This morning Circulation, one of our portfolio companies, announced a very exciting Series A financing of $10.5 million to scale one of the emerging leaders in the “on demand” healthcare economy. Circulation is the second of our Flare Ignite seed companies and with this financing, both companies have now successfully converted to be significant core holdings of the fund (Bright Health was the other).
There are several elements to this story which are quite instructive. First and foremost, it is very rewarding to work closely with world-class entrepreneurs (Robin Heffernan and John Brownstein) who are also great friends of mine. Robin and I have worked together for nearly a decade over three companies – she was an investor at my prior venture firm, we backed her when she helped start one of our other portfolio companies, and now at Circulation. In parallel, I have been collaborating with John as a member of his advisory board at Boston Children’s Hospital where he is the Chief Innovation Officer. And with this financing, one of Flare’s Executive Partners, Chris Kryder (who founded D2 Hawkeye, Generation Health, and ran Verisk Health) has also joined the board.
There are two other more fundamental observations to be made here. One is how the team rapidly iterated both the product and business model. Today, the company which launched less than a year ago, has over 50 active accounts touching well over 1,000 locations, and can already demonstrate outstanding metrics for better health outcomes, cost savings and rider satisfaction. The broad theme of “on demand” healthcare is profoundly interesting and echoes many of the forces at work in other industries. The team felt it was critical to get out early to assume category leadership versus being too deliberative.
Being early can be hard in healthcare given unique customer demands and that the cost of failure is so high and visible. Robin and John readily identified a very significant market opportunity with non-emergency medical transportation and envisioned a powerful launch partner with Uber, where John is the Healthcare Advisor. Rather than debating who should be Client #1, the team determined that being first to market was more important than being the “first second” entrant in the market.
In addition to breaking from the gates quickly, the company has embraced working with strategic investors early on. Some entrepreneurs are leery to engage with strategics or expose the “secret sauce” to them too early but in healthcare doing so can often be quite powerful. As evidenced by the composition of the Circulation financing syndicate, four of whom are Flare limited partners, it was important to have leading healthcare companies under the tent early to provide feedback on the product roadmap and possible use cases. In fact, each of the strategic investors will be board observers/advisors and come to this with substantial needs that the Circulation platform will quickly address.
One other observation, and a theme we have been developing, is that there are a series of other successful and innovative business models outside of healthcare that will be translated for the healthcare industry. At its core, this theme underscores the transition from a “passive” model where patients receive care to an “active” model where patients consume care. Patients will increasingly insist on convenience, choice, and price transparency. This “always on” approach to healthcare consumption makes essential the precisely coordinated logistics of patient, product and service movement. The move to “on demand” platforms introduces no shortage of other opportunities for care at the right time, right place, right cost.