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Cardiomatics bags $3.2M for its ECG-reading AI
Poland-based health tech AI startup Cardiomatics has announced a $3.2 million seed raise to expand use of its electrocardiogram (ECG) reading automation technology.
The round is led by Central and Eastern European VC Kaya, with Nina Capital, Nova Capital and Innovation Nest also participating.
The seed raise also includes a $1 million non-equity grant from the Polish National Centre of Research and Development.
The 2017-founded startup sells a cloud tool to speed up diagnosis and drive efficiency for cardiologists, clinicians and other healthcare professionals to interpret ECGs — automating the detection and analysis of some 20 heart abnormalities and disorders with the software generating reports on scans in minutes, faster than a trained human specialist would be able to work.
Cardiomatics touts its tech as helping to democratize access to healthcare — saying the tool enables cardiologists to optimise their workflow so they can see and treat more patients. It also says it allows GPs and smaller practices to offer ECG analysis to patients without needing to refer them to specialist hospitals.
The AI tool has analyzed more than 3 million hours of ECG signals commercially to date, per the startup, which says its software is being used by more than 700 customers in 10+ countries, including Switzerland, Denmark, Germany and Poland.
The software is able to integrate with more than 25 ECG monitoring devices at this stage, and it touts offering a modern cloud software interface as a differentiator versus legacy medical software.
Asked how the accuracy of its AI’s ECG readings has been validated, the startup told us: “The data set that we use to develop algorithms contains more than 10 billion heartbeats from approximately 100,000 patients and is systematically growing. The majority of the data-sets we have built ourselves, the rest are publicly available databases.
“Ninety percent of the data is used as a training set, and 10% for algorithm validation and testing. According to the data-centric AI we attach great importance to the test sets to be sure that they contain the best possible representation of signals from our clients. We check the accuracy of the algorithms in experimental work during the continuous development of both algorithms and data with a frequency of once a month. Our clients check it everyday in clinical practice.”
Cardiomatics said it will use the seed funding to invest in product development, expand its business activities in existing markets and gear up to launch into new markets.
“Proceeds from the round will be used to support fast-paced expansion plans across Europe, including scaling up our market-leading AI technology and ensuring physicians have the best experience. We prepare the product to launch into new markets too. Our future plans include obtaining FDA certification and entering the US market,” it added.
The AI tool received European medical device certification in 2018 — although it’s worth noting that the European Union’s regulatory regime for medical devices and AI is continuing to evolve, with an update to the bloc’s Medical Devices Directive (now known as the EU Medical Device Regulation) coming into application earlier this year (May).
A new risk-based framework for applications of AI — aka the Artificial Intelligence Act — is also incoming and will likely expand compliance demands on AI health tech tools like Cardiomatics, introducing requirements such as demonstrating safety, reliability and a lack of bias in automated results.
Asked about the regulatory landscape it said: “When we launched in 2018 we were one of the first AI-based solutions approved as medical device in Europe. To stay in front of the pace we carefully observe the situation in Europe and the process of legislating a risk-based framework for regulating applications of AI. We also monitor draft regulations and requirements that may be introduced soon. In case of introducing new standards and requirements for artificial intelligence, we will immediately undertake their implementation in the company’s and product operations, as well as extending the documentation and algorithms validation with the necessary evidence for the reliability and safety of our product.”
However it also conceded that objectively measuring efficacy of ECG reading algorithms is a challenge.
“An objective assessment of the effectiveness of algorithms can be very challenging,” it told TechCrunch. “Most often it is performed on a narrow set of data from a specific group of patients, registered with only one device. We receive signals from various groups of patients, coming from different recorders. We are working on this method of assessing effectiveness. Our algorithms, which would allow them to reliably evaluate their performance regardless of various factors accompanying the study, including the recording device or the social group on which it would be tested.”
“When analysis is performed by a physician, ECG interpretation is a function of experience, rules and art. When a human interprets an ECG, they see a curve. It works on a visual layer. An algorithm sees a stream of numbers instead of a picture, so the task becomes a mathematical problem. But, ultimately, you cannot build effective algorithms without knowledge of the domain,” it added. “This knowledge and the experience of our medical team are a piece of art in Cardiomatics. We shouldn’t forget that algorithms are also trained on the data generated by cardiologists. There is a strong correlation between the experience of medical professionals and machine learning.”
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The Extreme Tech Challenge Global Finals 2021 starts tomorrow
Get ready for a startup throwdown of global proportions (literally). We’re the proud hosts of the Extreme Tech Challenge (XTC) Global Finals, and the pitch competition action starts tomorrow, July 22 at 9:00 am (PT).
Pro housekeeping tip: Attending this virtual pitch fest is 100% free, but you need to register here first.
Not familiar with XTC? It’s the world’s largest pitch competition focused on solving humanity’s most vexing challenges. You gotta love a competition that serves the greater good — and a startup ecosystem for purpose-driven companies determined to build a more sustainable, equitable, healthy, inclusive and prosperous world.
The road to the XTC finals was crowded, to say the least. More than 3,700 startups from 92 countries applied to compete in one of these categories: Agtech, Food & Water, Cleantech & Energy, Edtech, Enabling Tech, Fintech, Healthtech and Mobility & Smart Cities.
Talk about a daunting endeavor. Team XTC, which consisted of deeply experienced investors, entrepreneurs and executives, winnowed down that field to these seven competing finalists: Wasteless, Mining and Process Solutions, Testmaster, Dot Inc., Hillridge Technology, Genetika+ and Fotokite.
Tomorrow’s competition takes place in two rounds, and each startup team will have to bring its best if they hope to impress this panel of judges — all leaders in sustainability and social impact.
Young Sohn, co-founder, XTC and chairman at Harmann International; Bill Tai, co-founder, XTC and partner emeritus, Charles River Ventures; Regina Dugan, president and CEO of Wellcome Leap; Jerry Yang, founder/partner of AME Cloud Ventures and co-founder of Yahoo!; Lars Reger, CTO and EVP at NXP Semiconductors; and Michael Zeisser, managing partner at FMZ Ventures.
In a classic, “but wait, there’s more” moment, the day also features several presentations from some of the leading voices in sustainability. Take a look at the two examples below, and check out the complete XTC finals agenda and the roster of speakers:
- The Keynote Address: Tune in as Beth Bechdol, the deputy director-general at the Food and Agriculture Organization (FAO) of the United Nations, provides an update on the latest from her agency.
- Waste Matters: According to the EPA, the U.S. alone produces 292.4 million tons of waste a year. Can technology help this massive — and growing — issue? Leon Farrant (Green Li-Ion), Matanya Horowitz (AMP Robotics) and Elizabeth Gilligan (Material Evolution) will discuss their companies’ unique approaches to dealing with the problem.
The Extreme Tech Challenge Global Finals starts tomorrow, July 22. Join us and thousands of people around the world for this free, virtual pitch competition. Register here for your free ticket.
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Announcing the agenda for Extreme Tech Challenge Global Finals presented by TechCrunch
Here at TechCrunch, we’re big fans of startup competitions. From our Extra Crunch Live Pitch-offs all the way up to the world-famous Disrupt Startup Battlefield, we can’t get enough of ’em. So we’re hooking up with Extreme Tech Challenge (‘XTC’) to present the Extreme Tech Challenge Global Finals, a startup competition focused on powering a more sustainable, equitable, inclusive, and healthy world.
Extreme Tech Challenge is the world’s largest transformative tech startup competition and forum for the leaders of tomorrow to be able to unleash their full potential. Last year, the competition attracted startups from 87 countries, and one third of the XTC 2020 finalists raised more than $167M combined in venture investment since being selected.
This year, over 3700 startups applied from 92 countries across XTC’s competition tracks: Agtech, Food & Water, Cleantech & Energy, Edtech, Enabling Tech, Fintech, Healthtech, and Mobility & Smart Cities. Check out the 80 Global Finalists that emerged from this competitive pool. The Category winners and the Special Awards winners will make it to the Global Finals stage.
Join the Extreme Tech Challenge on 7/22 to meet the world’s best purpose-driven startups making the world better through transformative tech. Network with corporations, VCs, & founders. Get your free tickets here!
Today, we’re excited to share the agenda of the event with you.
Powering the Future Through Transformative Tech
with Young Sohn (Young Sohn (XTC Co-Founder, Chairman of the Board, HARMAN International, and former Samsung Corporate President and Chief Strategy Officer), Bill Tai (XTC Co-Founder, Partner Emeritus, Charles River Ventures), and Beth Bechdol (Deputy Director-General, United Nations Food and Agriculture Organization)
What are the breakthrough tech innovations transforming industries to build a radically better world? How can business, government, philanthropy, and the startup community come together to create a better tomorrow? Hear from these industry veterans and thought leaders about how technology can not only shape the future, but also where the biggest opportunities lie, including some exciting news about XTC and the United Nations Food and Agriculture Organization.
Going Green
with Shilpi Kumar (Urban Us), Jenny Rooke (Genoa Ventures), and Albert Wenger (Union Square Ventures)
Sustainability is the key to our planet’s future and our survival, but it’s also going to be incredibly lucrative and a major piece of our world economy. Hear from these seasoned investors and founders how VCs and startups alike are thinking about greentech and how that will evolve in the coming years.
The Extreme Tech Challenge 2021 Global Finals: Startup Pitches Part 1
The reason we’re all here – the XTC Category and Special Awards Winners get their chance to pitch their transformative tech ideas to a panel of expert judges and hear their feedback. XTC is a global platform that connects exceptional purpose-driven startups with a network of investors, corporations, and mentors to help them raise capital, launch corporate collaborations, and scale their world-changing startups.
Waste Matters
with Leon Farrant (Green Li-ion), Matanya Horowitz (AMP Robotics), and Elizabeth Gilligan (Material Evolution)
According to the EPA, the U.S. alone produces 292.4 million tons of waste a year. Can technology help this massive – and growing – issue? Leon Farrant (Green Li-Ion), Matanya Horowitz (AMP Robotics), and Elizabeth Gilligan (Material Evolution) will discuss their companies’ unique approaches to dealing with the problem.
The Extreme Tech Challenge 2021 Global Finals: Startup Pitches Part 2
The reason we’re all here – the XTC Category and Special Awards Winners get their chance to pitch their transformative tech ideas to a panel of expert judges and hear their feedback, in this second and final round.
Cutting Out Carbon Emitters with Bioengineering
with Aaron Nesser (AlgiKnit), Jennifer Holmgren (LanzaTech) and Patricia Bubner (Orbillion Bio)
Bioengineering may soon provide compelling, low-carbon alternatives in industries where even the best methods produce significant emissions. By utilizing natural and engineered biological processes, we may soon have low-carbon textiles from Algiknit, lab-grown premium meats from Orbillion, and fuels captured from waste emissions via LanzaTech. Leaders from these companies will join our panel to talk about how bioengineering can do its part in the fight against climate change.
Announcement of the Extreme Tech Challenge 2021 Winners
The judging panel will crown the global winner of Extreme Tech Challenge 2021 and also announce the winner of the Female Founder Award.
Join thousands of investors, corporate executives, startups, and policymakers to network via video chat.
Join the Extreme Tech Challenge on July 22 to meet the world’s best purpose-driven startups making the world better through transformative tech. Network with corporations, VCs, & founders. Get your free tickets here!
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The huge TAM of fake breaded chicken bits
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
We’re closing our survey soon, so this is your last chance (probably) to get your voice heard!
Despite it being a short week, as always, it was a busy, busy time. We had Grace on the dials today, and Danny, Natasha and Alex making chit-chat about the tech world. As with every week this year, we had to cut and cut and cut to get the show down to size. Here’s what made it in in the end:
- Medium saw more employees depart the company after CEO Ev Williams published a “culture memo.” While the Medium memo doesn’t wholly ban politics, some allege that the undertone of the statement, timed weeks after a failed unionization attempt, created an unsafe environment. A week later, Natasha covered another controversy, this time at Y Combinator. We riff on the takeaway, and what this story looks like three months from now.
- The issue of company culture is attracting companies. Or more precisely startups, with Blendoor dropping a new report this week that TechCrunch covered, and Vault raising $8.2 million to provide a software solution to aid employees in reporting misconduct.
- On the funding round beat, we explored ChartHop’s new $35 million round that Danny had many thoughts about, fake-chicken nuggets startup Nuggs raising $50 million and Faculty’s latest deal that will help power its vision for the future of male grooming. We also got into Lifted’s elder-care focused round, a startup in the larger health tech beat that Natasha is giving some of her attention to.
- And we wrapped with the ExtraHop exit. We spent a minute trying to figure out why the company was valued at $900 million in its exit. The number, while large, felt light based on what we knew about the company.
Thanks for hopping along with us this week and every week. Quick programming note: Natasha will take Alex’s spot on the Monday show for next week since he’s out, so be nice, and send her stuff to mention.
Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday morning at 7:00 a.m. PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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Mendel raises $18M to tease out data structure from medicine’s disparate document trove
The medical industry is sitting on a huge trove of data, but in many cases it can be a challenge to realize the value of it because that data is unstructured and in disparate places.
Today, a startup called Mendel, which has built an AI platform both to ingest and bring order to that body of information, is announcing $18 million in funding to continue its growth and to build out what it describes as a “clinical data marketplace” for people not just to organize, but also to share and exchange that data for research purposes. It’s also going to be using the funding to hire more talent — technical and support — for its two offices, in San Jose, California and Cairo, Egypt.
The Series A round is being led by DCM, with OliveTree, Zola Global, and MTVLP, and previous backers Launch Capital, SOSV, Bootstrap Labs and chairman of UCSF Health Hub Mark Goldstein also participating.
The funding comes on the heels of what Mendel says is a surge of interest among research and pharmaceutical companies in sourcing better data to gain a better understanding of longer-term patient care and progress, in particular across wider groups of users, not just at a time when it has been more challenging to observe people and run trials, but in light of the understanding that using AI to leverage much bigger data sets can produce better insights.
This can be important, for example, in proactively identifying symptoms of particular ailments or the pathology of a disease, but also recurring and more typical responses to specific treatment courses.
We previously wrote about Mendel back in 2017 when the company had received a seed round of $2 million to better match cancer patients with the various clinical trials that are regularly being run: the idea was that certain trials address specific types of cancers and types of patients, and those who are willing to try newer approaches will be better or worse suited to each of these.
It turned out, however, that Mendel discovered a problem in the data that it would have needed to enable its matching algorithms to work, said Dr. Karim Galil, Mendel’s CEO and founder.
“As we were trying to build the trial business, we discovered a more basic problem that hadn’t been solved,” he said in an interview. “It was the reading and understanding medical records of a patient. If you can’t do that you can’t do trial matching.”
So the startup decided to become an R&D shop for at least three years to solve that problem before doing anything with trials, he continued.
Although there are today many AI companies that are parsing unstructured information in order to extract better insights, Mendel is what you might think of as part of the guard of tech companies that are building out specific AI knowledge bases for distinct verticals or areas of expertise. (Another example from another vertical is Eigen, working in the legal and finance industries, while Google’s DeepMind is another major AI player looking at ways of better harnessing data in the sphere of medicine.)
The issue of “reading” natural language is more nuanced than you might think in the world of medicine. Galil compared it to the phrase “I’m going to leave you” in English, which could just as easily mean someone is departing, say, a room, as someone is walking out of a relationship. The “true” answer — and as we humans know even truth can be elusive — can only start to be found in the context.
The same goes for doctors and their observation notes, Galil said. “There is a lot hidden between the lines, and problems can be specific to a person,” or to a situation.
That has proven to be a lucrative area to tackle.
Mendel uses a mix of computer vision and natural language processing built by teams with extensive experience in both clinical environments and in building AI algorithms and currently provides tools to automate clinical data abstraction, OCR, special tools to redact and remove personal identifiable information automatically to share records, search engines to search clinical data and — yes — an engine to enable better matching of people to clinical trials. Customers include pharmaceutical and life science companies, real-world data and real-world evidence (RWD and RWE) providers and research groups.
And to underscore just how much there is still left to do in the world of medicine, along with this funding round, Mendel is announcing a partnership with eFax, an online faxing solution used by a huge number of healthcare providers.
Faxing is totally antiquated in some parts of the world now — I’m not even sure that people the age of my children (tweens) even know what a “fax” is — but they remain one of the most-used ways to transfer documents and information between people in the worlds of healthcare and medicine, with 90% of the industry using them today. The partnership with Mendel will mean that those eFaxes will now be “read” and digitized and ingested into wider platforms to tap that data in a more useful way.
“There is huge potential for the global healthcare industry to leverage AI,” said Mendel board member and partner at DCM, Kyle Lui, in a statement. “Mendel has created a unique and seamless solution for healthcare organizations to automatically make sense of their clinical data using AI. We look forward to continuing to work with the team on this next stage of growth.”
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Extra Crunch roundup: first-check myths, Miami relocation checklist, standout SaaSy startups
This may seem like a great time to launch a SaaS startup, but the landscape is crowded with well-designed applications that promise “blazingly fast and delightfully simple” experiences, according to seed-stage investor John Chen of Fika Ventures.
Most SaaS startups will fail, but not because of a sour marketing campaign or server downtime. The majority of these companies will fall victim to what Chen calls “the myth of frictionless onboarding.”
Despite the hype about ease of use, enterprise companies always ask customers to abandon familiar tools so they can learn something new.
“Just like with a new fitness program, participants feel good after completing the workout, but it takes a lot of activation energy to start and hard work to get there,” Chen notes.
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Instead of putting the onus on customers to roll up their sleeves, he suggests that SaaS startups learn from cryptocurrency culture and find ways to “incentivize users to do the necessary work to have the right experience.”
But how do you encourage users to put in the time and effort required to produce an optimal customer experience?
“In a world where there is a surplus of alternatives for every job to be done, the scarce resource is not content, tooling, or hacks and tricks,” says Chen. “It’s attention.”
We’re off on Monday, May 31 in observance of Memorial Day; I hope you have a relaxing weekend!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Dismantling the myths around raising your first check
Image Credits: Klaus Vedfelt (opens in a new window) / Getty Images
As startups and venture capital grow in tandem, fundraising has gone from a formal affair on Sand Hill Road to a process that can happen anywhere from Twitter to Zoom.
While fundraising may no longer require a trip to California, it might depend on whether you got an invite to a private audio app. And while you may not need to be an insider, second-time founders — largely male and white — still have a competitive advantage.
The growing complexity of fundraising has the opportunity to make tech either inclusive or exclusive.
VC is the flashy gold medal, but the rapid growth of emerging fund managers means that a first check can be piecemealed together from a variety of different sources. The options for financing are seemingly endless: syndicates, public crowdfunding, VC firms, accelerators, debt financing, rolling funds, and, for the profitable few, bootstrapping.
Doximity’s S-1 may explain why healthcare exits are heating up
Image Credits: Nigel Sussman (opens in a new window)
Telehealth startup Doximity filed to go public earlier today. Notably, the company has not fundraised since 2014, a year in which it attracted just under $82 million at a valuation of $355 million, per PitchBook data.
How has it managed to not raise money for so long? By generating lots of cash and profit over the years. Healthtech communications, it turns out, can be a lucrative endeavor.
What Vimeo’s growth, profits and value tell us about the online video market
Image Credits: Avishek Das/SOPA Images/LightRocket via Getty Images
The spin-out of video platform Vimeo from IAC completed this week, and the smaller company is now trading as an independent entity under the ticker ‘VMEO’.
If you missed the news that the internet conglomerate was spinning out the video service, don’t feel bad; it slipped past many radars. But with the company now trading, our access to its historical results, and our minds still enthralled by YouTube’s recent financial performance for Alphabet, it’s worth taking a moment to digest the company’s health.
Flywire’s flotation suggests the IPO slowdown is behind us
Image Credits: Nigel Sussman (opens in a new window)
The Flywire IPO is neat from a financial perspective and notable in that it’s a Boston exit as opposed to yet another New York or San Francisco-based flotation. It’s nice to see some other cities put points on the board.
But more than that, this IPO is a useful measuring stick for keeping tabs on the IPO market as a whole. This year and the last are shaping up to be key exit periods for startups and unicorns of all shapes and sizes; many a venture capital fund return rests on these public debuts.
Dear Sophie: Any unique immigration strategies for quick hiring?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
I do recruitment for tech startups. With a surge of VC investing, many startups are urgently hiring.
Which visas offer the quickest options for international talent? Are there any unique strategies that you would recommend we explore?
— Maverick in Milpitas
7 questions to ask before relocating your startup to Florida
Image Credits: Artur Debat (opens in a new window) / Getty Images
Cities like Miami, Pittsburgh and Austin have been drawing talent and wealth from Silicon Valley for years, but the COVID-19 pandemic accelerated the trend.
In recent months, many investors and entrepreneurs have noisily departed for Miami, citing the region’s favorable business climate and quality of life.
It’s always good to consider one’s options, but before booking a moving van for the Sunshine State — or any emerging tech hub, for that matter — here are some basic questions entrepreneurs should ask themselves.
Vise CEO Samir Vasavada and Sequoia’s Shaun Maguire break down the art of the pitch
Image Credits: Sequoia Capital / Wolfe + Von / TechCrunch
In just a few short years, Vise has gone from launching on the Disrupt Battlefield stage to a unicorn. Co-founders Samir Vasavada and Runik Mehrotra met Sequoia’s Shaun Maguire at an after-party at the event, and Maguire ended up leading a seed and Series A round while Sequoia led the Series B.
Last week, Vise raised its Series C of $65 million and was officially valued at $1 billion post-money.
We spoke to the pair about the early fundraising process for Vise, what Vasavada has learned about delivering a good fundraising pitch, and what stood out about the pitch and the product for Maguire.
Acorns’ SPAC listing depicts a consumer fintech business with a SaaSy revenue mix
Image Credits: Nigel Sussman (opens in a new window)
Another day, another unicorn public offering.
On Thursday, it was Acorns, a consumer fintech service that blends saving and investing into a freemium product.
Acorns fits inside the larger savings-and-investing boom seen over the last four or five quarters as consumers buffeted by the economic changes brought on by COVID-19 turned to stashing cash and boosting their equities investing cadence.
By now this is old news, but we haven’t had a clear picture of the economics of consumer fintech startups accelerated by the pandemic. Now that Acorns has decided to list via a SPAC — more on that in a moment — we do.
Poor onboarding is the enemy of good hiring
Image Credits: Olga Strelnikova (opens in a new window) / Getty Images
The world of hybrid work is here, and the usual 10-minute intro call, swag bag and first-day team lunch are just not enough to make your new employee feel welcome.
While many companies have found a way to interview and select candidates in a fully remote environment, few have spent time and resources on aligning the “pre-boarding” and onboarding process for the new hybrid world of work. Many employers still rely on old ways of welcoming new hires, despite our totally changed work environment.
It’s important to capitalize on candidates’ enthusiasm and eagerness from the moment the offer is signed instead of when they log in on Day One, because first impressions can make or break a candidate’s chances of staying at a company.
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Doximity’s S-1 may explain why healthcare exits are heating up
There was a time when this column was more than a never-ending run of IPO coverage. Then the unicorn liquidity cycle kicked off and it’s been a long run of public offerings ever since. This morning is no exception.
Doximity filed to go public earlier today. You likely haven’t heard of the company because it exists in the modestly obscure world of telehealth. But it’s a venture-backed startup all the same that raised more than $80 million from investors like Emergence, InterWest Partners, Morgenthaler Ventures and Threshold, according to Crunchbase data.
Notably, Doximity has not fundraised since 2014, a year in which it attracted just under $82 million at a valuation of $355 million, per PitchBook data. How has it managed to not raise for so long? By generating lots of cash and profit over the years. Health tech communications, it turns out, can be a lucrative endeavor.
The Exchange explores startups, markets and money.
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Doximity is a social network that allows doctors to speak to each other while complying with HIPAA, a federal law that promotes medical privacy. The network, originally defined as a LinkedIn for medical professionals, gives doctors a Rolodex for specialists, a newsfeed for healthcare updates, a communication tool to talk to patients and a job search tool.
In 2017, Doximity claimed that it reached 70% of all U.S. doctors, more than 800,000 licensed professionals.
This is CEO Jeff Tangney’s second time bringing a health tech company public after his previous medical software startup, Epocrates, debuted in 2011.
Let’s chat briefly about the larger health tech exit market and then dig into Doximity’s IPO filing and get our heads around how the company managed to avoid private-market dilution for seven years — and what the company may be worth.
Health tech exits
The global digital health market is estimated to hit $221 billion by 2026, underscoring how large an opportunity the sector may present to venture capitalists. But investors aren’t merely just paying attention to estimates; they are seeing a number of exits in digital health (read: liquidity) that are warming up their checkbooks.
CB Insights estimates that there were 79 healthcare IPOs and M&A transactions in Q1 2021 alone, a 60% increase from the quarter prior. Another report says that there were 145 acquisitions of digital health companies in 2020, up from a solid 113 in 2019.
While still growing, it’s fair to say that those figures describe a healthy exit environment.
The list of deals in the market is straight fire. Earlier this year, Everlywell, founded in 2015, acquired two healthcare companies to expand its digital health service and distribution. Last week, Modern Fertility was bought by Ro for north of $225 million in a majority-equity deal. Before you start complaining that it’s not an IPO, consider this: A less than four-year-old company just got bought for a quarter of a billion dollars by another company that is less than four years old.
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Should startups build or buy telehealth infrastructure?
Digital health in the U.S. got a huge boost from COVID-19 as more people started consulting physicians and urgent care providers remotely in the midst of lockdowns. So much so that McKinsey estimates that up to $250 billion of the current healthcare expenditure in the U.S. has the potential to be spent virtually. The prominence of digital health is undoubtedly here to stay, but how it looks and feels from provider to provider is still a debate among sector startups.
But for providers who want to deliver care virtually across the country, it’s not as simple as adding a Zoom invite to an annual check-up. The process requires intention every step of the way — right from the clinicians delivering remote care to the choice of payment processor.
Providers and healthcare startups can choose white-label solutions such as publicly-listed Teladoc and Truepill, which have been around for a long time, and have powered the operations of unicorns like Hims and Hers, Nurx, and GoodRx as they look to scale in a compliant but efficient manner.
Turnkey solutions might be tempting to companies looking to take advantage of this opportunity, but startups still have to decide what to outsource and what to build. Should you rely on others for staffing your practice? Do you build your own payment processing service in-house? Do you integrate with Zoom or build your own video-conferencing software? These questions are crucial to think about early on to prepare for future scale regardless of whether a startup is B2B or B2C.
More than just Zoom
SteadyMD, which in March raised a $25 million Series B led by Lux Capital, wants to be the infrastructure layer that makes it easier for other companies to offer telehealth services. It is hoping to address a pain point it ran into years earlier: The complexity of launching compliant telehealth services in all 50 states.
The company launched in 2016 with the intent to provide high-quality, virtual primary care for brick-and-mortar shops. Through that process, SteadyMD built a suite of tools to make it work with EMR integrations, doctor-patient communication channels, digital recruiting and forecasting software, and prescription referrals and operations. The burdensome process struck a chord with the co-founders and they pivoted the company to where it is today: an “AWS for healthcare”.
SteadyMD offers a suite of services to its customers, the least of which, says co-founder Guy Friedman, is its video-conferencing platform.
“It’s not about the technology capacities,” Friedman says. “The very large companies that have a lot of resources are using us to help them increase their capacity as workforce.”
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Noyo raises $12.5M Series A to keep building its health insurance API business
This morning, Noyo, a startup that provides APIs that link players in the health insurance space, announced that it has closed a $12.5 million Series A round of funding.
The new capital comes less than a year after the startup disclosed that it had raised around $4 million in pre-seed and seed capital, and that its product was already in the market.
At the time it was clear that Noyo had a laser focus on its part of the healthcare world. Now, nearly a year later, the company confirmed to TechCrunch during conversations surrounding its new capital raise that it’s keeping its focus for now.
Linking the carriers and platforms of other insurance verticals, or varietals, will have to wait.
But Noyo is working in an enormous market, namely the U.S. health insurance universe, one that could provide it with space to grow for years to come. The startup sells the use of its application programming interfaces, or APIs, which in Noyo’s case allow customers to “execute, track, and confirm the fulfillment of member transaction requests to carriers,” citing the startup’s documentation.
The company’s product was born out of frustration that Noyo co-founders Shannon Goggin and Dennis Lee dealt with while working for Zenefits, an HR tech unicorn that ran into problems with regulators and customers alike. For more on that story, our prior reporting is useful. (Notably, AgentSync is another API startup play under construction by Zenefits alums.)
The American healthcare market is enormous, lucrative and fraught with inefficiencies and antiquated technology. And the insurance portion of the healthcare market is similarly titanic and broken, providing an outsize opportunity for a startup that can navigate its politics and unique needs with a technology solution able to help incumbents speed up, and save money.
The Series A
Noyo’s new funding event was led by Costanoa Ventures and Spark Capital. Prior investors Core Innovation Capital, Garuda Ventures, the Webb Investment Network, Precursor Ventures and Homebrew upped their investment in the new round.
Homebrew’s Satya Patel was effusive about the company in a comment provided to TechCrunch, saying that Noyo’s “technology and strategic vision have convinced major industry leaders to get on board right out of the gate.” This tracks with what the company has said, including that it has lined up new partnerships with insurance providers Ameritas and Humana.
Patel also noted that “Noyo is helping connect insurance companies and the growing ecosystem of insurtechs,” a portion of the startup market that TechCrunch has worked to track in the last year as it has raised piles of capital, seen notable liquidity and continues to drive headlines more recently.
A good question to ask startups that don’t run their cash accounts near zero before raising new funds is why they raised now. In Noyo’s case, I was curious what was the catalyzing factor for it to go out and raise more capital.
Goggin said that Noyo had found “really good signal and pickup from our early clients and partners.” That, combined with what she described as a “very clear sense of what we needed to do, and how we could accelerate bringing our future vision to life” were enough for her team to say “alright, let’s settle down, this is working, let’s be able to take the big swings.”
And thus the Series A came together.
Noyo has plans to keep hiring, with Goggin telling TechCrunch that her company is currently around 20 people, but will be around 30 by the time 2021 kicks off. She added that “the nice thing” about her new capital raise is that her startup won’t have “a staffing constraint” when it wants to “roll out a new product.”
The pace at which Noyo builds, then, should accelerate.
Which, in turn, should yield more revenue growth. Goggin cautioned that Noyo is not aiming for profitability but is, at the same time, “a real business with a viable model.” The Series A stage is generally a bit early to press founders on growth metrics, as most won’t share unless they are outlier-good. But happily, by the time that Noyo raises a Series B, it should have enough revenue history for some useful year-over-year comparisons, and we will ask for them.
The Noyo round is another data point that API-delivered startups are seeing good market traction, and that investors are taking notice. Expect to hear from a few more related companies in the next few weeks if my inbox is any indicator of what’s coming up.
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Does early-stage health tech need more ‘patient’ capital?
Crista Galli Ventures, a new early-stage health tech fund in Europe, officially launched last week. The firm offers “patient capital” — with only a single LP (the Danish family office IPQ Capital) — and promises to provide portfolio companies with deep healthcare expertise and the extra runway needed to get over regulatory and efficacy hurdles and to the next stage.
The firm has an initial $65 million to deploy and is led by consultant radiologist Dr. Fiona Pathiraja. With offices in London and Copenhagen, it operates as an “evergreen” fund, meaning it doesn’t follow traditional five-year VC fundraising cycles.
In fact, Crista Galli Ventures’ pitch is that traditional venture isn’t well-suited to early-stage health tech where it can take significantly longer to find product-market fit with healthcare practitioners and systems and then become licensed by local regulators.
To dig deeper into this and CGV’s investment remit more generally, I interviewed Pathiraja about what she looks for in health tech founders and startups. We also discussed Crista Galli LABS, which operates alongside the main fund and backs founders from underrepresented backgrounds at the pre-seed stage.
TechCrunch: You describe Crista Galli Ventures (CGV) as an early-stage health tech fund that offers patient capital and backs companies in Europe. In particular, you cite deep tech, digital health and personalised healthcare. Can you elaborate a bit more on the fund’s remit and what you look for in founders and startups at such an early stage?
Dr. Fiona Pathiraja: We like founders with bold ideas and international ambitions. We look for mission-driven founders who believe their companies can make a real and positive impact on the lives of people and patients the world over.
We will look for founders who deeply understand the problem they are trying to tackle from all angles — especially the patient’s perspective, but also that of the clinician and relevant regulators — and we want to see that they are building their solutions to solve this. This means they will make an effort to understand the complex and nuanced healthcare landscape and all the stakeholders in it.
In terms of founder characteristics, in my opinion, the best founders will be mission driven, able to tell a compelling story, and motivate others to join them. Grit and resilience are important and several of our portfolio companies were founded around 6-8 years ago and they are doggedly continuing to build.
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