, everybody, if you're tuning in, make sure you subscribe. Follow the new YouTube page that's continuing to grow. We're doing much more of these. We've got another one coming up just in actually, Dave, we got a North Carolina resident that is has a venture studio that's started that will grow but started in Philadelphia. So again, some cross Persephoni BioPartners.

Chris Frew [00:31:23]:

So I don't know if you've met them or not, but. But we'll be talking with them next week. So thank you all again. Have a wonderful rest of your day. We'll talk to you soon.