As the US population grew older, more senior care startups were launched, with most targeting the local aging area.
In the past five years, venture capital firms have actually invested more than $ 2.5 billion in a seemingly endless list of geriatric and home care startups, so a recent Crunchbase report. The inflow of capital is partly due to the long-term demographic tailwind, but also to the high level of innovation in the healthcare sector.
“Investor interest has increased because demographic change is undeniable,” Abby Miller Levy, managing partner of Primetime Partners, told Home Health Care News. “However, I think that investor interest in healthcare as a place of innovation has really driven change over the past five to seven years.”
Overall, the number of Americans 65 and older will more than double over the next 40 years, reaching 80 million by 2040, according to the Urban Institute.
As a VC company exclusively focused on aging services and senior care, New York-based Primetime Partners has focused on this area. The company offers start-up and early-stage investments in products, services, technologies, and experiences related to aging.
In addition to demographics and innovation, the COVID-19 emergency has accelerated both the number of entrepreneurs entering the aging service sector and investor interest. In 2021 alone, VC companies invested more than half a billion dollars in U.S. senior care and home care startups, Crunchbase reported.
“One of the things that happened during the pandemic is that you couldn’t pick up a newspaper or watch the news without fully understanding how seniors were doing amid the pandemic,” Levy said. The news cycle covered everything from the crisis in nursing homes to the reactions of older adults to the vaccination. That had an enormous influence on the focus of investors as well as on the interests of entrepreneurs. “
In addition, entrepreneurs and investors are often personally invested, Levy noted. A significant proportion of the people starting or supporting senior care startups have elderly family members affected by the public health emergency, she said.
Additionally, the COVID-19 crisis has opened the door wider in terms of reimbursements and potential sources of income. This also made it possible for more companies to get into the game of care for the elderly.
“I’ve been talking to entrepreneurs the whole time who said, ‘If there isn’t a payer to reimburse this, the business model is not going to work,'” Levy said.
Several Medicare Advantage plans began paying for remote monitoring technology and services aimed at reducing social isolation, for example. Meanwhile, the US Centers for Medicare & Medicaid Services (CMS) made great strides in reimbursing new models of care, such as: B. Hospital-at-home programs.
Looking for stamina
It was in this environment that companies such as DUOS and Tomorrow Health were founded.
With the support of venture capital giant Andreessen Horowitz, Tomorrow Health and its digital marketplace deliver medical supplies and devices directly to patients’ homes. The company, which went into operation in April 2020, is already active in 29 states.
Tomorrow Health was about addressing a pain point home carers are feeling. Vijay Kedar, Co-Founder and CEO of Tomorrow Health, noted that vendors often struggled to get manageable, reliable, and consistent medical devices and supplies for patients.
In addition, the public health emergency increased the demand for medical equipment and consumables, particularly oxygen and ventilators.
“We saw … the existing rifts in the home care ecosystem – some of the operational and logistics challenges to actually getting the medical devices and supplies patients needed,” Kedar told HHCN. “As retail stores across the country closed, patients and providers struggled to manage and manage the critical equipment and supplies that patients needed at home.”
In essence, Tomorrow Health aims to become an Amazon-like service for home care providers. Since its inception, the company, which announced $ 25 million in Series A in April this year, has worked with more than 125 health insurers and hospital systems.
But even with a lot of firepower, Kedar realizes that not every senior care startup can make it.
Those who do this have to offer the customer “an incredibly strong” value proposition, he said.
“This is what separates an enduring and scalable company from those that have strong products but lack the ability to grow continuously – a relentless focus on adding value to each of the stakeholders you serve,” said Kedar.
From 2016 to 2018, according to Crunchbase, there were between 62 and 68 deals to finance start-ups in geriatric care or home care in the US. This rose to 83 in 2019 and reached 91 last year.
DUOS is a New York-based company that helps place skilled personal assistants – “Duos” – in the homes of older adults. The company officially launched earlier this month with the announcement of $ 6 million seed funding from investors Redesign Health and Forerunner Ventures.
While DUOS has a direct-to-consumer business model, the company has begun doing business with large B2B customers in the Medicare Advantage and dual entitlement space. It has also turned to risk-bearing providers in a similar way.
The added value of DUOS is that the company addresses the social determinants of health while helping seniors age on the spot, Co-Founder and CEO Karl Ulfers told HHCN.
“They really want to be able to age independently in their home, so the value proposition for an older adult is that we encourage their independence,” said Ulfers. “The value proposition from on [informal] The nursing staff’s perspective is to directly alleviate the stress and strain they face. “
Associated with this, around 44 million people in the United States are joining as informal caregivers. These are spouses, partners, friends, or family members who, according to a San Francisco-based nonprofit, help out with Daily Living Activities (ADLs) and possibly even medical duties Alliance for family carers.
Even in the early days of the company, DUOS saw many VC interests, but Ulfers pointed out that interest does not always lead to an investment.
“The last falling domino that really led us to this funding was our pilot testing, both from a business and consumer perspective,” he said. “We were really able to prove that this model will lead to a high level of satisfaction, which we measured [net promoter score]. “
On the flip side, a challenge for companies in the early stages is often to be creative with the resources that are available to them.
“We have a value at Tomorrow Health that is doing more with less,” said Kedar. “It’s about using existing resources in the most sensible and scalable way and being lean and efficient.”
What distinguishes startups that can go over the distance and those that fizzle out is ultimately a deep understanding of the older population.
“To really understand what they need and how important this need is,” said Ulfers.