Smart breast pump: Mothers love it, VCs don't

Naya Health's Smart Pump. Photo / Naya Health Inc.

Before her first meetings with venture capitalists, Janica Alvarez thought she could have a professional discussion about breasts.

Alvarez was trying to raise money for her startup Naya Health Inc., which makes a smart breast pump. Naya has secured approval from the Food and Drug Administration, achieving that milestone much earlier than most young companies.

But the conversations weren't what she expected. Investors wanted to know how she'd be able to run a startup while also raising her children. Another commented on her body and asked how a mother of three stays in such good shape. Others said they were too grossed out to touch her product or pleaded ignorance about how a breast pump works. "Investors would say, 'Let me go talk to my sister; let me go talk to my wife,'" Alvarez said.

She and her husband, Jeffrey Alvarez, managed to raise US$6.5 million ($8.86m) from investors after starting the business together in 2013. But they've recently hit a wall. With few VCs willing to fund the product, they're turning to Kickstarter in the hopes of keeping their company running. The campaign, with an initial goal of US$100,000, started Thursday. "If VCs don't want this, then we know parents and mothers do," Alvarez said.

The U.S. venture capital industry is 93 per cent male and facing heightened scrutiny for the sometimes-fraught relations with Silicon Valley's few female entrepreneurs. Alvarez's experience illustrates how getting venture funding can be even harder when your product isn't one men use.

The breast pump market is dominated by Swiss manufacturer Medela, which got a boost in the U.S. from an Obamacare mandate that insurance companies must cover the cost of pumps for new moms. Most devices use hard plastic cups and an air suction system. They're often loud and sometimes painful.

The Naya's soft suction cup mimics the feel of a baby's mouth and distributes the suction over a broader area of a woman's breast. Alvarez said the Naya delivers 30 per cent more breast milk and is 20 per cent faster than alternatives, thanks to a unique water-based system. The company is also planning to sell a smart bottle that will be able to track the volume, calorie count and fat content of breast milk and inputs them into an app. Mothers would be able to use the software to monitor how much they're pumping, how much the baby is eating and how much milk is left in storage.

Customers are asked to pay a serious premium for those features. The company was selling the Naya for US$999 until Thursday, when it lowered the price temporarily to US649. A typical Medela pump is about US$250. Naya is now pitching a lower-end model without a rechargeable battery or certain accessories for US$399, though the price will go up by US$100 eventually.

The pump is partly covered under certain insurance plans and is free for military servicewomen. Naya plans to offer rentals in the future for those who can't afford the upfront cost.

Despite the price, Naya has won favorable coverage from Wired and the New York Times. There's a dedicated fan base among mothers who can afford it, like Emilee Stucky, a 29-year-old new mom in Wichita, Kansas, with seven-month-old twin daughters. "The comfort alone is worth the investment," said Stucky, who works as a freelance calligrapher. "In a world where pumping is already so inconvenient for women, the Naya breast pump makes it so convenient and so comfortable."

Like most VCs Alvarez met with, Charles Hudson didn't know anything about breast pumps. Hudson, a managing partner at Precursor Ventures, said he decided to make a seed investment in Naya after doing some research with moms. "We were expecting our first child, and I started asking around and asked, 'Do you like your current product?'" he said. "Everyone said no." But Hudson acknowledged that Naya's business is a tough sell to many VCs. Beyond being a foreign industry, it requires developing hardware, which can get expensive fast compared with making an app.

During one pitch meeting, Alvarez recalled one guy saying, "I'm not touching that; that's disgusting." In another meeting, investors Googled the product and ended up on a porn site. They lingered on the page and started cracking jokes, she said. "I felt like I was in the middle of a fraternity," Alvarez said. "I expect more from grown men."

Alvarez decided to start bringing her husband with her to pitch meetings. Unlike the CEO, he said investors never made disparaging comments or asked about the challenges of running a company as a parent. "We made the decision that it would be best if both of us would always go to these meetings," said Jeffrey Alvarez, a longtime medical-device engineer who's Naya's senior director of research development. "They would treat her like a little girl trying to play a man's game."

But the couple still couldn't raise money. As cash got tight, the founders asked their eight full-time employees, who are mostly in the San Francisco Bay area, to work for minimum wage, which would buy the company a few months of extra runway. The staff agreed. The Alvarezes, meanwhile, traded their four-bedroom home for a rental that's half the size.

Things haven't been much easier for other startups in their small industry. Moxxly and Exploramed NC7 Inc., two other companies building smart breast pumps, are yet to release their pump products. The companies hoped to stand out with features not found in competing devices. Moxxly, which is working on a way to pump discreetly under a bra, sold itself to Medela in June for an undisclosed price.

Shortly before Alvarez was set to give a recent on-stage pitch, she ran into a female VC, who offered some advice: Only wear black and gray; don't use nail polish; don't smile or laugh too much; and keep your hair back in a pony tail. Alvarez immediately took off her jewelry and pulled her hair back before giving the presentation. She said: "It's hard when you're told you can't be yourself because you have to play the game."