Will Dayton

Hot take on a lot of early-stage digital health companies out there: You're not a tech company. Most tech-enabled care companies I've seen over the past two years are only tech-enabled in the sense that they use telehealth as their delivery mechanism for care. There are exceptions to this, of course - companies who build computer vision and applied AI tools to better the doctor-patient experience, companies who build tooling around risk scoring and stratification to enable more personalized medicine, companies who build truly novel intakes to better route patients to the appropriate care, etc. These companies have real technology chops and, if they sell it right to the market, can get credit for this from investors. But if you're truly a telehealth provider, you need to realize now that the goal post has shifted dramatically from 2021 and you're going to be valued at maturity at something like 3x EBITDA. That's profit. Not revenue. Throw a revenue multiple out the window. That's not the world we live in if you're a virtual doctor's office. Think of how that impacts venture math. If you're raising a seed round at $15M post-money (or $12M pre-money), it means you'll have to generate something like $150-200M in annual EBITDA to be a fund returner for your seed investors. Maybe even more with dilution, since telehealth businesses are not traditionally capital efficient and will likely need to raise material additional capital to reach that scale. You need to be ridiculously profitable (probably on $800M-$1B in annual revenue since you're likely going to be a 40% gross margin business). Here's the good news: you can set yourself up well (and probably be a contrarian founder relative to your peers), by talking about EBITDA growth and how you can grow into a fund-returning outcome based on realistic mature market comps. This will stand out for the investors you're pitching, even at the early stage. This is how you can beat the malaise of the tech-enabled care market. Focus on the right metrics and the right type of growth. You don't have to have all the answers (no founder does), but you need to make sure the ship is headed in the right direction. A focus on profitability for "tech-enabled care" (*ahem* telehealth) businesses is a good first step.

26

3 Comments

Solve for information asymmetries! Architecture & Civil Engineering - Layout interpretation ~other industries: Healthcare - <Prescription> interpretation Financial Products - <Subject to market risks documentation> interpretation Loans - <Fine print> interpretation There’s going to be a slew of startups commercialising this year with a value prop of simplification using AI

5

Some VC investors believe that brick and mortar - referring to a physical presence of some kind - should be avoided at all costs. Yet, the track record of clinic and hybrid care businesses in health care indicates otherwise. ==> One Medical (sold for $3.9 billion to Amazon), Oak Street (bought by CVS for $10.6 billion), Lifestance (IPO at $7.5 billion market cap), and PE-backed Premise Health (acquired by OMERS Private Equity for $1.1 billion) If a clinic is indicated as the optimal way to deliver care for that patient population, there are creative ways to build and operate them. Full article below with advice and strategies on how to build and operate hybrid clinics from my teammate Anarghya Vardhana from Maveron, Amir Dan Rubin from OneMedical Group, Steven Eidelman from Modern Animal and more!

13

1 Comment

Someone broke down the estimated costs of a $15 Sweetgreen salad. We need these cost graphics for digital health to help future founders. Especially for tech enabled cos, the greatest cost is labor. Much of the "value created" is in curation and matching, which means the gross margins are reliant on labor arbitrage. Pay someone $X, but get paid $X+Y% per visit. The challenge with healthcare is that you often have to pick one of two business models: 1. specialized, low volume, high cost, low gross margin % 2. generalized, high volume, low cost, high gross margin % I'd argue founders should focus on gross dollars over the lifetime of the customer (like Jeff Bezos said) instead of gross margin %'s, but we'll leave that for another time. The challenge is that many tech enabled digital health cos have high cost of goods sold (labor) and moderately high product, design, and engineering budgets. We must build differentiated solutions for patients, clinicians, and clients to be out incumbents, however, we're realizing that companies are ultimately valued on the discounted value of future cash flows. And the high SG&A costs at most organizations might be inbalanced to the unit economics of the business. I'm not sure the math pencils out for everyone unfortunately. But I'm just a guy on the internet, would love to hear the thoughts from those smarter than I (you!). Comment below. --- p.s. I have no idea the accuracy of the graphic and not an investor in Sweetgreen. Cheers. Credit: David Crowther

112

27 Comments

"Digital health is no longer the future; it is the present, reshaping our healthcare landscape in real-time." Excited to be part of the UCSF Digital Health Hub Foundation's Quarterfinalist Party! As a past board member, I'm honored to celebrate the outstanding quarterfinalists. As we reflect on the state of digital health in 2024, it's evident that the COVID-19 pandemic has fundamentally transformed healthcare delivery. The rapid adoption of telemedicine during the crisis has become a permanent fixture, with over 60% of physicians continuing to utilize this technology. The sprint towards smarter healthcare, catalyzed by necessity, has shattered preconceptions about digital-first health experiences. Virtual care is no longer a stopgap but an integral part of a seamless, anytime, anywhere health ecosystem. 🌍 We're witnessing the rise of B2B2C models in remote consultations, with companies like Teladoc Health and Amwell partnering with insurance providers to integrate their services into health plans. Public sector collaborations, like eConsult Health 's partnership with the NHS in the #UK, underscore the potential for remote consultations to enhance efficiency and accessibility at a national level. The digital health landscape is evolving rapidly, with advancements in remote consultations, mental health support, at-home diagnostics, and patient monitoring. AI and generative AI transform care delivery, making it more efficient, personalized, and patient-centric. 🤖 Yet, challenges remain. While venture capital funding for digital health has stabilized after the pandemic boom, it remains below its 2021 peak. Sectors like digital therapeutics face reimbursement hurdles, and we've seen major players like Walmart and Optum close telehealth businesses. Looking ahead, we anticipate further consolidation in digital health, driven by acquisitions to create broader ecosystems encompass telemedicine, mental health, and other specialized services. As healthcare leaders, we must leverage these digital advancements to improve access, enhance patient outcomes, and drive efficiency in our healthcare systems. The future of healthcare is digital, and the time to embrace this transformation is now. Congratulations to all the finalists! 🎉 Looking forward to the grand finale at #HLTH2024 in #LasVegas! 🙌 By the way, the pink drink that we were holding was delicious—and nonalcoholic! The Digital Health Hub Foundation - Digital Health Awards #HealthcareInnovation #DigitalHealth #UCSFHealthHub #Networking #HealthTech #Entrepreneurship #LasVegasFinale Walter Greenleaf, PhD Daniel Kraft, MD Unity Stoakes StartUp Health University of California, San Francisco UCSF Innovation Ventures American Association for Precision Medicine (AAPM) WISE World Investors & Entrepreneurs Society #AAPMhealth #aapm_health

94

7 Comments

VC funding in healthcare has been more resilient than in other industries. Here are some key takeaways from recent Carta data: 👉 At the priced seed, Series A, and Series B stages, dilution for health startups has noticeably decreased, while dilution for SaaS startups has stayed flat or increased slightly. 👉 In priced seed rounds, median dilution for healthcare companies dipped to 14.2%, compared to 20% for SaaS.  👉 The frequency of bridge rounds surged in the health sector in Q1, jumping to 44.3% from 36.9% in Q4 2023. This is the first significant increase in bridge rounds in healthcare over SaaS since early 2022. 👉 More founder-friendly terms for health startups may result from enduring VC interest since COVID. Healthcare has remained strong through economic turmoil, enabling higher valuations with smaller round sizes. What are the implications? The healthcare sector might see a rise in new ventures due to favorable investment conditions and lower dilution rates. The surge in bridge rounds suggests that certain sectors within healthcare face unique challenges that require interim financing solutions. Founders and investors in the healthcare space- what are your thoughts on this? I’d love to hear from you. If you know a founder innovating in healthcare, tag them in the comments! The Artemis Fund is especially interested in groundbreaking care tech companies. You can check out Carta’s full blog linked in the comments. If you haven’t read our latest blog on care tech, you’ll find that there too. #healthcare #caretech #fundraising

30

3 Comments

While there are numerous pros and cons to consider when raising a seed round, I generally agree with Gary Tan’s assessment: companies succeed when they create products that solve problems and meet customer needs, not because of the size of the check VCs write. I understand the frustration for VCs who have been raising larger seed-stage funds and need to deploy more capital per deal, but I support the founder’s decision to limit dilution early on. My advice to founders is to stay strong, be bold, hustle and take a chance on yourself, if you can solve customer problems, the same VCs who are upset about your decision to raise and dilute less during the seed round will come knocking on your door. #startups #founders #dilution #believeinyourself #venturecapital https://lnkd.in/gdmKsUje

17

2 Comments

The most talked about AI x Medical startup Abridge is working to rescue doctors from the never-ending admin grind (which causes burnout and less patient face-time). Abridge's AI listens to patient visits and generates precise medical notes, slashing the clerical workload. Now, doctors can focus on what truly matters: patient care. Major health systems like Yale and Emory are already on board and raving, calling it "life-changing" and "magical." 🔷 A big reason --> Payback of the scribe tool is easy to measure. It supports 14 languages including Haitian Creole, Brazilian Portuguese, and Punjabi. An ongoing criticism of generative AI is that it still has few substantive business applications. This seems to quash that. Question: is a dedicated medical LLM needed to be successful in the space? Or will the huge foundational models (GPT-4o, Google, and Meta) ingest a plethora of medical notes and kill the competition with performance? We're dealing with a fast and furious pace, and today's edge may not be relevant tomorrow. Competitors include Microsoft-owned Nuance Healthcare , Ambience Healthcare, Nabla and Suki. I'm excited to continue to see this field revolutionized. 🌟 #AI #MedTech #Abridge #HealthTech

12

5 Comments

💡Benchmarks in the investment industry serve as a standard for measuring the performance of securities, mutual funds, or investment managers. They provide a reference point for analyzing allocation, risk, and return of a portfolio, enabling investors to make informed decisions. Thanks Peter Walker for keeping us all informed!! Can’t wait for this!! Follow and get on the waitlist for this one! #benchmarks #fundraising #Capitalraise #founders #womenshealth #femhealth #medtech #wellness

16

mdhub (YC S24) is a clinical AI assistant for mental health clinicians, helping them run their clinics more efficiently. Mental health issues are a growing concern in America, with approximately 50 million Americans currently grappling with a mental health condition— a number increasing by 1.5 million every year. At the same time, the US is experiencing a massive shortage of 30,000 mental health clinicians in 2024, a situation costing the US health system $300 billion annually due to delayed treatment. Yet, clinicians are spending only 50% of their day with patients, while the rest of their time is consumed by admin-heavy work, delaying access to mental health care even further. With mdhub, mental health clinicians become 10x more efficient by automating tasks such as clinical documentation, drafting patient after-visit reports, pre-charting, and treatment planning. Over the last 6 months, mdhub has already successfully saved clinicians more than 100,000 hours in admin tasks. Congrats on the launch, Efrén A. Lamolda and Dominik Middelmann! 🚀 https://lnkd.in/gPCTzfy9

90

5 Comments

Increasingly we see a lot of fundraising news "leaked" before the fundraising is done. This week there's a $300M at $2B+ story on Physical Intelligence as well as a $500M at $8B+ story about Perplexity AI. Earlier this year we heard rumors around OpenAI's raise and Figure AI's raise. What's going on here? Why all the leaking? As a founder, I try to understand which way the winds are blowing in the fundraising landscape. We've never leaked or had our fundraising details leaked, so I've been curious how it happens and why. Aren't fundraising deals fragile and this adds risk? In practice, usually these are being leaked by someone friendly with the company that is fundraising. Most of the time though, they're leaked after the company has a strong enough hand to get the fundraising deal done. Looks really bad if it leaks and then the fundraising doesn't get done. But the idea is to drum up more investor interest and to force investors who might be on the sideline to jump in by creating a little extra FOMO. Investors understand this game, so rather than a sign of weakness ("wow, that deal's gone on so long that it must be all just rumors"), leaking the fundraise details can be seen as a sign of strength ("wow, they must be pretty confident to put that out there"). The fact that investors are excited about the robotics space and the fusion of AI and robotics is terrific news I think for those of us active in this space. I happen to believe a) everyone knows how important the foundation models for robotics will be and we're going to see multiple models emerge like we have with LLMs b) the winning companies will have a vertically integrated robotics story direct to customers. This is why I think companies like Perplexity AI and Glean are extremely interesting and companies with more academic and less commercial roots like Character AI or Covariant have folded and been acqui-hired. Time will tell how the robotics foundation models space plays out. Our own work on foundation models has revealed both a lot of potential and some significant bottlenecks [links in the comments]. We track everyone and we hear lots of claims, but so far haven't seen an approach that busts through the bottlenecks and nothing that seems protectable or defensible when NVIDIA, Google, Amazon, Meta, Hugging Face, OpenAI are also all investing here. Good luck to PI as they work to close this round! Hopefully this article helps push the deal over the line with the terms they want! https://lnkd.in/dpp24QcY

156

24 Comments

🔮 What's the future of developer platforms? ☠ Or the death knell for open core companies? Get the answers (and more) from Ethan Kurzweil; longtime partner at Bessemer Venture Partners and soon-to-be founder of a new, early stage venture firm. In his time at Bessemer Ethan invested in Launchdarkly, Twilio, PagerDuty, Intercom, Twitch, SendGrid, HashiCorp and npm. He's seen it all, you won't want to miss his takes on what's next and what isn't going to work. I'm sharing our closing lightning round questions here, but the full interview (which is much juicer) can be found at calyx.substack.com. ⚡Lightning round questions!⚡ *What's the developer platform that you respect most?* 🔶 Zapier. It's the ultimate democratizer of development for 4,000 different esoteric use cases and some not so esoteric use cases. And they built it in a way to allow anyone to use it. *Who is a developer GTM leader you respect?* 👨 Adam FitzGerald at HashiCorp. Disclaimer - he’s a Bessemer operating advisor. He is the best thinker to help companies structure developer evangelism programs at scale. *Unpopular opinion re: dev tools?*  💼 That a lot of dev tools shouldn't be businesses. Many should be free or part of a larger developer platform offering. The difference between tool and platform can make a big difference as to whether you have a sustainable business. *How do you feel like you’re able to uniquely work with developer-first companies?* ⚾ I’ll keep it to one for the lightning round: I’ve gotten lots of experience with false signals. If you’re a founder working on a startup sometimes you’ll respond to a false signal and it’s hard to go back and unwind those choices—we have lots of experience with developer platforms and can help founders avoid those pitfalls. Disclaimer: Ethan would never use emojis like this. He actually...doesn't use emojis!? I've just added them in an attempt to improve readability on LinkedIn... enjoy!

48

4 Comments

Of note: Your health records are coming to new apps This in an interesting change, and a somewhat Epic change. All puns intended. If you don’t know, the leading medical record storage solution in the US is operated by Epic. A rather critical problem is that if you walk (well drive) between two hospital in the US, the medical records tend not to follow you, unless you carry a large Manila envelope. Having Epic (and others) via TEFCA allow export of records arguably allows you to only carry your phone, which is a very siginificant change. This also (arguably) opens up a huge new innovation sector. Epic is one of the organizations that has been helping the US federal government establish the Trusted Exchange Framework and Common Agreement, or TEFCA. The goal being to iron out both the legal and technical requirements for sharing patients' data at scale. Health-care data in the U.S. has historically been siloed and difficult to move around. Clinics, hospitals and health systems can store their information in a variety of formats across dozens of different vendors, and there hasn't been a trusted nationwide mechanism in place for transporting it securely. This means if a patient moves to a different state or visits a new hospital, their medical records tend not follow. PS. If you want appreciate how profitable the US medical sector is, Epic HQ has a restantant designed to look like Kings Cross from the Harry Potter movies. https://lnkd.in/g8NaWza8

1

3 Comments

The state of venture capital is wild right now. We are witnessing a surge of innovation across the spectrum: - Funds merging - VC doing PE - PE doing VC - Secondary funds - Buyout funds - Spin-out funds - Debt funds - Continuation funds - Infrastructure funds - GP turnover - Hard Tech surging - Family Office uptick

60

8 Comments

One of my proudest moments as an investor occurred today as Alaffia Health announced its series A because it shows how the Aperture® Venture Capital vision of multi-level, multi-generational #impactinvesting is succeeding in the marketplace. Here’s the model in its most basic form : ✅As diverse fund managers with meaningful capital to allocate, we are changing the VC landscape every day just by doing our day jobs. ✅As Black/Brown investors with ~40 years experience collectively, Aperture GPs have access to talent /excellence that others do not, so our portfolio *organically* is more inclusive by race, gender and geography even while optimizing for financial outcomes (all about the alpha). ✅Our most successful portco’s are using financial #innovation to solve market problems that impact underrepresented demographics and underserved communities. Alaffia Health is a shining example of the impact portion of our overall fund thesis, and we couldn’t be prouder of TJ Ademiluyi and Adun Akanni, MPH, PMP - the dynamic brother-sister founder duo whose vision we have steadfastly supported on their journey. Congratulations to TJ and Adun from William Crowder and myself, as well as the whole Aperture team- Marjorie King Philip McKenzie Yves Louis-Jacques Tanvi Lal Michelle Dhansinghani Lisha Bell Katie Kelly Amy Chung Cindy Chong, CFA Brian Fernandes-Halloran Monroe France Jayden Pantel Darren Herman Evan Wladis Neal Triplett Thomas Scriven Peter Ammon Irina Bit-Babik Tim Milanich Rob Rahbari

38

18 Comments

I had the great pleasure of sitting down with a startup CEO, a medical professional, who wanted to get ahead of codebase health before her product went to the App stores... (stay tuned for a plug of her product) We came upon an analogy for understanding code metrics to health care metrics. I thought it was a great way to think about what we do at Sema and how we partner with technologists. There are three levels of understanding metrics about code, just like three levels of understanding patient information. The first level is the raw data. In health care, that could be a blood pressure reading. In code metrics, that could be the raw count of high-risk security warnings from Open Source code, aka CVEs. In both cases, we can make some general statements: it is generally better to lower your blood pressure; it is generally better to have fewer CVEs. But that guidance is quite generic. The second level is benchmarked results. In the health care example, that could mean blood pressure levels among men in their fifties. For code, that could be high-risk CVEs among tech companies that are at least 5 years old and 100-250 all-time developers. The trick is to get a comparison group small enough to be useful, without overfitting and missing the big picture. The question of specificity vs. generalizability is not an easy one. Benchmarked results are a big improvement over raw data, but it's still not enough. That's why a third level is needed: expert discussion. Of course in medicine that looks like a conversation with a health care professional. With code stats that looks like an Engineering expert, whether a sophisticated CTO, a Tech Operating Partner, or an external Advisor. The best experts, whatever hat they wear, know the details of their field while also being able to explain the results to a broad audience. That expert discussion leads to further contextualization of the results-- understanding the patient's family history / cholesterol levels / heart rate variability, or maybe the codebase is safely behind firewalls and for internal use only. Perhaps even more important, that expert can start shaping the improvement plan. What does that mean for Sema? At the raw data level, we have collected the broadest set of codebase health metrics for a deep and diverse set of software organizations. For benchmarked results, our Snapshot gives a ready comparison of codebases compared to organizations of similar size and stage. For experts, we are honored to partner with many outstanding experts, who can take the scan results combined with their own investigation and insights and guide their "patient" to the next level of success. I am the son of a computer programmer and a math teacher, so my heart (and genes?) will always be with looking at data to make things better. A proper approach to data-driven improvement covers all three levels.

12

I recently went to my primary care doctor (part of the UNC system) for a checkup on something. He wasn't worried but said we can do an ultrasound to be 100% sure everything was ok. "I'll put the order in for the ultrasound - you can use it if you want." He asked me if the UNC ultrasound facility was good. At first I said yes. Then as he was typing I asked if he could make it for another facility that's closer to me and has easier parking (the UNC facility is at the hospital, which is inconvenient). He said of course. He then said "Depending on your insurance, it's often much cheaper to go to this place because it's a standalone facility instead of the hospital and the billing is different." I hadn't even thought about this - I was asking for the change because of the convenience of parking. It turns out changing facilities will save me $300-$700 out of pocket. This is absolutely absurd. Where else in life do you make $500 decisions without any information? "Decisions" is even an aggressive word here - I was really just shaking my head "yes" to the first suggestion he made about facility, and he was making that suggestion because it was the first one that popped up in the EHR (since of course it's going to be an in-system recommendation). I've built a few businesses in healthcare, invested in healthcare companies, thought and researched deeply about healthcare billing, and this is STILL REALLY F'ING HARD FOR ME. Which early stage companies are solving this problem? Specifically: who is building pricing transparency tools to be used at the point of care? I want to invest in this space.

90

30 Comments

🚀 𝐔𝐧𝐥𝐨𝐜𝐤 𝐒𝐭𝐚𝐫𝐭𝐮𝐩 𝐒𝐮𝐜𝐜𝐞𝐬𝐬 𝐰𝐢𝐭𝐡 𝐔𝐫𝐢 𝐋𝐞𝐯𝐢𝐧𝐞’𝐬 𝐈𝐧𝐬𝐢𝐠𝐡𝐭𝐬! 🚀 Uri Levine, co-founder of Waze and Moovit, shares invaluable lessons in his book “𝘍𝘢𝘭𝘭 𝘪𝘯 𝘓𝘰𝘷𝘦 𝘸𝘪𝘵𝘩 𝘵𝘩𝘦 𝘗𝘳𝘰𝘣𝘭𝘦𝘮, 𝘕𝘰𝘵 𝘵𝘩𝘦 𝘚𝘰𝘭𝘶𝘵𝘪𝘰𝘯.” Key takeaways include the importance of passionately embracing the problem you’re solving, the necessity of customer retention as a marker of product-market fit, and the strategic use of pitch deck slides. He also emphasises the significance of hiring and firing correctly and observing user behaviour to refine your product. These principles can transform your startup journey, ensuring resilience and growth. 🌟 #StartupSuccess #Entrepreneurship #ProductMarketFit #Innovation

5

Just over a year ago, Imran Mahmud, MD introduced to me what was then called, Co:Helm. I was taken by the backgrounds and stories of Abdel Mahmoud, MD, Zahid Mahmood & Tahseen Omar and moreso their grit and determination to forge ahead with their mission of reducing the cost of healthcare. They soon got into the Sequoia Arc program with the backing of another friend, George Robson. And have been staying low and building ever since. Inbetween rebrandng to Anterior (formerly Co:Helm). And even more recently announced a new round to add more fuel. https://lnkd.in/e3V4qrRz Happy to be a supporter alongside Annelie Ajami, Dorothy Chou, Adil Mohammed, Andy Young, Caroline Mogford, Christian Arno, Felix Leuschner, Freddy Kelly, Leonard Picardo, Mandeep Singh, Michael Steel, Omid Ashtari, Noor Shaker, Sultan Murad Saidov, Yuelin Li and others in the ecosystem... [Anterior is giving clinicians a second set of hands—and fixing one of the biggest pain points for patients. It is a LLM-powered co-pilot for administration, handling all the work that comes before the clinical decision-making. Where it might take a nurse several hours to track down, organize and summarize hundreds of pages of records they need, Anterior can do it in seconds, allowing clinicians to increase their output tenfold and focus on what matters most: helping patients.] #healthcare

65