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Radical Ethereum entrepreneurs are redefining what ‘rape kit’ means
Their investors call them disruptive innovators. Detractors like North Carolina Attorney General Josh Stein call them “dirty scammers.” But Leda Health co-founders Madison Campbell and Liesel Vaidya think of themselves as advocates for sexual assault survivors.
Among the feminists leveraging Ethereum for subversive use cases, Leda Health’s do-it-yourself evidence-collecting kit for sexual assault survivors is among the most ambitious projects. So far, 16 members of Congress condemned Leda Health’s upcoming kits, which Michigan Attorney General Dana Nessel described as “shamelessly trying to take financial advantage of the #MeToo movement.” Leda Health’s DIY kit was nearly banned in New Hampshire and Utah before it even launched. But that hasn’t deterred Campbell and Vaidya.
Campbell is a survivor herself, so she knows the reasons people don’t immediately go to police after an assault. In her case, by the time she’d grappled with the trauma and was ready to come forward, it would have just been her word against his.
“There are also rape kits in every state that have been lost,” Campbell said. “The sheer amount of sexual assault survivors that reach out to me and tell me this product could change their lives, that’s what keeps me going.”
As such, Campbell said her startup plans to launch these kits in fall 2021, partnering with several universities for a beta rollout. Support services, to complement the take-home kits, include therapy and transformative justice groups run by licensed facilitators.
“We plan on being a business-to-business company, for universities and corporations and the military, partners like that,” Campbell said. “Our goal is for institutions to eventually pay for products and services to help these students. We know it will be difficult, that we’ll need a lot of case studies showing whether this helps… including healing work with people who committed harm about accountability and boundaries, to end that cycle of harm.”
Starting by offering institutions free therapy services and resources should seem like a no-brainer. Yet critics argue these kits give survivors false hope, because they are less effective in court than rape kits managed by law enforcement and related clinics. On the other hand, every year tens of thousands of rape kits aren’t tested by police.
Vaidya said Leda Health’s Ethereum-powered mobile app gives survivors the choice to document their own accounts, using blockchain technology for time-stamping evidence collected in the kit, which puts power back in survivors’ hands.
“We’re not in the business of proving consent. We’re just in the business of providing resources,” Vaidya said.
According to Chief Deputy District Attorney John Henry, in California’s Riverside County, this commercial product will be the first of its kind. He said it’s too soon to tell whether this could help survivors who are, for whatever reason, reluctant to immediately turn to law enforcement. Timing is also a factor. If the survivor is unable to get to a clinic promptly after the assault, there won’t be any biological evidence left to collect.
Love them or hate them, there’s no denying these blockchain-savvy entrepreneurs are challenging the status quo in a space where women are horrifically underserved.
“Nurses and police have some degree of experience and training on what to ask, where to follow up, what information is important. That is information the general public doesn’t have. As a prosecutor, I’d rather have those statements, and the additional investigation that goes on, done by law enforcement and medical personnel,” Henry said. “If a kit is collected in a way that is inconsistent with regulations and best practices, it’s not inadmissible. But that is something the jury would need to take into account… I can see the benefit of some type of evidence, as opposed to none. I can’t give a definitive opinion yet about whether it [Leda Health] is a good idea or a bad idea.”
A rape kit alone, of any variety, cannot result in a conviction or expulsion. It is merely a tool used as part of a broader investigation. Even so, the idea of survivors managing their own data has sparked vehement backlash.
“Back in 2019, our office was broken into,” Vaidya said. “We’ve also documented potential investors engaging with social media posts calling for us to be jailed.”
Campbell added they are now both subjected to routine online harassment.
“We also take Ubers home from meetings or offices ever since 2019, because our lawyers told us not to take the subway. We might be followed,” Campbell said.
The way this controversial kit works is a nondescript box comes with plastic bags, swabs and instructions all labeled with QR codes. Users download Leda Health’s app and are prompted to type in information while they save evidence of the assault, such as ripped panties, in separate Ziploc bags.
“The blockchain creates a sense of accountability, because these records can’t be changed,” Vaidya said. “There’s only myself and perhaps one more person in the company that has access to the data and it’s encrypted…there are access locks regarding when and how and we might access that data if compelled to by a legal authority.”
Leda Health outsources most of the tricky Ethereum software support to the blockchain startup Deqode. Deqode engineer Shivam Bohare said Leda Health’s system relies on Ethereum infrastructure services from Blocknative, a company that attracted investment from Coinbase Ventures, and Infura, a startup partially owned by Ethereum co-founder Joe Lubin. The encrypted data and profile are attached to a specific user account, not any self-custodied token, so the blockchain aspects of this app all occur under the hood. Users don’t need to know anything about Ethereum.
“Access to the user data is guarded using strict authorization,” Bohare said. “Even the users don’t have access to their own data (without proper authorization from Leda Health administration) once it’s been uploaded to the cloud.”
Unlike a kit administered by police, survivors can physically hold the kit until they turn it over to lawyers or authorities, rather than hoping their case isn’t one of the thousands that gets lost in the system. Plus, the DIY kit, combined with the records stored through the app, can be used for mediation outside of court, like group therapy sessions.
“People tend to forget that self-collected evidence is extremely common in the U.S. court system and analyzed for admissibility and other issues on a regular basis,” said attorney Jiadai Lin, who provides outside counsel to Leda Health.
Indeed, rape kits donated by another private manufacturer were reportedly used in April 2020 in Monterey County, California, under a temporary process developed for the pandemic.
“I believe survivors should have the right to gather information about their own bodies on their own terms, and entrepreneurs should have the right to try their hand at innovation,” Lin said. “In my view, legislative efforts to ban the product have been excessively restrictive. And that makes me feel even more strongly about standing behind Leda Health.”
Critics cast the startup’s entrepreneurial approach as greedy opportunism. Leda Health investors like Romeen Sheth, a Harvard law school alum and former co-president of the Harvard Association for Law and Business, invested in the startup so far because he believes the for-profit strategy can complement nonprofit organizations already working in this space. So far, Leda Health has raised roughly $2 million.
“Disruptive innovation in any industry is never comfortable; it never starts out as something that the incumbents are pleased with,” Sheth said. “I’m bullish on products and services that keep users as the top priority… I’m interested in investing in forward progress, not in maintaining the status quo. Leda Health defines that ethos and I’m hopeful their efforts make sexual trauma and sexual harassment less embarrassing, painful and traumatic.”
Now, as Campbell and Vaidya finish work on the prototype, Leda Health already started offering support groups for sexual assault survivors, led by licensed therapists.
“We have two groups going right now and another five starting in May,” Vaidya said.
Love them or hate them, there’s no denying these blockchain-savvy entrepreneurs are challenging the status quo in a space where women, in particular, are horrifically underserved by current resources.
“For sexual assault victims, the cost of the status quo, which includes under-reporting, a massive kit processing backlog and general lack of support services, is very high. Leda is demonstrating there are innovative low-risk solutions available,” said investor Duriya Farooqui. “Second, among the reasons an assault victim may not immediately report is because the procedure for collecting evidence via a rape kit can feel invasive and in itself can add to trauma. Leda wants to provide options.”
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The health data transparency movement is birthing a new generation of startups
In the early 2000s, Jeff Bezos gave a seminal TED Talk titled “The Electricity Metaphor for the Web’s Future.” In it, he argued that the internet will enable innovation on the same scale that electricity did.
We are at a similar inflection point in healthcare, with the recent movement toward data transparency birthing a new generation of innovation and startups.
Those who follow the space closely may have noticed that there are twin struggles taking place: a push for more transparency on provider and payer data, including anonymous patient data, and another for strict privacy protection for personal patient data. What’s the main difference?
This sector is still somewhat nascent — we are in the first wave of innovation, with much more to come.
Anonymized data is much more freely available, while personal data is being locked even tighter (as it should be) due to regulations like GDPR, CCPA and their equivalents around the world.
The former trend is enabling a host of new vendors and services that will ultimately make healthcare better and more transparent for all of us.
These new companies could not have existed five years ago. The Affordable Care Act was the first step toward making anonymized data more available. It required healthcare institutions (such as hospitals and healthcare systems) to publish data on costs and outcomes. This included the release of detailed data on providers.
Later legislation required biotech and pharma companies to disclose monies paid to research partners. And every physician in the U.S. is now required to be in the National Practitioner Identifier (NPI), a comprehensive public database of providers.
All of this allowed the creation of new types of companies that give both patients and providers more control over their data. Here are some key examples of how.
Allowing patients to access all their own health data in one place
This is a key capability of patients’ newly found access to health data. Think of how often, as a patient, providers aren’t aware of treatment or a test you’ve had elsewhere. Often you end up repeating a test because a provider doesn’t have a record of a test conducted elsewhere.
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Healthcare is the next wave of data liberation
Why can we see all our bank, credit card and brokerage data on our phones instantaneously in one app, yet walk into a doctor’s office blind to our healthcare records, diagnoses and prescriptions? Our health status should be as accessible as our checking account balance.
The liberation of financial data enabled by startups like Plaid is beginning to happen with healthcare data, which will have an even more profound impact on society; it will save and extend lives. This accessibility is quickly approaching.
As early investors in Quovo and PatientPing, two pioneering companies in financial and healthcare data, respectively, it’s evident to us the winners of the healthcare data transformation will look different than they did with financial data, even as we head toward a similar end state.
For over a decade, government agencies and consumers have pushed for this liberation.
This push for greater data liquidity coincides with demand from consumers for better information about cost and quality.
In 2009, the Health Information Technology for Economic and Clinical Health Act (HITECH) gave the first big industry push, catalyzing a wave of digitization through electronic health records (EHR). Today, over 98% of medical records are digitized. This market is dominated by multibillion‐dollar vendors like Epic, Cerner and Allscripts, which control 70% of patient records. However, these giant vendors have yet to make these records easily accessible.
A second wave of regulation has begun to address the problem of trapped data to make EHRs more interoperable and valuable. Agencies within the Department of Health and Human Services have mandated data sharing among payers and providers using a common standard, the Fast Healthcare Interoperability Resources (FHIR) protocol.
Image Credits: F-Prime Capital
This push for greater data liquidity coincides with demand from consumers for better information about cost and quality. Employers have been steadily shifting a greater share of healthcare expenses to consumers through high-deductible health plans — from 30% in 2012 to 51% in 2018. As consumers pay for more of the costs, they care more about the value of different health options, yet are unable to make those decisions without real-time access to cost and clinical data.
Image Credits: F-Prime Capital
Tech startups have an opportunity to ease the transmission of healthcare data and address the push of regulation and consumer demands. The lessons from fintech make it tempting to assume that a Plaid for healthcare data would be enough to address all of the challenges within healthcare, but it is not the right model. Plaid’s aggregator model benefited from a relatively high concentration of banks, a limited number of data types and low barriers to data access.
By contrast, healthcare data is scattered across tens of thousands of healthcare providers, stored in multiple data formats and systems per provider, and is rarely accessed by patients directly. Many people log into their bank apps frequently, but few log into their healthcare provider portals, if they even know one exists.
HIPPA regulations and strict patient consent requirements also meaningfully increase friction to data access and sharing. Financial data serves mostly one-to-one use cases, while healthcare data is a many-to-many problem. A single patient’s data is spread across many doctors and facilities and is needed by just as many for care coordination.
Because of this landscape, winning healthcare technology companies will need to build around four propositions:
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RapidDeploy raises $29M for a cloud-based dispatch platform aimed at 911 centers
The last year of pandemic living has been real-world, and sometimes harrowing, proof of how important it can be to have efficient and well-equipped emergency response services in place. They can help people remotely if need be, and when they cannot, they make sure that in-person help can be dispatched quickly in medical and other situations. Today, a company that’s building cloud-based tools to help with this process is announcing a round of funding as it continues to grow.
RapidDeploy, which provides computer-aided dispatch technology as a cloud-based service for 911 centers, has closed a round of $29 million, a Series B round of funding that will be used both to grow its business and continue expanding the SaaS tools that it provides to its customers. In the startup’s point of view, the cloud is essential to running emergency response in the most efficient manner.
“911 response would have been called out on a walkie talkie in the early days,” said Steve Raucher, the co-founder and CEO of RapidDeploy, in an interview. “Now the cloud has become the nexus of signals.”
Austin-based RapidDeploy provides data and analytics to 911 centers — the critical link between people calling for help and connecting those calls with the nearest medical, police or fire assistance — and today it has about 700 customers using its RadiusPlus, Eclipse Analytics and Nimbus CAD products.
That works out to about 10% of all 911 centers in the U.S. (7,000 in total), and covering 35% of the population (there are more centers in cities and other dense areas). Its footprint includes state coverage in Arizona, California and Kansas. It also has operations in South Africa, where it was originally founded.
The funding is coming from an interesting mix of financial and strategic investors. Led by Morpheus Ventures, the round also had participation from GreatPoint Ventures, Ericsson Ventures, Samsung Next Ventures, Tao Capital Partners and Tau Ventures, among others. It looks like the company had raised about $30 million before this latest round, according to PitchBook data. Valuation is not being disclosed.
Ericsson and Samsung, as major players in the communication industry, have a big stake in seeing through what will be the next generation of communications technology and how it is used for critical services. (And indeed, one of the big leaders in legacy and current 911 communications is Motorola, a would-be competitor of both.) AT&T is also a strategic go-to-market (distribution and sales) partner of RapidDeploy’s, and it also has integrations with Apple, Google, Microsoft and OnStar to feed data into its system.
The business of emergency response technology is a fragmented market. Raucher describes them as “mom-and-pop” businesses, with some 80% of them occupying four seats or less (a testament to the fact that a lot of the U.S. is actually significantly less urban than its outsized cities might have you think it is), and in many cases a lot of these are operating on legacy equipment.
However, in the U.S. in the last several years — buffered by innovations like the Jedi project and FirstNet, a next-generation public safety network — things have been shifting. RapidDeploy’s technology sits alongside (and in some areas competes with) companies like Carbyne and RapidSOS, which have been tapping into the innovations of cell phone technology both to help pinpoint people and improve how to help them.
RapidDeploy’s tech is based around its RadiusPlus mapping platform, which uses data from smart phones, vehicles, home security systems and other connected devices and channels it to its data stream, which can help a center determine not just location but potentially other aspects of the condition of the caller. Its Eclipse Analytics services, meanwhile, are meant to act as a kind of assistant to those centers to help triage situations and provide insights into how to respond. The Nimbus CAD then helps figure out who to call out and routing for response.
Longer term, the plan will be to leverage cloud architecture to bring in new data sources and ways of communicating between callers, centers and emergency care providers.
“It’s about being more of a triage service rather than a message switch,” Raucher said. “As we see it, the platform will evolve with customers’ needs. Tactical mapping ultimately is not big enough to cover this. We’re thinking about unified communications.” Indeed, that is the direction that many of these services seem to be going, which can only be a good thing for us consumers.
“The future of emergency services is in data, which creates a faster, more responsive 9-1-1 center,” said Mark Dyne, founding partner at Morpheus Ventures, in a statement. “We believe that the platform RapidDeploy has built provides the necessary breadth of capabilities that make the dream of Next-Gen 9-1-1 service a reality for rural and metropolitan communities across the nation and are excited to be investing in this future with Steve and his team.” Dyne has joined the RapidDeploy board with this round.
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Longevity startup Longevica plans to launch supplements based on long-term research
A biotech company that has spent 11 years researching supplements to increase human longevity plans to launch its supplements later this year. Longevica says it has attracted a total of $13 million from investors, including Alexander Chikunov, a longevity investor, who is also president of the company.
Longevica says it created a biotechnology platform for longevity after researching the life-span of laboratory mice. It now aims to produce medicines, dietary supplements and food products.
The longevity space is a growing sector for tech startups. Google backed the launch of Calico in the space. Late last year Humanity Inc. raised $2.5 million in a round led by Boston fund One Way Ventures for its longevity company that will leverage AI to maximize people’s health span.
Longevica’s CEO Aynar Abdrakhmanov, backing up his company’s aim to tap the desire for people to live longer, said: “According to the WHO, by 2050, 2 billion people will be 60+ years old. By 2026, the sales of services and products for this audience will be around $27 trillion… By comparison, it was only $17 trillion in 2019.”
According to CB Insights, life-extension startups raised a record total of $800 million in 2018 alone. And there are some high-profile investors in the space.
PayPal co-founder Peter Thiel invested in Unity Biotechnology, which is developing drugs to treat diseases that accompany aging. And Ethereum founder Vitalik Buterin invested $2.4 million worth of Ether into the nonprofit SENS Research foundation, where famed longevity research Aubrey de Grey is chief science officer, to develop rejuvenation biotechnologies.
Longevica is basing its platform on the work of scientist Alexey Ryazanov, who holds 10 U.S. patents in the space, and is a longtime researcher into the regulation of protein biosynthesis cells.
Chikunov said: “I gathered scientists known in this field to discuss their approaches to the problem. Then Alexey Ryazanov proposed the innovative idea of large-scale screening of all known pharmacological substances on long-lived mice in order to find those that prolong life.”
Under the leadership of Ryazanov, Longevica says it used 20,000 long-lived female mice and 1,033 drugs representing compounds from 62 pharmacological classes to find five substances that statistically significantly increased longevity by 16-22%: Inulin, Pentetic Acid, Clofibrate, Proscillaridin A, D-Valine.
From this work, they formed a view about the elimination of certain heavy metals from the body and improved the body’s ability to remove toxins.
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Alan raises $220 million for its health insurance and healthcare superapp
French startup Alan has raised a $220 million funding round at a $1.67 billion valuation (€185 million and €1.4 billion respectively). Coatue is leading the round with Dragoneer, Exor, and existing investors Index Ventures, Ribbit Capital and Temasek also participating.
Alan has been building health insurance products from scratch. When I first covered the company back in 2016, the startup had just managed to get approval from regulators to become an official health insurance company.
Since then, it’s been a not-so-slow-and-steady growth story as the company now covers 160,000 people. Overall, Alan generates over €100 million in annualized revenue. While most of that revenue is spent back on claims, it’s an impressive revenue trajectory.
Like other insurance companies, Alan has some capital requirements to comply with health insurance regulation. Alan has to raise more if it wants to insure more people. But that’s just part of the story as the startup still had enough cash on its bank account for the next 12 to 18 months.
“The context is that we managed to end the year 2020 very strong, finally — and I say finally because it’s been stressful until the last minute,” co-founder and CEO Jean-Charles Samuelian-Werve told me.
Alan managed to meet its goals and international expansion finally started to take off. Many startups try to raise when they’re in a strong position. You shouldn’t wait until you have your back against the wall and that’s exactly what’s happening here.
“We thought it was the right time and we had multiple term sheets. Even though valuation is really good we first looked at a partner that has a really long-term vision,” Samuelian-Werve said.
With today’s funding round, the company can iterate on its core product — health insurance — and everything that makes Alan a superapp — a single app that lets you access several services. In France, employees are covered by both the national healthcare system and private insurance companies. Alan sells its products to other companies so that their employees are automatically covered by Alan contracts. It’s a sort of B2B2C play.
9,400 companies have opted for Alan in France, Belgium and Spain — the company’s home market remains its main market. Clients include WeWork, Deliveroo, JustEat, Vitaliance and Big Mamma. By 2023, Alan wants to reach 1 million members.
In order to gain more customers, Alan is betting on three pillars — product innovation, customer satisfaction through additional services, and expansions to new verticals and markets.
When it comes to product innovation, Alan has designed a modular insurance builder. Small companies can subscribe to Alan in a few clicks. Big companies can tweak every single parameter to build the right insurance package for them.
After that, the company tries to make it easy to manage your health insurance. You’ll soon be able to automatically manage sick leaves, change the employee affiliation status, etc. As for employees, the company has always promoted a transparent offering. For instance, you should know how much you’re going to pay out of pocket when you see a doctor. You can see a map of doctors around you and how much they charge on average. This way, there’s no surprise.
Alan also tries to reimburse you as quickly as possible. If it’s a straightforward claim, the startup tries to analyze and categorize your claim as quickly as possible and then issue an instant SEPA transfer. Seventy-five percent of claims are reimbursed and available on your bank account in less than an hour.
These core product features definitely contributes to customer satisfaction. But Alan is expanding beyond insurance products with several additional services that should increase retention. For instance, you can chat with a doctor, get medical advice for your baby’s health, get a free meditation app subscription, start a telehealth appointment via a partner, talk with someone about your mental health, etc.
Those services contribute to turning Alan into a superapp for your health. Essentially, as soon as you’re insured by Alan, you become a member and can access all those services without additional charges.
Eventually, Alan plans to launch a personal care guidance service to help you contact the right healthcare professional based on your health issue. In Spain, Alan can already book appointments for you.
Finally, Alan plans to reach new customers through aggressive expansion goals. The company plans to hire 400 people within the next three years and expand to other industries with tailor-made insurance products, such as retail, wholesale and manufacturing.
While the company is still going to focus on France, Belgium and Spain in the near future, it is looking at opportunities across Europe. So let’s see where Alan is going to expand next.
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How to pivot your startup, save cash and maintain trust with investors and customers
A few years ago, founder Sean Lane thought he’d achieved product-market fit.
Speaking to attendees at TechCrunch’s Early Stage virtual event, Lane said Queue, a secure digital check-in tablet for hospital waiting rooms that reduced wait times by uniting and correcting electronic medical records, was “selling like hotcakes.” But once Lane realized it would only ever address one piece of a much bigger market opportunity, he sold off the product, laid off two-thirds of the people affiliated with it and redirected the employees who were left.
Lane explained that what he really wanted to build is what his company — since renamed Olive — has now become, a robotic process automation (RPA) company that takes on hospital workers’ most tedious tasks so nurses and physicians can spend more time with patients.
Customers seem to like it. According to Lane, more than 600 hospitals use the service to assist employees with tasks like prior authorizations and patient verifications.
Investors clearly approve of what Olive is selling, too: Last year, the company raised three rounds of funding totaling roughly $380 million and valuing the company at $1.5 billion. According to Crunchbase, it’s raised a total of $456 million altogether.
In fact, VCs think so much of Lane that in February, they invested $50 million in another company that Lane runs simultaneously called Circulo, a startup that describes itself as building the “Medicaid insurance company of the future.”
Still, the path from point A to B was painful, and it might not have happened if Lane didn’t have a few things going for him, including a deeply personal reason to build something that could have greater impact on the U.S. healthcare system.
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Home gym startup Tempo raises $220M to meet surge in demand for its workout device
When the pandemic forced everyone to stay at home last year, many gym-goers looked to at-home fitness makers to fill the void for their cardiovascular and strength-training workouts.
To help meet that demand, Tempo, the five-year-old fitness startup founded by Moawia Eldeeb and Josh Augustin, closed a $220 million Series C round led by SoftBank. The company plans to use the raise to shore up its supply chain, keep up with increased consumer demand and fuel efforts such as R&D and content. Other participants in the Series C round included Bling Capital, DCM, General Catalyst, Norwest Venture Partners and Steadfast Capital Ventures.
Tempo’s freestanding cabinet, which the company launched in February 2020, includes a 42-inch touchscreen with a 3D motion-tracking camera that consistently scans, tracks and coaches users as they work out.
It currently sells three hardware bundles, starting at $2,495, that include accessories like barbells, dumbbells, a folding bench, a kettlebell system, a squat rack, a workout mat, a recovery foam roller and a heart rate monitor, depending on which bundle customers spring for. Users also pay a $39 monthly subscription to access on-demand and live classes.
The concept for Tempo came about in 2015 when Eldeeb and Augustin developed SmartSpot, a computer vision-augmented smart screen they sold to gyms that helped trainers analyze and improve their clients’ form during workouts. With the trove of data generated and collected by SmartSpot, Eldeeb and Augustin developed a program that identified fitness users’ most common movement errors and utilized machine learning to offer unique recommendations for each individual user — a program that became part of the foundation for Tempo.
“Being a personal trainer once, I remember charging $150 an hour,” explains Eldeeb. “I want to create a better experience and offer it to many more people for a lot less. That means we’re going to continue to invest in the core technology that makes that possible.”
Tempo’s launch came during a particularly opportune time. With the pandemic unfolding, demand for at-home fitness solutions soared. The startup has seen sales surge 1,000% since it began taking pre-orders in early 2020, with delivery delays currently ranging between five to seven weeks — a common issue faced by other at-home fitness companies such as Peloton, Tonal and Echelon. Tempo users have collectively performed 5 million workouts, or clocked 40,000 hours on their devices to date, according to the company.
“That [supply chain] was definitely an issue,” acknowledges Eldeeb, pointing to production challenges posed by factories temporarily shutting down or reducing operations in 2020. “We were doing this for the first time at scale, and we’d made small quantities of the product before [launch]. But for our first year in the market, we had to solve all those problems and still ship the product, which was a huge undertaking. We basically had to reduce sales because I wanted the factory workers to be safe.”
For Tempo, the opportunity to scale is enormous, as the global market is estimated to reach $29.4 billion by 2025. With new funding in tow, Eldeeb wants to capitalize on surging demand, with plans of doubling down on logistics and its supply chain, growing employee headcount and expanding its content to offer yoga and boxing classes later this year.
With vaccinations across the U.S. steadily increasing and gyms reopening, the big question is whether people will stick with their at-home fitness workouts, throw themselves back into their old gym routines or adopt a hybrid model that marries the two. Eldeeb is betting that now that more people have acclimated to working out in their homes, they’ll stay the course out of sheer convenience, pointing to a Consumer Trends report from The New Consumer published earlier this year indicating that 81% of people under the age of 40 prefer to exercise at home.
If true, then companies like Tempo will continue to reap the benefits of this shift of fitness into the home.
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Walnut wants to crack open flexibility for healthcare bills
Healthcare insurance, if you’re lucky to have it, only covers a subset of conditions in the United States. As a result, patients can often get burdened with horror story charges, like huge deductibles, out-of-network costs and expensive co-pays. So for the uninsured and insured alike, innovative ways of managing big bills are in high demand — especially as uncertainty remains around how COVID-19 and long-haul symptoms will be handled by patients and payers.
Walnut, founded by Roshan Patel, is a point-of-sale lending company with a healthcare twist. Walnut uses a “buy now, pay later” model, popularized by Affirm and Klarna, to help patients pay for healthcare over a period of time, instead of in one $3,000 chunk. Walnut works with healthcare providers so that a patient’s bill can be paid back through $100-a-month increments for 30 months, instead of one aggressive credit card swipe.
A patient using Walnut to pay healthcare bills. Image Credits: Walnut
It’s a sweet deal, but Patel added one more detail that he thinks makes Walnut stand out: The startup doesn’t charge any interest or fees to consumers.
“Almost every ‘buy now, pay later’ company in e-commerce charges interest or fees, and every personal loan provider charges interest or fees, but we do not,” he said. “And that’s really important to me, not making healthcare any more expensive than it already is. It’s a very patient-friendly product.”
Companies that use the buy now, pay later model with zero interest or fees need to make revenue somehow, and in Walnut’s case it is by charging healthcare providers a percentage of each sale or transaction.
If a provider’s collection rate for an out-of-pocket is 50%, Walnut would go to them and say “give us a 40% discount, and we’ll guarantee the cash for you upfront.” The startup will take the risk, and then the provider is able to make 60% of the collection rate.
Now, ideally, a provider would want to get 100% of payments they are owed, but that is wishful thinking. Patel explained that a large number of bills go unpaid due to bankruptcies or a default on payments (the average collections rate for hospitals out of pocket is less than 20%). Because of this, a company like Walnut has room to offer at least some stable upfront cash to hospitals, even if it ends up being 60% of overall bills versus 100%.
The company uses “extensive underwriting models” to figure out if a patient should qualify for a loan. Patel says that the startup goes beyond using credit score, which he describes as an “outdated metric”, and instead looks at thousands of data points from different providers, from side hustle income to spending habits on things like groceries and bills.
Image Credits: Lightspring (opens in a new window) / Shutterstock (opens in a new window)
Walnut’s biggest challenge, says Patel, is to underwrite the population and pay the healthcare provider upfront in cash. It then collects from the patient on the back end, which comes with its own amount of risk.
“To be able to take on that risk for patients that are less credit-worthy is a very challenging problem, and I don’t think it’s really solved yet in healthcare,” he said.
The startup is starting by working with small private practices of one to five physicians that focus on specialties like dentistry, dermatology and fertility.
A big part of Walnut’s success will be determined by if it can attract people that truly need flexible financing options. For example, the company doesn’t have any hospitals as a partner yet, which would tap a larger group of patients that likely need flexible financing options the most. Right now, “the people who get elective-care surgery are the ones that can afford it.”
But Patel doesn’t see this as a disconnect; instead, he sees it as an opportunity to widen access to elective medical care to more people.
“I talked to a person last week who has no teeth and wants dentures but it costs $6,000,” he said. “That person should be able to afford it, and we enabled them to pay $100 a month for it.”
Walnut’s two biggest customer groups are the uninsured (people who have lost their jobs from COVID-19), and consumers who have high deductible plans.
Walnut isn’t the first. PrimaHealth Credit, Walnut’s closest competitor, offers point-of-sale lending procedures for elective medical procedures. Think surgeries like cataract work or dental work. The company said the service is currently available in Arizona, California, Florida, Oklahoma and Texas, and will be expanded to all 50 states this year. Walnut, comparatively, is mostly focused on the East Coast and plans to expand nationwide by the end of this year.
PrimaHealth’s average loan size is $1,800, and Walnut’s average loan size is $5,000.
The company is currently piloting with a handful of healthcare providers in dermatology, dentistry and fertility. It has had more than 500 patient loan applications, totaling over $4.6 million in application volume year-to-date. Patel says that Walnut only accepted a fraction of these applications, but declined to share what percent of money it has lent so far. As Walnut refines its model, it might be able to cover other categories.
Up until this point, Walnut has been lending off of its own balance sheet. In order to truly scale, it will need to get a new source of capital — either a credit line, debt financing round or venture capital — to offer more loans. Patel says that the startup is in talks with banks, and turned down a debt offer due to size and rate.
Venture capital seems to be the solution for now: The startup announced that it has raised a $3.6 million seed round from investors including Gradient Ventures, Afore Capital, 2048 Ventures, Supernode Ventures, TA Ventures, Polymath Capital, Tack Ventures, Awesome People Ventures, Newark Ventures and NKM Capital. Angels include the CEOs of Giphy and PillPack, and the CTO of Rampm Financial as well as an NFL coach. The company is also a part of Plaid’s inaugural accelerator.
“I don’t want to be yet another startup trying to offer you an undifferentiated insurance plan,” Patel said.
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Better Health raises $3.5M seed round to reinvent medical supply shopping through e-commerce
The home medical supply market in the U.S. is significant and growing, but the way that Americans go about getting much-needed medical supplies, particularly for those with chronic conditions, relies on outdated and clumsy sales mechanisms that often have very poor customer experiences. New startup Better Health aims to change that, with an e-commerce approach to serving customers in need of medical supplies for chronic conditions, and it has raised $3.5 million in a new seed round to pursue its goals.
Better Health estimates the total value of the home medical supplies market in the U.S., which covers all reimbursable devices and supplies needed for chronic conditions, including things like colostomy bags, catheters, mobility aids, insulin pumps and more, is around $60 billion annually. But the market is obviously a specialized one relative to other specialized goods businesses, in part because it requires working not only with customers who make the final decisions about what supplies to use, but also payers, who typically foot the bill through insurance reimbursements.
The other challenge is that individuals with chronic care needs often require a lot of guidance and support when making the decision about what equipment and supplies to select — and the choices they make can have a significant impact on quality of life. Better Health co-founder and CEO Naama Stauber Breckler explained how she came to identify the problems in the industry, and why she set out to address them.
“The first company I started was right out of school, it’s called CompactCath,” she explained in an interview. “We created a novel intermittent catheter, because we identified that there’s a gap in the existing options for people with chronic bladder issues that need to use a catheter on a day-to-day basis […] In the process of bringing it to market, I was exposed to the medical devices and supplies industry. I was just shocked when I realized how hard it is for people today to get life-saving medical supplies, and basically realized that it’s not just about inventing a better product, there’s kind of a bigger systematic problem that locks consumer choice, and also prevents innovation in the space.”
Stauber Breckler’s founding story isn’t too dissimilar from the founding story of another e-commerce pioneer: Shopify. The now-public heavyweight originally got started when founder Tobi Lütke, himself a software engineer like Stauber Breckler, found that the available options for running his online snowboard store were poorly designed and built. With Better Health, she’s created a marketplace, rather than a platform like Shopify, but the pain points and desire to address the problem at a more fundamental level are the same.
Better Health head of Product Adam Breckler, left, and CEO Naama Stauber Breckler, right. Image Credits: Better Health
With CompactCath, she said they ended up having to build their own direct-to-consumer marketing and sales product, and through that process, they ended up talking to thousands of customers with chronic conditions about their experiences, and what they found exposed the extent of the problems in the existing market.
“We kept hearing the same stories again, and again — it’s hard to find the right supplier, often it’s a local store, the process is extremely manual and lengthy and prone to errors, they get the surprise bills they weren’t expecting,” Stauber Breckler said. “But mostly, it’s just that there is this really sharp drop in care, from the time that you have a surgery or you were diagnosed, to when you need to now start using this device, when you’re essentially left at home and are given a general prescription.”
Unlike in the prescription drug market, where your choices essentially amount to whether you pick the brand name or the generic, and the outcome is pretty much the same regardless, in medical supplies which solution you choose can have a dramatically different effect on your experience. Customers might not be aware, for example, that something like CompactCath exists, and would instead choose a different catheter option that limits their mobility because of how frequently it needs changing and how intensive the process is. Physicians and medical professionals also might not be the best to advise them on their choice, because while they’ve obviously seen patients with these conditions, they generally haven’t lived with them themselves.
“We have talked to people who tell us, ‘I’ve had an ostomy for 19 years, and this is the first time I don’t have constant leakages’ or someone who had been using a catheter for three years and hasn’t left her house for more than two hours, because they didn’t feel comfortable with the product that they had to use it in a public restroom,” Stauber Breckler said. “So they told us things like ‘I finally went to visit my parents, they live in a town three hours away.’ ”
Better Health can provide this kind of clarity to customers because it employs advisors who can talk patients through the equipment selection process with one-to-one coaching and product use education. The startup also helps with navigating the insurance side, managing paperwork, estimating costs and even arguing the case for a specific piece of equipment in case of difficulty getting the claim approved. The company leverages peers who have firsthand experience with the chronic conditions it serves to help better serve its customers.
Already, Better Health is a Medicare-licensed provider in 48 states, and it has partnerships in place with commercial providers like Humana and Oscar Health. This funding round was led by 8VC, a firm with plenty of expertise in the healthcare industry and an investor in Stauber Breckler’s prior ventures, and includes participation from Caffeinated Capital, Anorak Ventures and angels Robert Hurley and Scott Flanders of remote health pioneer eHealth.
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