MDI Health Revenue & Funding (2024)

[00:00] Hey, folks. My guest today is Ariel Efergan. He's the head of growth at MDI Health. Originally from the suburbs of Chicago, he now lives in Tel Aviv. Before joining the company, he consulted for various health care startups and provider groups. He also founded and was CEO of Pangaea Medical. He's an active in the startup and health care ecosystem both in The US and abroad. When he's not working on health care, he's focused on his other passion, the [00:20] environment. He loves to travel, spend time indoors, and when possible, get to the beach by his place in Tel Aviv. Ariel, you ready to take us to the top? [00:27] >> Yep. [00:28] Alright. So just to be clear, are you a founder? Do you own equity? [00:31] >> I'm part of the founding team. Yes. Okay. I'm not a founder. [00:35] How many of you guys are there? [00:37] >> In the company in total now, we're about 25. [00:40] Founders. [00:41] >> Oh, founders. So there's three founders [00:45] >> in the company. Yeah. [00:47] Got it. So three of you guys. And and when did you really start working on this thing? What year? [00:52] >> So I they started the company in 2019, and I joined about a year ago. [00:59] Okay. Cool. So 2019, you joined in, call it 2020. Help us understand who you're selling to it and what they're what they're paying [01:08] >> platform to optimize medication treatments. So problems for medications is the fourth leading cause of death in The US. And so we sell to health payers and providers such as health systems. [01:21] Okay. And and so are these long sales cycles you're selling to governments, things like that, or no? [01:26] >> Yeah. So the average sales cycle for enterprise, what we do in health care, is about eighteen months. So twelve to eighteen months. That's really long. [01:33] Wow. And so what is the average customer paying you per month or per year to use the technology? [01:38] >> So that is very significantly depends on the population, depends on how the length of the contract, etcetera. But typically, it will operate either on a per member per month basis or in a shared savings model. So based on the gender the savings that we generate for the client, we're able to take a bonus from that and use that as our payment essentially. So really, they're just paying for the value they're getting. [02:04] I see. But if you take all your current customers today divided by your revenue, I mean, you can sort of back into an average contract size. Are we talking $10,000 contracts or a $100,000 contracts or a million dollar contracts? What's the scale here? [02:14] >> Yeah. No. So contracts in our space are typically in the millions of dollars. [02:18] Okay. So you so if people aren't willing to spend, know, a million dollars more, you're you're not a fit for them? [02:24] >> We could be. It depends on the size, you know, $500,000, something like that. And pilots obviously are cheaper, but it it just depends on the size of of the client. But typically, large enterprise clients are gonna be spending millions of dollars. [02:37] I see. And what stage are you guys at today? Have you launched? [02:41] >> Yeah. So we're so we raised about $8,000,000 or 8 to $10,000,000 seed round. And we've launched, we're live, we've done clinical studies. We're working with some of the largest health insurance companies in the world and in The US, as well as some of the largest health systems. [02:59] When was the seed? [03:01] >> So we did that at the begin the end of last year, beginning of this year. [03:07] Got it. So 8,000,000 seed raised, call it end of twenty twenty. And where'd most of that money go? Why did you need to raise so much capital? [03:14] >> Yeah. So it's both a function of just our needs in terms of research and developing the AI in our clinical teams, and also just the growth. We've had so much interest in our platform because of the impact we can have on patients. And so really, it allows us to essentially get to that impact and validation, the level of validation you really need in healthcare. [03:34] Mhmm. But so where are you though today in terms of customers signed on and paying, or is everyone still in pilot mode? [03:41] >> No, we have customers that are paying and working with us. Part of the some of the commercial agreements are start in pilot mode that automatically converts a commercial contract. In healthcare, there's a level of kind of efficacy validation. If we screw up, it's not like your food doesn't get to you, someone dies. So we need to be pretty sure. So there's a step of clinical validation, which is kind of part of the pilot, and then that [04:07] >> goes into commercial terms. [04:09] I see. I see. So so how many customer I wanna go back to your first customer, but how many customers are you working with today who are either on a pilot or already a full paid plan? [04:16] >> About six. [04:18] About six. [04:19] Take me back to the first one. Do you No. Know who was [04:21] >> Within each one of those, right, there could be 10 different customers. And these are six kind of parent companies that we contract with, but each one has, you know, many different for instance, one is a health system that, you know, they have about 90 hospitals or something like that. [04:37] Yeah. But something can we look at this like this is these are six sort of organizations where there's contract value potential to be a million dollars plus per year. So there's effectively 6,000,000 in pipeline. [04:47] >> Yeah. More than that, but [04:49] Yeah. Yeah. Take me back to the first customer. Who was it? And then how'd you guys close them? Or [04:53] >> So, yeah. So actually our first customer was academic medical center in Israel called Hadassah that we did a clinical study with. So that was really the first and that came from one of our co founders. She is a PharmD by training and she was the head of pharmacy services for the second largest HMO in the world, as well as the head and founder of the Pharmacovigilance Department of the Ministry of Health, and also ran her own [05:16] >> private clinics. So she's a pretty well known pharmacist in the space and drug safety expert. And so really because of her and and her research, we're able to get some really early interest in in this platform. [05:30] So two co founders are selling a lot early. You joined a little bit later, really, as a third co founder. And you said the team size today total is how many folks? 20 something? [05:37] >> I didn't join as a co founder. I just joined the kind of founding team. So that was the sixth employee, I think. And Okay. Cool. [05:47] Yeah. Well, so so how many total team members are there? [05:50] >> About 25. [05:51] And and where does founding teams stop? Is it employee seven, eight, nine, ten, 20? [05:57] >> Yeah. I mean, it depends how you look at it. You know? We give most of our employees equity and our options in their company because we want them to really be a part of our mission. But in most organizations, you probably say probably the first 10 employees are part of the founding team. It just depends how you define it, really. [06:14] Mhmm. So got it. So you joined, now you're leading growth. What does that mean? What does your day look like? [06:19] >> Yeah. So I essentially, with the CEO, run all the business side of the company. So business development, sales, marketing, account management, launching designing pilots, fundraising. My day mainly consists of meetings, either with clients, potential clients, consists of working on strategy, where do we want to go, how should we be designing our product to meet the market needs and drive the most value, and then kind of business development, sales, marketing. [06:49] Mhmm. So what's the big revenue target? I mean, what are you guys thinking you can do next year in in 2022? [06:55] >> That's not something that we share publicly, but things are looking very, very good for us. As we all know, health tech is a really hot space right now. And there's a reason for that just because of the level of impact that we can have on clients. [07:07] Well, but there's a lot of hot spaces with companies that never, you know, hit meaningful scale, especially after you've raised $8,000,000. So that that's not hugely helpful. Right? I mean, what do you think the opportunity is for you guys based off, like, I mean, current pipeline, you know, what hitting 10,000,000 next year be exciting, or is that like a stretch goal? [07:22] >> Yeah. I would say that that would be very exciting for us. But again, we don't publicly share what our our revenue and and financials are. [07:30] Can can you get to that goal with the money you've already raised, or are you out fundraising another round right now? [07:36] >> So we're not actively fundraising. However, we're, you know, always open to it, and we have lots of funds that have reached out to us and are watching us very closely and are really interested in participating in our next round. We'll probably raise a series a sometime in the next twelve months. [07:53] Mhmm. And and when you think about a series a, obviously, there's standards and there's outliers, etcetera. But, you know, when you think about a series a, what would that mean for you guys in terms of how much you target to raise? [08:04] >> That's really gonna depend on both our revenue and just how fast we want to grow. So we're one of the few startups in a fortunate position that we really have more business than we can handle and more incoming clients than we can handle. So just a factor of what is our product roadmap, where do we need to be to essentially hit our KPIs with our clients, and where do we really want to grow and how fast [08:29] >> we want to do that. [08:30] So what is the bottleneck right now? You have customers coming in, they're big ACVs, you raised a bunch of capital in your seed, sold a big chunk of the company. What's the bottleneck? [08:38] >> Yeah, partially it's just hiring people. So we're really trying to hire. Right now, it's a really tough job market out there. So hiring one is then is just the long sales cycle in health care is is really tough as well. [08:52] Mhmm. What makes hiring hard? I mean, imagine with your story and the amount you've raised and the big market you're tackling. I mean, this should be like anyone who wants to be on the cutting edge is gonna join. Why wouldn't people quit their current gig and join you guys at all costs? [09:05] >> That's a great question. I mean, so far the people we've spoken with are very interested. But right now there's a lot of very exciting startups with a lot of good value that they're driving. The job market right now is pretty tough in general. Some people don't like the [09:25] >> craziness of working at a high growth startup. You're not coming to work nine to five. You're really coming to be behind the mission of trying to save people's lives. And so that takes a lot of work. It's a lot of sacrifice. Not everyone is necessarily suited to do that. [09:39] Why are you excited about it? You joined as employee number six. What were you doing before? [09:44] >> Yeah. So I was had just recently finished my first startup and then was doing some [09:50] Well, what does that mean? Finished your first startup? What finished how's how'd you finish? [09:54] >> Yeah. So that company I built for about three and a half years. And then part of those assets we absorbed into this company, but mainly the operations we closed down because of COVID. And then had a bunch of opportunities. That company was relatively successful. And because of that, yeah, had a lot of great opportunities and ultimately [10:15] How do you define success? [10:18] >> Just in terms of clients, the impact on patients, as well as being revenue. So we built that startup completely bootstrapped. So that was a very exciting journey. And what got me really excited about MDI was the interest that they had, the specific problem that they're solving within healthcare, as well as the the team is is pretty incredible. And and the problem that we're solving is is massive and very tangible, which is, I would say, not always [10:48] >> the case with with health care startups. [10:50] Fair. And and, I mean, you have to, though, make a decision to kill this thing you've been working for three years to effectively join this thing. Or, you know, you get a juicy option pool. It's effectively an acquihire here. Is that sort of what happened? [11:04] >> Yeah. And in a sense, guess a combination of both, that COVID was made it really tough to be selling to health systems because all of their focus went away from innovation, went away from all of their areas aside from COVID. For me, was very passionate about the problem we were solving and didn't really want to pivot the business just to make money. That wasn't what was so interesting to me at the time. [11:26] Talk to me a little bit more about sort of where you guys see the product going. So what's a use case for someone listening right now? They're gonna if they end up in the hospital, God forbid, in the next twelve months, where might they come in contact to a product built by MDI Health? [11:39] >> Yeah. So let's say you're a 65 year old patient who is managed by a complex care team. So you are in the hospital, you're discharged, you go home, you're on 10 different medications. Your care manager would essentially either do this in the background or reach out to you, review your medications with MDI software, see what risks are posed to you because of your medication regimen. So you might be at risk for a heart attack or having [12:04] >> a fall because of the drugs that you're on and they interact poorly. Then they would make changes to your drug regimen based on our risk analysis and interventions. And so from there, they would eliminate your risk of having a fall or that heart attack. [12:17] Interesting. And and so I guess, do you have do you have any customers that started paying you and stopped? Do you have any churn? [12:23] >> Zero churn. [12:24] It's just because you're too early, though. Right? I mean, you you have, like, your handful of customers. [12:28] >> It it could I mean, people could have left during a pilot period and could have left. [12:33] Was your first pilot? When did the first customer pay a dollar? What month? [12:37] >> We started working with probably in 2020. [12:42] Yeah. Okay. Like, mid twenty twenty? [12:44] >> Yeah. Probably. Maybe a little bit earlier. Yeah. Yeah. Interesting. [12:48] Very cool. Alright. Let's wrap up here with the famous five. Number one, what's your favorite book, Ariel? [12:53] >> My favorite book is probably The Originals by Adam Grant in terms of business book. [13:00] Number two, is there a CEO you're following or studying? [13:05] >> Yes. I really closely [13:10] >> I I follow a lot of CEOs. I really like Satya Nadella, though. [13:16] Number three, what's your favorite online tool for building MDI Health? [13:22] >> I find honestly, G Suite is what I use most. [13:28] Number three, how many hours of sleep do get every night? [13:31] >> Probably around seven. [13:33] Okay. And situation, married, single, kids? [13:36] >> Single. [13:37] Nice. No kids running around. How old are you? [13:39] >> No. [13:41] >> 26. [13:42] 26. Last question. [13:43] What do you wish six years what do you wish you knew six years ago when you were 20? [13:50] >> How hard it would be to create a health care company and the amount of capital it really takes, and also the power of networking. [14:00] Guys, there you have it. MDI Health, they're just getting going, closed an $8,000,000 seed last year, now scaling, call it six big customers, but under them could have many, many hospitals, many, many branches. These are all potential million dollar plus deals as they work to move these folks from pilots to full recurring partners, fully installed, fully onboarded. That's the focus this year with their team of 25 as it looks to continue to scale. Looking at maybe a [14:22] series a in the next twelve months, we'll see what happens. Ariel, thanks for taking us to the top. [14:26] >> Thank you very much. [14:29] One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it. And the buyers try and make a deal live. It is fun to watch every Thursday, 1PM [14:54] Central. Additionally, remember these recorded Founder interviews go live. We release them here on YouTube every day at 2PM Central. 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