🔍 Case Study: Iris.ai
Sometimes 'brutal' honesty can help your business survive

What’s the design?

Iris.ai is an AI company that utilises Natural Language Processing to review masses of research papers on behalf of academics, researchers and scientists. It finds the most relevant documents, extracts key data and identifies the most precise pieces of knowledge. The tool not only saves time in all areas of research but builds a path to the vast amount of knowledge hidden in the world’s more than 80 million research papers. The company’s goals are to democratise science, disrupt an industry and improve scientific content for more transparency and accountability. 

The struggle

“It’s all about ‘sisu’,” CEO and Co-Founder of Iris.ai Anita Schjøll Brede tells us about the experience of building and running Iris.ai. ‘Sisu’ is a Finnish term referencing “resilience and almost stubbornness against all odds”. In the five years Iris.ai has been existing, ‘sisu’ is what’s been guiding them through the storms.

But it didn’t begin as an uphill battle. When they were founded in 2016, they were one of the first AI companies in Europe. “We were invited to all of these conferences, which meant we got a lot of attention from venture capital,” Brede explains. However, it turned out that a lot of the interest didn’t translate into action. “We were perhaps naive, but in meeting after meeting, we were told: ‘Oh, what you do is so good for the world’ followed by ‘But there's no money in it, so, we're not going to invest.” In total, Brede and her team met with 277 venture capitalists during the first year and a half.

Even though Iris.ai had big plans for their deep tech-solution, the market they stepped into proposed extensive challenges. Academic institutions don’t have much money to spend, and the company’s slow and steady approach didn’t appeal to venture capitalists looking for a fast and high return on investment. “We recognised that even though we’re really good for the world, for many, it's a terrible business proposition.”

The strategy

Iris.ai did eventually find investment by changing their fundraising strategy. They decided to go with impact funds and take on convertible notes, a form of short-term debt that converts into equity, and loans from mostly angel investors. “You just have to scramble to get by,” says Brede, who has taken the equivalent of just six months' salary in five years of operation.

“One thing we’ve always done is be transparent and almost brutally honest with our employees,” she says. “For example, having an overview of the finances falls very well into their way of working.” When Iris.ai hit a financial road bump in early 2019, Brede and her co-founders always kept the team in the loop. “We put all employees together in a video call, where we asked them to go on two weeks of unpaid vacation and then invited everyone back on an 80% salary and 80% workload.” The team accepted, knowing the deal was very fair. “All the employees knew the situation was very, very unsure, so they knew what to expect.”  

Iris.ai operates as a remote company, with only a few employees in the same location. This was worrisome for venture capitalists who were considering investing. Specifically, they were concerned that the lack of ‘water-cooler conversation’ wouldn’t build team spirit. “But, I think it somewhat helps that we're a remote company because everyone we hire has a certain degree of independence,” Brede explained.  

The company is equally as transparent about who they want to work with and who they don’t. “We’ve had military organisations come to us wanting to use our tech for their research, but we consistently say ‘no’ to weapons, military and tobacco,” she explained. “Simply because it’s not the kind of research that positively impacts the world.” According to Brede, even when these deals may offer financial security, neither the management or team are willing to sacrifice the company’s or personal values. “It gives our employees faith that we’re doing this for impact and it makes me sleep better at night.”

With the ‘sisu’ mentality deeply rooted, Iris.ai continues to fight for their mission. “Several of the things that we've gone through over the past five years have been these kinds of events where you just have to grit your teeth and clench your fists and think: ‘Okay, we're going to get through this. It's not going to be easy but, we're gonna make it through’.”

Tips from the designer

  • Stick to your values – When you’re a struggling startup, there’s nothing more appealing than a big cheque. But don’t fall into temptation if it means you could be compromising your company’s mission or morals.
  • Be creative with funding  – The straight-forward VC funding route isn’t the reality for many businesses, you’ll need to be both creative and flexible for keeping afloat, particularly in difficult times. Enlist in all the (hopefully, free) financial advice you can get.
  • Looking for co-founders – Establish some requirements and agree on the time spent on the project. If three are spending 100% of their time and one 30%, it’s gonna cause conflict.