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Investors give Baltimore’s Facet Wealth $25 million to sell businesses on financial planning as a benefit
Yesterday, Baltimore-based fintech company Facet Wealth said it raised $25 million in financing as it readies a new business line pitching financial planning as an employment benefit to businesses looking to recruit top talent.
Employment benefit packages are expanding beyond the basic gym membership and healthcare to include subscriptions to Netflix, discounts on delivery and rideshare services, and other perks. So why not financial wellness?
The thesis certainly managed to attract a big-money backer, with Warburg Pincus, the multi-billion-dollar private equity investment firm, which doubled down on its commitment with the new financing into the company.
The company said the latest round would be used to finance the expansion of Facet Wealth’s direct-to-consumer business even as it readies its employee benefit service for launch.
Already customers are signing up for pre-launch partnerships to get their employees on the program. Early wannabe users include ClassPass, MyVest and Chili Piper, the company said.
“Since our first investment two years ago, the Facet Wealth team has proven their ability to meet a unique consumer need, evolving and expanding their offering to build a truly innovative client experience and business model,” said Jeff Stein, managing director at Warburg Pincus. “Their expansion into the employer market further solidifies them as a category-defining company that is well-positioned to disrupt the wealth management industry for years to come.”
To date, Facet Wealth has raised $62 million in funding from Warburg Pincus, Slow Ventures and other, undisclosed investors.
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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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Synthetic biology startups are giving investors an appetite
There’s a growing wave of commercial activity from companies that are creating products using new biological engineering technologies.
Perhaps the most public (and tastiest) example of the promise biomanufacturing holds is Impossible Foods . The meat replacement company whose ground plants (and bioengineered additives) taste like ground beef just raised another $200 million earlier this month, giving the privately held company a $4 billion valuation.
But Impossible is only the most public face for what’s a growing trend in bioengineering — commercialization. Platform companies like Ginkgo Bioworks and Zymergen that have large libraries of metagenomic data that can be applied to products like industrial chemicals, coatings and films, pesticides and new ways to deliver nutrients to consumers.
The new products coming to market
In fact, by 2021 consumer products made with Zymergen’s bioengineered thin films should be appearing at the Consumer Electronics Show (if there is a Consumer Electronics Show). It’s one of several announcements this year from the billion dollar-valued startup.
In August, Zymergen announced that it was working with herbicide and pesticide manufacturer FMC in a partnership that will see the seven-year-old startup be an engine for product development at the nearly 130-year-old chemical company.
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Five success factors for behavioral health startups
Courtney Chow is an associate with Battery Ventures in San Francisco who focuses on early and growth-stage internet, software and services companies.
Justin Da Rosa
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Contributor
Justin Da Rosa is a vice president with Battery Ventures in San Francisco. He focuses on consumer internet, online marketplace and software investments.
Telehealth, or remote, tech-enabled healthcare, has existed for years in primary medical care through companies like Teladoc (NYSE: TDOC), Doctors on Demand and MDLIVE.
In recent years, the application of telehealth had rapidly expanded to address specific chronic and behavioral health issues like mental health, weight loss and nutrition, addiction, diabetes and hypertension, etc. These are real and oftentimes very severe issues faced by people all over the world, yet until now have seen little to no use of technology in providing care.
We believe behavioral health is particularly suited to benefit from the digitization trends COVID-19 has accelerated. Previously, we’ve written about the pandemic’s impact on online learning and education, both for K-12 students and adult learners. But behavioral health is another area impacted by the fundamental change in consumers’ behavior today. Below are four reasons we think the time is now for behavioral health startups — followed by five key factors we think characterize successful companies in this area.
Telehealth can significantly lower the cost of care
Traditional behavioral healthcare is cost-prohibitive for most people. In-person therapy costs $100+ per session in the U.S., and many mental health and substance-use providers don’t accept insurance because they don’t get paid enough by insurers.
By contrast, telehealth reduces overhead costs and scales more effectively. Leveraging technology, providers can treat more patients in less time with almost zero marginal costs. Mobile-based communications enable asynchronous care that further helps providers scale. Access to digital content gives patients on-going support without the need for a human on the other side. This is particularly useful in treating behavioral health issues where ongoing support and motivation may be necessary.
Technology unlocks supply in “shadow markets” of providers
Globally, we face an extreme shortage of behavioral health providers. For example, the United States has fewer than 30,000 licensed psychiatrists (translating to <1 for every 10,000 people). Outside of big cities, the problem gets worse: ~50-60% of nonmetro counties have no psychologists or psychiatrists at all.
Even when providers are available, wait times for appointments are notoriously long. This is a huge issue when behavioral health conditions often require timely intervention.
We are seeing new platforms build large networks of certified coaches, licensed psychologists and psychiatrists, and other providers, aggregating supply in what has historically been a scarce and a highly fragmented provider population.
Behavioral/mental health issues are losing their stigma
We believe the stigma associated with mental illness and other behavioral health conditions is dissipating. More and more public figures are speaking out about their struggle with anxiety, depression, addiction and other behavioral health issues. Our zeitgeist is shifting fast, and there’s an all-time high in people seeking help as the Google Trends data below demonstrates.
Image Credits: Google
Note: The anomalous dip in March/April ’20 was driven by mandatory shelter-in-place due to COVID-19.
Policy and regulations are changing quickly
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How $20 billion health care behemoth Blue Shield of California sees startups
In the two years since Jeff Semenchuk took the reins in the newly created position of chief innovation officer for Blue Shield of California, the nonprofit health insurer with $20 billion in revenues has stepped up its investments in startup companies.
As one of California’s largest insurance providers with more than four million members, Blue Shield plays an outsized role in technology adoption among physicians, hospital networks and patients. With that in mind, and with the acceleration of entrepreneurial activity around the multitrillion health care market, Semenchuk was brought on board after serving as chief executive of Yaro (now Virgin Plus) and CIO of Hyatt Hotels and co-founder of Citi Ventures.
Semenchuk said he sees Blue Shield as working to create a new health care system: “It’s not to perpetuate the health care system we have today.” Increasingly, startups have a role to play in that revisioning of health care services in America, according to Semenchuk.
“What I would say has happened over the last two years is that we have really focused on transformational innovation,” he added.
Investing in those transformational technologies involves taking cash directly from Blue Shield’s balance sheet for investments. The company doesn’t operate a corporate venture capital fund in the traditional sense, instead making strategic investments under the auspices of Semenchuk or Chief Financial Officer Sandra Clarke.*
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IoT solutions are enabling physical distancing
Tyler Cracraft
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Tyler Cracraft is an electronic engineer turned solution architect at Advantech who has more than a decade of experience working in the electronics technology industry.
If you’re a business owner or investor and are wondering about the long-term impacts of the COVID-19 pandemic on the business world, you’re not alone.
Today’s business leaders have been plunged into the deep end of telecommuting with little notice, and the way we do business has been impacted at almost every level. Travel is restricted, meetings are virtual and delivery of goods and even raw materials is being delayed. While some industries that depend on large gatherings are seeing extremely difficult challenges due to the pandemic, others such as the tech industry, see the opportunity and responsibility for innovation and growth.
As many states begin phased reopening, companies are trying to determine what the workplace and business environment will look like in a post-quarantine world. The first obvious step is the integration of personal protective equipment (PPE). Sanitization and face masks will become required and nonessential face-to-face meetings will be a thing of the past, along with shaking hands.
Additionally, relationship-driven careers such as sales and recruiting will have to find new ways to connect to be successful. Physical distancing rules will have to be established, which may include employees coming in alternate days while telecommuting the other days of the week to keep offices at reduced capacity. Large offices of 10 or more may implement thermographic camera technology for fever screening or other real-time technology-based health screenings.
One thing is for sure: IoT devices that enable physical distancing will become an integral part of reopening businesses, facilitating sales connections and embracing a different way of living.
Solutions for physical distancing
There are a variety of IoT devices available that can help business leaders successfully implement physical distancing in their offices. Thermographic camera technology coupled with facial recognition can create a baseline for each employee and then assist in determining if an employee has a temperature outside of their norm. Other remote health monitoring may also take place with healthcare providers, helping employees determine on a daily basis if they are well enough to go into work.
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The secret to trustworthy data strategy
Daniel Wu
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Dan Wu is a Privacy Counsel & Legal Engineer at Immuta, an automated data governance platform for analytics. He’s advocated for data ethics, inclusive urban innovation, and diversity in TechCrunch, Harvard Business Review, and FastCompany. He’s helped Fortune 500 companies, governments, and startups with ethical & agile data strategies. He holds a Harvard J.D. & Ph.D.
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Eugene Kolker
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Eugene Kolker, PhD is the Chief Economist and Head of XLAB at Fabuwood Corp., an Adjunct Professor at New York University’s Tandon School of Engineering, and President of 1Ekaroni, a consulting and services company. He was formerly the Chief Data Officer of IBM Global Services and the Chief Data and Analytics Officer of Seattle Children’s Healthcare System. He has also co-founded three digital technology and healthcare startups.
Leandro DalleMule
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Leandro DalleMule is the General Manager for North America for Planck. He’s the former Chief Data Officer and Head of Information Management at AIG. Leandro holds an MBA from the Kellogg School of Management at Northwestern University, graduating magna cum laude, a graduate certificate in applied mathematics from Columbia University, and a B.Sc. in mechanical engineering from University of Sao Paulo, Brazil.
Barbara Cohn
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Barbara Cohn is the managing member of BLC Strategic Advisors. She previously served as the first Chief Data Officer for the State of New York, having led its successful open data initiative for Governor Andrew Cuomo. Prior to that, she was Executive Counsel/HHS Connect Data Interoperability Initiative under Mayor Bloomberg, as well as served in multiple leadership positions in NYS agencies and Office of the NYS Governor.
Carlos Rivero
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Contributor
Carlos Rivero is the Chief Data Officer for the Commonwealth of Virginia. Prior to his appointment, Rivero served as Chief Data Officer and Chief Enterprise Architect for the U.S. Department of Transportation’s Federal Transit Administration in Washington, D.C.
Shortly after its use exploded in the post-office world of COVID-19, Zoom was banned by a variety of private and public actors, including SpaceX and the government of Taiwan. Critics allege its data strategy, particularly its privacy and security measures, were insufficiently robust, especially putting vulnerable populations, like children, at risk. NYC’s Department of Education, for instance, mandated teachers switch to alternative platforms like Microsoft Teams.
This isn’t a problem specific to Zoom. Other technology giants, from Alphabet, Apple to Facebook, have struggled with these strategic data issues, despite wielding armies of lawyers and data engineers, and have overcome them.
To remedy this, data leaders cannot stop at identifying how to improve their revenue-generating functions with data, what the former Chief Data Officer of AIG (one of our co-authors) calls “offensive” data strategy. Data leaders also protect, fight for, and empower their key partners, like users and employees, or promote “defensive” data strategy. Data offense and defense are core to trustworthy data-driven products.
While these data issues apply to most organizations, highly-regulated innovators in industries with large social impact (the “third wave”) must pay special attention. As Steve Case and the World Economic Forum articulate, the next phase of innovation will center on industries that merge the digital and the physical worlds, affecting the most intimate aspects of our lives. As a result, companies that balance insight and trust well, Boston Consulting group predicts, will be the new winners.
Drawing from our work across the public, corporate, and startup worlds, we identify a few “insight killers” — then identify the trustworthy alternative. While trustworthy data strategy should involve end users and other groups outside the company as discussed here, the lessons below focus on the complexities of partnering within organizations, which deserve attention in their own right.
Insight-killer #1: “Data strategy adds no value to my life.”
From the beginning of a data project, a trustworthy data leader asks, “Who are our partners and what prevents them from achieving their goals?” In other words: listen. This question can help identify the unmet needs of the 46% of surveyed technology and business teams who found their data groups have little value to offer them.
Putting this to action is the data leader of one highly-regulated AI health startup — Cognoa — who listened to tensions between its defensive and offensive data functions. Cognoa’s Chief AI Officer identified how healthcare data laws, like the Health Insurance Portability and Accountability Act, resulted in friction between his key partners: compliance officers and machine learning engineers. Compliance officers needed to protect end users’ privacy while data and machine learning engineers wanted faster access to data.
To meet these multifaceted goals, Cognoa first scoped down its solution by prioritizing its highest-risk databases. It then connected all of those databases using a single access-and-control layer.
This redesign satisfied its compliance officers because Cognoa’s engineers could then only access health data based on strict policy rules informed by healthcare data regulations. Furthermore, since these rules could be configured and transparently explained without code, it bridged communication gaps between its data and compliance roles. Its engineers were also elated because they no longer had to wait as long to receive privacy-protected copies.
Because its data leader started by listening to the struggles of its two key partners, Cognoa met both its defensive and offensive goals.
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Scandit raises $80M as COVID-19 drives demand for contactless deliveries
Enterprise barcode scanner company Scandit has closed an $80 million Series C round, led by Silicon Valley VC firm G2VP. Atomico, GV, Kreos, NGP Capital, Salesforce Ventures and Swisscom Ventures also participated in the round — which brings its total raised to date to $123M.
The Zurich-based firm offers a platform that combines computer vision and machine learning tech with barcode scanning, text recognition (OCR), object recognition and augmented reality which is designed for any camera-equipped smart device — from smartphones to drones, wearables (e.g. AR glasses for warehouse workers) and even robots.
Use-cases include mobile apps or websites for mobile shopping; self checkout; inventory management; proof of delivery; asset tracking and maintenance — including in healthcare where its tech can be used to power the scanning of patient IDs, samples, medication and supplies.
It bills its software as “unmatched” in terms of speed and accuracy, as well as the ability to scan in bad light; at any angle; and with damaged labels. Target industries include retail, healthcare, industrial/manufacturing, travel, transport & logistics and more.
The latest funding injection follows a $30M Series B round back in 2018. Since then Scandit says it’s tripled recurring revenues, more than doubling the number of blue-chip enterprise customers, and doubling the size of its global team.
Global customers for its tech include the likes of 7-Eleven, Alaska Airlines, Carrefour, DPD, FedEx, Instacart, Johns Hopkins Hospital, La Poste, Levi Strauss & Co, Mount Sinai Hospital and Toyota — with the company touting “tens of billions of scans” per year on 100+ million active devices at this stage of its business.
It says the new funding will go on further pressing on the gas to grow in new markets, including APAC and Latin America, as well as building out its footprint and ops in North America and Europe. Also on the slate: Funding more R&D to devise new ways for enterprises to transform their core business processes using computer vision and AR.
The need for social distancing during the coronavirus pandemic has also accelerated demand for mobile computer vision on personal smart devices, according to Scandit, which says customers are looking for ways to enable more contactless interactions.
Another demand spike it’s seeing is coming from the pandemic-related boom in ‘Click & Collect’ retail and “millions” of extra home deliveries — something its tech is well positioned to cater to because its scanning apps support BYOD (bring your own device), rather than requiring proprietary hardware.
“COVID-19 has shone a spotlight on the need for rapid digital transformation in these uncertain times, and the need to blend the physical and digital plays a crucial role,” said CEO Samuel Mueller in a statement. “Our new funding makes it possible for us to help even more enterprises to quickly adapt to the new demand for ‘contactless business’, and be better positioned to succeed, whatever the new normal is.”
Also commenting on the funding in a supporting statement, Ben Kortlang, general partner at G2VP, added: “Scandit’s platform puts an enterprise-grade scanning solution in the pocket of every employee and customer without requiring legacy hardware. This bridge between the physical and digital worlds will be increasingly critical as the world accelerates its shift to online purchasing and delivery, distributed supply chains and cashierless retail.”
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Hims & Hers launch Spanish language telemedicine services
Hims & Hers, the startup focused on providing access to elective treatments for things like hair loss, skin care and erectile disfunction and online telemedicine services, is expanding its services to include a Spanish language option, the company said.
After Mexico, the U.S. has the second-largest Spanish speaking population in the world, with an estimated 41 million U.S. residents speaking Spanish at home. The population also prefers to receive healthcare information and frequent facilities that offer resources in Spanish.
Now, with a shortage looming in primary care physicians for rural areas and inner cities and a sky-high rate of Hispanics living without any form of healthcare coverage (roughly 15.1%, according to data provided by the company), Hims & Hers is pitching its telemedicine offering as an option.
“Language, cost, and location should not be barriers to receiving quality care, which is why we are launching a Spanish offering on our telemedicine platform,” the company said in a statement.
The company’s $39 primary care consultations at its Hims and its Hers websites will be in Spanish. That will include everything from communications like the patient intake form and instructions to prepare for an online consultation along with a connection to Spanish-speaking healthcare provider.
“The reason we created Hims & Hers was to break down barriers and provide more people with access to quality and convenient care,” the company’s co-founder and chief executive, Andrew Dudum, said in a statement. “As a telemedicine company, we recognize the need and understand the importance of serving the Spanish-speaking population. We hope those seeking access to care in Spanish find our platform to be a welcoming, inclusive, quality experience.”
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Owkin raises $25 million as it builds a secure network for healthcare analysis and research
Imagine a model of collaborative research and development among hospitals, pharmaceutical companies, universities and other research institutions where no one shared any actual data.
That’s the dream of the new New York-based startup Owkin, which has raised $25 million in fresh financing from investors, including Bpifrance Large Venture, Cathay Innovation and MACSF (the French Pension Fund for Clinicians), alongside previous investors GV, F-Prime Capital and Eight Roads.
The company’s pitch is that data scientists, clinical doctors, academics and pharmaceutical companies can all log in to the virtual lab that Owkin calls the Owkin Studio.
In that virtual environment, all parties can access anonymized data sets and models exclusively to refine their own research and development and studies to ensure that the most cutting-edge insights into novel biomarkers, mechanisms of action and predictive models inform the work that all of the relevant parties are doing.
The ultimate goal, the company said, is to improve patient outcomes.
In its quest to get more companies and institutions to open up and share information — with the promise that the information can’t be extracted or used in a way that isn’t allowed by the owners of the data — Owkin is replicating work that other companies are pursuing in fields ranging from healthcare to financial services and beyond.
The Israeli company Qedit has developed similar technologies for the financial services industry, and Sympatic, a recent graduate from one of the recent batches of Techstars companies, is working on a similar technology for the healthcare industry.
Owkin makes money by enabling remote access to the data sets for pharmaceutical companies and licensing the models developed by universities to those companies. It’s a way for the company to entice researchers to join the platform and provide another revenue stream for research institutions who have seen their funding decline over the last 40 years.
“We have a huge loop of academic universities that have access to the data and are developing algorithms and we share data,” said the company’s chief executive Dr. Thomas Clozel. “At the end what it helps is developing better drugs.”
Declines in federal funding for scientific research since the 1980s (Image courtesy of The Conversation)
The investment from Owkin’s new and existing investors takes the company to $55 million in total capital raised through the extension of its Series A round. In all, the round totaled $52 million, Clozet said.
“We are exactly where we need to be because it’s about privacy and privacy is more important than ever before,” said Clozet.
The COVID-19 epidemic has emphasized the need for closer collaboration among different corporations and research institutions, and that has also increased demand for the company’s technology. “It touches everything… We have access to the right data sets and centers to build the best models for COVID,” said Clozet. “We’re lucky to have the right traction before the COVID happens and we have the right research that has been done.”
In fact, the company has launched the Covid-19 Open AI Consortium (COAI), and is using its platform to advance collaborative research and accelerate clinical development of effective treatments for patients infected with the coronavirus, the company said. All of its findings will be shared with the global medical and scientific communities.
The initial focus on the research is on cardiovascular complications in COVID-19 patients in collaboration with CAPACITY, an international registry working with over 50 centers worldwide, the company said. Other areas of research will include patient outcomes and triage, and the prediction and characterization of immune response, according to Owkin.
“Since we first backed Owkin in 2017, we have been sharing its vision to apply AI to fighting one of the most dreadful diseases on earth: cancer,” said Jacky Abitbol, a partner at Cathay Innovation. “Owkin has risen to become a leader in digital health, we are proud to grow our investment in the company to fuel its ambition to pioneer AI for medical research, while preserving patient-privacy and data security.”
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