Intro: Welcome to the “FedTech Innovator” podcast, bringing you the stories and journeys behind Deep Tech innovation and entrepreneurship. In each interview, we go behind the scenes with the entrepreneurs, scientists, and visionaries who are engineering the technologies of tomorrow — today. These journeys are unpredictable and full of learning and whether you’re an entrepreneur, researcher, or funder of innovation, our goal is to create a community where we can learn from each other, as we all seek to change the world with technology.
I’m Ben Solomon, Founder and Managing Partner of FedTech. Since 2015, we’ve been building a bridge between the R&D world and the venture world. Every year, we get to work with hundreds of companies and researchers who are changing the world through technology. In this podcast, we’re going to share those stories with you from our friends and colleagues in Deep Tech. I’m coming to you from our headquarters in Arlington, Virginia, just across from the river from our nation’s capitol.
Ben: We are really pleased to be joined by Rachel Rath today from Johnson and Johnson’s JLABS and BLUE KNIGHT™.
Rachel, good to see you. Thanks for being on the podcast. I’m really excited. I know we've done some work together in terms of hosting different sessions and it’s just been really awfully neat to see all the progress that you've made in your work.
I guess, start just with an intro and then walk us through a little bit of: what is JLABS? What is BLUE KNIGHT™? Why is J&J investing in both? Why is this critical to the work you do?
Rachel: Yeah, absolutely.
Well, first of all, thanks, Ben, for having me. It's been a pleasure to get to know FedTech a bit over the last couple of years through programs and some partnership opportunities that we've done. So, I’m really happy to join you today and have a fun conversation.
So, let's see, Johnson & Johnson Innovation — JLABS. JLABS is part of Johnson & Johnson Innovation. The idea behind Johnson & Johnson Innovation is that the best ideas come from everywhere, not just within the walls of Johnson & Johnson. Through Johnson & Johnson Innovation, we really aim to be out in ecosystems to support early-stage companies, innovators, entrepreneurs working on the potential solutions of tomorrow.
JLABS is our global incubator network that is part of Johnson & Johnson Innovation. We have locations around the world from Shanghai to locations across North America on the West Coast, the East Coast;, in Houston, Texas; up in Toronto; a location in Beersum, Belgium; as well as supporting companies virtually wherever they are in the world. The JLABS Incubator Network is a “no strings attached" model; we don't take IP, we don't take equity when companies come in, but we're looking to bring in and support early-stag companies that strategically align to the business units of Johnson & Johnson. Traditionally, J&J has been a three-sector company: pharmaceuticals, medtech, consumer. Consumer is spinning out into the new Kenview company. We support companies — early-stage companies — across any of those areas that align strategically up to Johnson & Johnson. Our locations provide really modular innovative space — bio labs, chem labs, prototyping space, cell culture space — to support companies as they grow. Companies come in with a single lab bench sometimes, and then they’ve graduated several years later when they're bursting at the seams of private labs for 10 people. We love to see our companies grow to the point of graduating out of our spaces and developing their own footprints.
BLUE KNIGHT™, to answer maybe the second part of that question, is a public-private partnership between JLABS and BARDA — the Biomedical Advanced Research and Development Authority within the U.S. Department of Health and Human Services. BLUE KNIGHT™ leverages the JLABS model to support companies that are strategically aligned both to Johnson & Johnson and to BARDA's areas of interest and provide these companies with additional resources to keep accelerating their science and solutions even faster.
Ben: I know we've been lucky enough — we work with BARDA through a different program. The value of BARDA and the whole imperative of BARDA, obviously, has become much more post-pandemic. We see it more as a society, I think.
Tell us: what led J&J to partner with BARDA? Then, where is it going in terms of what do you hope in the next five, ten years, you're going to be able to achieve together?
Rachel: Actually, it's interesting from a timing perspective. Whenever I'm telling the story of BLUE KNIGHT™, I ask people to go back in time with me to April of 2019, pre-COVID.
Ben: Oh my god, don't do that. Yeah.
Rachel: It was actually in April of 2019 when Johnson & Johnson announced that we would be opening the next JLABS location in Washington, D.C. — which is our newest JLABS location — that we would have this partnership with BARDA. This actually came before the COVID-19 surge and I actually joined Johnson & Johnson in December of 2019, thinking I would have this sort of great space for some runway and some strategic planning. It was just a couple months later that we found ourselves launching this public-private partnership to support companies looking at emerging pathogens, looking at pandemic preparedness in the midst of COVID-19. We definitely thought about how to pivot. Whenever a moment like that comes along, you have to think about the way you can pivot to increase the support opportunities.
I think when I think about what we're going to look forward to seeing in the future, I actually get really inspired by how we've already pivoted and new things that we've done to date. When we originally announced that we would be launching BLUE KNIGHT™, we originally announced it as a partnership focused at JLABS @ Washington, D.C. When we actually publicly launched BLUE KNIGHT™ in August of 2020, we piloted that with companies actually from around the world. We originally announced seven companies coming in as the initial companies within BLUE KNIGHT™ and piloting at some sites outside of JLABS @ Washington, D.C. We actually continued to expand from there.
Today, BLUE KNIGHT™ supports companies wherever they are in the world, physically through JLABS locations across North America or virtually connecting them to where they are in the world. We have this amazing network of JLABS locations, but we don't have a JLABS everywhere in the world. So, our JLABS locations need to be these hubs to then connect into those broader ecosystems as well. We have companies from Australia; Bogota, Columbia; across North America; and across Europe as well, all within the BLUE KNIGHT™ portfolio.
One of the other new really exciting things that we actually just did within the last year was look at new ways to support the companies that are currently in the portfolio. We're always onboarding and reviewing applications for new BLUE KNIGHT™ companies on a rolling basis, but we're also always looking at new ways to support the current portfolio. At the end of last year, we launched a resident-only quickfire challenge to bring some non-dilutive funding to awardees for just the current BLUE KNIGHT™ portfolio companies to help them get to their next inflection point. We awarded five of the BLUE KNIGHT™ companies with some small non-dilutive capital to help them get to those next inflection points. That's what we're trying to do. We're really looking to help these companies progress their science and companies — not just focusing on the technologies — but how do you really build companies to get potential solutions to patients at the end of the day?
Ben: Actually, that's a really good thread, Rachel. The idea of inflection points for companies is something that we think a lot about at FedTech and to what extent you can systematize and understand what's the path and what are those inflection points that you have to hit. When do you have to hit them; how do you hit them?
I'm curious, the companies that we largely will see are coming out of research labs, a lot of times winning SBIRs, early on as the roadmap. Then, that would allow for private funding to come in eventually. When you look at the successful companies that have participated in BLUE KNIGHT™, what's their playbook? How have they gone to market? What are the — if you could point out — two or three of the critical moments that you've seen the companies either be successful or not? What would those look like?
Rachel: All of our companies are still pre-commercial, so we're still very early. These companies that we're bringing in are actually… From a pipeline perspective, one of the sweet spots for BLUE KNIGHT™ is companies that are generally too early for other BARDA funding. We've often, honestly, been looking at companies around the same point that maybe you are through FedTech. They've often maybe received some non-diluted funding from the SBIR program or the STTR program. They've spun out of their research labs already, particularly academic labs.
One of the things that is a baseline requirement for becoming a JLABS company is being an incorporated company. We don't look at the number of employees, we don't look at the duration, but you do have to be a company versus still within an academic institution or a research lab. I think a couple of inflection points are: that spin-out process, actually incorporating the company — which is maybe very sort of fundamental and early on, but has to happen. Then, coming with that is actually looking at the IP, making sure there is a pathway to commercialization for the technology, really protecting that IP that the company is generating.
Many of our companies across JLABS are receiving SBIR funding, STTR funding. I think everyone's excited about the next wave, right? It's that time of year again right now.
Ben: Yeah.
Rachel: I would say state-level funding, as well. Particularly, when we think about BLUE KNIGHT™ companies, you look at the New York State Biodefense Fund, for example. Several of our BLUE KNIGHT™ companies have been supported through that program or other state funding — or even local funding. We look down at the Washington, D.C. area and there's some great local funding coming out of this region, as well. I think those are important milestones. Then, we’re really getting to the point of raising those first dilutive rounds, the seed round, thinking about moving into a Series A. Many of our companies come into the BLUE KNIGHT™ program. I would say around… There's no set bar where you have to be, but many of the companies come into BLUE KNIGHT™ around the seed stage, either getting ready to raise their seed or raising it. Then, they stay in JLABS while raising their Series A, generally. Then, maybe they're ready to graduate coming out of that, particularly into their own spaces.
Ben: What I think is so exceptional about this program is that you are looking early and that you're willing to work with early-stage companies. A lot of times, when we see large corporations, they often have great innovation programs. When they say early, what early actually means is different than a lot of the companies that we see and that I'm sure you guys see, also.
For Johnson and Johnson — a huge, amazing company — what's the long-term play in terms of making these investments and helping companies that you're going to have hit-or-miss results? If you just look at the sort of the distribution of likely outcomes, but that's… Okay, the ones that work well will be awesome, I'm sure, but what's the thinking behind this all, from J&J's perspective?
Rachel: I think you have to think about JLABS as a whole, and then also Johnson & Johnson Innovation. JLABS is one of the tools within the Johnson & Johnson Innovation toolbox that we like to think about. So, we work closely with our innovation centers around the world that do early partnering in the preclinical space — a lot of research collaborations, MTAs. We also have JJDC, which is our strategic venture fund which does the venture investing into early-stage companies; and JBD, which does the licensing and later-stage deals, mergers, and acquisitions.
We have all of these different tools within the JLABS toolbox or within the Johnson & Johnson Innovation toolbox. It's thinking about how to deploy them to support the innovations that are on-strategy for J&J. One of the things that we look at is: as we're bringing in companies into JLABS, is there a short-term deal potential? Is there a long-term deal potential? How may we want to go on to work with these companies?
JLABS has been around for 10 years; over that time, we've incubated about 920 companies globally across JLABS and we've done at least one deal with about 25% of those companies in the portfolio. That may be an MTA, maybe a research collaboration, an equity investment, or a licensing deal, but we're finding different ways to work with these companies. Many times, coming into JLABS when you're really early is a great way to start building that relationship with Johnson & Johnson. One of the things about JLABS is that all of the companies that come in with strong strategic alignment, they get a J-PAL who's a mentor from within Johnson & Johnson who's helping build that relationship with them, looking at their progress over time, and can help be a champion for them within the organization.
Then, on the BLUE KNIGHT™ side, the BLUE KNIGHT™ companies are getting mentorship from Johnson & Johnson, but they're actually also getting mentorship from BARDA in the US government. For many companies, yes; that scientific input is incredibly valuable and not mentorship, but let's be honest, navigating the US government can be really hard. Sometimes, even just mentorship about the different entities within the US government and how you navigate and how you approach can be really valuable.
Ben: You need a J-PAL. Yeah, I love that. That's great. That's wonderful.
Just focusing in a little bit. I'm really proud that this initiative is going on in D.C. Obviously, at FedTech, we have most of our staff based in the Arlington area, so we're very passionate about the D.C. venture scene in general. I mean, how do you view it? It looked like from your background that you spent a lot of time here. You went to college here, you went to grad school here. How do you feel about D.C. as a place for startups and innovation?
Rachel: Yeah, I've been in D.C. now for almost 20 years and for better or worse, maybe got stuck down here in the D.C. ecosystem.
It's really exciting to see this type of more biotech, life science innovation taking place here in the capital region. I think JLABS likes to go into ecosystems and be an early driver. You see that where we've gone into Houston or where we've gone into Toronto, we like to help be part of the impetus to help that ecosystem emerge. I think we're in the early stages here in the D.C. area. I think back to when I was in college down here in D.C., there weren't life science incubators, at least not any that I knew about. That wasn't part of what we were exposed to.
I think we're at this pivotal point in D.C. where JLABS @ Washington, D.C. is part of the Children's National Research and Innovation Campus on the old Walter Reed campus, just south of Silver Spring, Maryland. It's really watching this whole ecosystem emerge, transform, and bring in investment dollars and VCs here to the capital region, which I think the Virginia, Maryland, D.C. all do play really nicely together in helping support early-stage companies here. You see work going on up in Boston, work down in Virginia, and out near Manassas.
It's about how this ecosystem can really work together to help support these early-stage companies set up here in this ecosystem where they can be connected to so many nonprofits, foundations, government entities, groups like FedTech who are all set up here in the capital region.
Ben: I was surprised recently when I was looking at GDPs by region and you had the Washington, D.C. area being fourth in the country behind New York City, LA, San Francisco, and then us. What's interesting to me is that you don't really think of D.C. as necessarily a venture hub, but there's a lot of exciting things I think that are going on that are going to be changing that.
Rachel, so tell us a little bit about your career path. What brought you down to D.C.? I know you grew up in New Hampshire. What was that like? What's the career arc been to date?
Rachel: As you mentioned, Ben, I grew up in rural New Hampshire and was able to, in high school —and actually earlier than that — really get engaged in political elections. New Hampshire is the first presidential primary, or historically has been, so I was able to really get firsthand experience working in campaigns.
When it came time to go to college, I wanted to come down here to the Washington, D.C. area. I was fortunate to have some internship experiences early in college, but felt that just working inside the government wasn't going to be the right fit for me, at least at that point in time. I ended up studying international relations and pre-med in college, thinking I would go to medical school.
I think one of the things that really defined my career path today was being really open to new opportunities. I think back to when I was growing up or when I was in high school, I always loved science. I grew up in a family of doctors; growing up, if you liked science, you became a doctor. I wasn't aware of all of the other possibilities out there. Being really open-minded and taking different internship opportunities, job opportunities, or shadowing in hospitals to get some of that exposure to understand if I don't want to work in politics, where do I want to go from there? If I don't want to be a physician providing individual-level patient care, where do I go from there?
So, I ended up getting a master's in public health and global health policy. Then, I worked for a number of years on the early team building PCORI out of the new legislation that founded that new funding entity around comparative effectiveness research. I then moved from there into establishing public-private partnerships with the US government. So, I circled to another D.C. school, got an MBA from Georgetown, and helped to set up a public-private partnership with the FDA in regulatory science. Then, I moved over here to launch this new public-private partnership with BARDA and Johnson & Johnson.
Ben: Going backwards, I always find it interesting.
So, my dad was an ER doctor and I remember being directly driven away from that career path. For me — at least — it was between the overnight shifts and visiting him in the ER. I would be like, “Dad, you're not reacting. We hear all this screaming and discomfort.” He's like, “What?” He tunes it out, you know? So, I made that decision to not pursue it.
If you walk back, I'm just curious, like what kind of doctors were your parents? When was that decision that you actually veered off from and said, “Hey, I wanna be more on in venture and startups,”?
Rachel: So, my dad was a gastroenterologist and his whole side of the family was in different kinds of medicine. Psychiatry, pediatrics, ER, radiology — there's a whole mix of them.
It's funny you say that about your dad, Ben, I feel like it kind of goes one of two ways. I thought it was so fun to visit my dad at the hospital and see the different medical things. I don't talk about this a lot, but I remember getting stuffed animals of stomachs and things, working on building Rube Goldberg's of the digestive system, and thinking that stuff was so cool.
Ben: Definitely the child of a gastroenterologist.
Rachel: Oh, yeah. I still don't know where he was getting those stuffed animals of stomachs; I should ask.
So, I really loved it. Then, I got a little bit more into politics and public policy and that's what drove me into the international relations side of things. Partly, I grew up with strong connections to a lot of refugee families, understanding and strong interest in global health and global equity, which is where I moved into the international relations side of things. I actually added pre-med and did it as my senior year of college; I almost went back to an interest in becoming a doctor.
Then, what ended up pivoting for me was the year after college, I had an opportunity to shadow in a local hospital. Even though I'd spent a lot of time exposed to my dad's life as a doctor and his family's life as doctors, it was different sort of going into a hospital even one day a week and experiencing sort of the day-to-day grind. For me, the individual patient level care… I wanted to do things at a broader population level and see how more of the technologies could impact patients, policies, or processes.
The first time I actually got exposed to thinking about incubators, though — and more of the innovation, incubation, venture side of things — was when I was in business school and we were overseas, actually doing an immersion experience. We visited an incubator — a sports innovation incubator — in Madrid. That, for me, was the moment where I was sort of let loose. I mean, it's not biotech, it's not life science, so you have a little bit more freedom to play with all the VR toys, new treadmills, new helmets, things like that. I remember just thinking what an incredible thing to be at the cutting-edge of things that could help people and what is the future going to look like. That's really where I came back and thought, “Okay, I need to figure out what's going on in this space — in the life sciences,” and particularly then in sort of the global health and emerging infectious disease side of things where I have a strong interest.
Ben: It sounds like you got the startup bug. When you see the fun, the joy, the pain, the energy, the excitement of the venture world, it's tough to go back to anything else.
One thing I wanted to get your thoughts on — I get the question a lot. I'm an MBA, non-technical. I was a history major in college, but at FedTech, we get to interface cutting-edge science like every day.
You're not a researcher; it sounds like you have a strong appreciation for medical technology, but not actually practicing it. How do you approach those conversations? How do you approach dealing with even the big brains that you are gonna inevitably interact with, whether it's J&J or the ventures? Just as a non-technical person, because I get that question constantly. I'm just curious to hear your thoughts on that.
Rachel: No, it's a great question. I didn't know you were a history major in college; that's very interesting. I think it's really important to know your own limitations and where to rely on the expertise and partnership with others. I love helping build connections between people and helping spur innovation by thinking through things strategically and asking questions and helping connect people to other people. I'm never gonna pretend to be the scientist in the room. I think understanding what questions to ask; I've been working sort of in this field long enough to know enough to be dangerous and ask really good questions. Then, it's about bringing in my colleagues or external experts who are true scientific experts in this field — from a technical standpoint — and can help from that side of things.
So, I think it's about bringing the right people and the right perspectives to the table, because ultimately, at the end of the day, bringing the next technology, vaccine, or therapeutic to patients, it doesn't just hinge on really phenomenal science. The scientific problems, you work through, but it's also about building and establishing a company, a strategic plan, and the right team. How do you navigate those non-scientific hurdles just as much as the scientific ones?
Ben: Yeah, sure. It's a great point. There's a full business model piece of it that often gets underappreciated. The best advice I ever got around this topic was actually in college. We had an investigative journalist come and talk to us and he had done an expose on very different fields — technical, non-technical. He brought up this piece of advice that has stuck with me is that as long as you're willing to do the work, learning, and then have the right people to ask questions of, there's almost not a field out there that you can't become articulate enough to be part of the ecosystem. You may not actually be the one that's doing the science, but you could still be understanding the objectives, helpful, able to be part of that conversation.