‘Proven science is an anomaly’: Why Middleland Capital invested in gut microbiome startup BIOHM

• This month, Cleveland, Ohio-based microbiome startup BIOHM raised a $7.5 million equity financing round.
• Middleland Capital’s VTC Ventures led the oversubscribed round.
• Additional investment came from Felton Group, JobsOhio Growth Capital Fund, Aztec Capital Management, and others.
• New funds will enable further development of BIOHM’s discovery platform that turns microbiome data into potential solutions for food and beverage startups, consumers and the medical field.

Why it matters:

Brian Mixer, managing director at Middleland Capital, says he’s seen a growing interest in the gut microbiome over the last several years. “We’ve seen overwhelming research that demonstrates the fundamental importance of the microbiome in human health,” he tells AFN.

The gut microbiome is the environment in and around our stomachs and intestines and is made up of trillions of microbes including bacteria, fungi, viruses, and protozoa. Some of these microbes are good for a person’s health, some are not.

Much of the work done on the microbiome so far has focused on bacteria. However, the role of fungi could be equally important. It is therefore a very overlooked component of health and wellness.

BIOHM co-founder Dr. Mahmoud Ghannoum has studied fungi for more than 40 years. His work eventually led him to the conclusion that fungal organisms are as essential to the microbiome as bacterial ones. In 2010, Dr. Ghannoum and his team released research about fungal communities in the gut and coined the term “mycobiome” to describe these communities.

The research also explored the critical relationship between bacteria and fungi when it comes to gut health.

While these two things can work together to create a healthy microbiome, they can also team up to create a digestive biofilm. This is a plaque-like lining that forms on a person’s intestines and hides bad germs in the gut. Because of this, BIOHM believes gut health solutions must address both bacterial and fungal balance.

“There’s growing research that [fungi] are a very important piece of the puzzle,” says Mixer. “You can’t just look at the bacteria, but how they work together in promoting both health and disease. When it comes to understanding the role of fungi, BIOMH is the leader.”

How BIOHM works:

BIOHM’s business includes both direct-to-consumer and business-to-business products and services.

BIOHM FX is a probiotic supplement for consumers that specifically addresses the aforementioned digestive biofilm in the gut. Once that lining is destroyed, the product releases good bacteria and fungi to neutralize the bad ones that were hiding out in the biofilm.

In the B2B realm, BIOHM partners with other companies to make products and ingredients based on its extensive library of microbiome data. BIOHM says it manages one of the most comprehensive gut health datasets and has access to the second-largest collections of fungi strains, after the Centers for Disease Control and Prevention (CDC). This enables “predictable and low-cast developments,” according to Mixer.

BIOHM also works with partners on bioinformatics, testing, and clinical trial support. The company is currently embarking on a clinical extension directly for medical practitioners.

Mixer says the B2B pipeline and discovery platform were of particular interest to Middleland Capital.

“They’re turning AI into powerful insights and working with some of the largest global ingredient companies. That validates that there’s real value in their dataset.”

‘Proven science’

That validation is no small matter.

Controversy often surrounds microbiome startups. They’ve been accused of fraud, raided by the FBI, and slammed for outrageous pricing on tests. All of this rolls up into concerns from both consumers and scientists about the strength of the science backing many of these companies.

Mixer believes BIOHM stands apart in this respect. “Proven science is an anomaly. There is a lot of buzz in the space, but not too many that are clinically backed by science.”

“They built this state-of-the-art microbiome innovation platform and have a really exciting, robust B2B pipeline,” he adds. “They’re working with global industry leaders to create next-gen products using BIOHM’s database. We saw that robust pipeline validating that this is proven science, which is unique in the sector.”

BIOHM’s location was also attractive to Middleland and VTC: Cleveland, Ohio has some of the world’s leading academic medical centers, such as Case Western University. It’s also an underdeveloped ecosystem for technology, including foodtech and ingredient tech.

Both of these factors work in BIOHM’s favor, suggests Mixer. The company can leverage expertise from the universities and scientific community, and there’s a real, untapped opportunity in the area’s venture ecosystem.

“It’s an exciting market when you look at it from an investor perspective,” he says of the microbiome space. “Research will continue to get better.”