It’s Tuesday, Health Tech enthusiasts.
Situational awareness: We recently witnessed the first and only health tech IPO of the year in Heart Test Laboratories (Nasdaq: HSCS), a Southlake, Texas-based medical device company using AI to boost ECG. (There was also the Excelera SPAC.)
- Did we miss any? Are others coming? Tell us.
As digital health enjoys its Shopify momentPrimary care-focused tech developer Fold Health raises $6M in seed funding from former Athenahealth CEO Jonathan Bush and others Fold CEO Abhi Gupta says Erin exclusively.
Why is this important: The days when digital health entrepreneurs were forced to cobble together a series of tenuous point solutions to activate their tools are over – or at least that’s the reality that Gupta and a series of other founders hope to create.
- But right now, “the holes in health care are so huge you can see them from space,” Gupta told Erin.
Details: Other participants in Fold’s round include Skyflow CEO Anshu Sharma, Saama Technologies CEO Vivek Sharma and VC partners Anand Chandrasekaran of General Catalyst, Mohanjit Jolly of Iron Pillar and Gokul Rajaram of Firebolt Ventures.
- Gupta and co-founder Ram Sahasranam have also invested $1 million each in the company.
The context: The era of digital health enablement has begun – and several emerging startups are vying to be the technology infrastructure for healthcare companies offering primary and specialty care and health plan administration.
- Capable Health, developer of a software platform for virtual care startups, raised $6 million in seed funding in May.
- Flume Health, which helps organizations create personalized health plans for their members, raised $30 million in March.
- Tebra, a medical software provider for clinics whose tools are most similar to Fold’s, raised $72 million earlier this month.
How it works: Fold charges primary care clinics a monthly fee per member and offers tools for patient onboarding, marketing, messaging and billing.
- Its operating system can be layered over existing medical records systems, membership management tools, and billing platforms.
- Current clients include Zócalo Health, a primary care startup for the Latin American community founded by former Amazon Care executive Erik Cardenas.
Rollback: Years ago, Gupta and Bush had a fateful encounter at a healthcare conference in Bangalore that would set the stage for a series of future deals.
- At the time, Bush ran medical IT giant athenahealth; Gupta was building electronic health records startup Praxify Technologies, which Bush’s company would acquire in 2017 for $63 million.
- “He took my iPad, started showing it to other people and said, ‘This is what should be happening at athenahealth!'” Gupta recalled.
- Fast forward to now, and Bush is developing his own digital health enablement startup called Zus Health, while Gupta is building Fold. (Each is an investor in the other’s business.)
What they say : Investors and entrepreneurs tell Erin that companies like Fold and Capable have a chance to become key catalysts for their industry as healthcare catches up to more mature sectors like fintech.
- These companies “have the opportunity to become Stripe, AWS, Shopify, etc. for digital health,” Lux Capital partner Deena Shakir told Erin earlier this summer.
And after: As competition between infrastructure companies intensifies, rivalries could begin to form. But for now, investors say there’s plenty of white space for new and existing businesses to build.
- “It’s not a win-win category,” Jolly told Erin. “The market is absolutely huge, and people are asking for these solutions.”
💭 Our thought bubble: As more and more investor dollars are poured into enabling digital health, the industry may soon consolidate. (Fold competitor Tebra told Erin last week that it plans to use the newly raised funds for transactions.)