Executive Interview
How MDI Health Raised an $8M Seed and Signed 6 Health Payer and Health System Customers (Interview with Head of Growth Ariel Efergan)
- Interview Date
- November 4, 2021
- Interviewee
- Ariel EferganHead of Growth
Company Metrics at Interview Time
Total Funding Raised
$8,000,000
Customers (2021)
6
Team Size (2021)
25
Churn (2021)
0
Year Founded
2019
Historical Snapshot
These numbers were reported by Ariel Efergan during his interview with Nathan Latka recorded in November 2021 and are a historical snapshot, not current figures. See MDI Health’s current numbers.
Key Takeaways
- 01MDI Health raised a seed round Ariel Efergan described as "about $8,000,000 or 8 to $10,000,000", closed around end of 2020 or early 2021.
- 02The company was working with 6 enterprise parent organizations as of November 2021.
- 03Each parent organization can represent many sub-customers, such as one health system with roughly 90 hospitals.
- 04Ariel Efergan declined twice to disclose revenue - both the 2022 target ("That's not something that we share publicly") and revenue generally, saying MDI Health does not publicly share its revenue and financials. The $6M figure raised in the interview is Nathan Latka's own estimate of potential pipeline, not revenue.
- 05Typical enterprise contracts in their space are in the millions of dollars.
- 06Sales cycles average 12 to 18 months in healthcare enterprise.
- 07The team had grown to 25 people by November 2021.
- 08MDI Health reported zero churn since its first customer began paying in 2020, though Ariel Efergan allowed that this may reflect how early the company is and that pilot customers could have dropped out.
- 09The company was not actively fundraising but anticipated a Series A within the next 12 months.
- 10Hiring and long sales cycles were cited as the two primary bottlenecks to growth.
- 11The first customer was Hadassah, an academic medical center in Israel, secured through a co-founder's clinical network.
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| Total Funding Raised | $8,000,000 | Head of growth interview, Nov 2021 |
| Funding Round Type (2020) | Seed | Head of growth interview, Nov 2021 |
| Year Founded | 2019 | Head of growth interview, Nov 2021 |
| Customers (2021) | 6 | Head of growth interview, Nov 2021 |
| Team Size (2021) | 25 | Head of growth interview, Nov 2021 |
| Churn (2021) | 0 | Head of growth interview, Nov 2021 |
| Number of Founders | 3 | Head of growth interview, Nov 2021 |
| Average Sales Cycle (2021) | 12 to 18 months | Head of growth interview, Nov 2021 |
| First Customer Payment Start | 2020 | Head of growth interview, Nov 2021 |
Growth Breakdown
Funding
MDI Health closed a seed round Ariel Efergan described as "about $8,000,000 or 8 to $10,000,000" around the end of 2020 or early 2021. The capital was directed toward AI research and development, building out clinical teams, and supporting the growth needed to reach clinical validation standards required in healthcare.
Customers
As of November 2021, the company was working with 6 enterprise parent organizations, including large health insurance companies and health systems. Each parent can represent many sub-customers, with one health system alone comprising roughly 90 hospitals. The first customer was Hadassah, an academic medical center in Israel.
Team
The team had grown to approximately 25 people by November 2021. The company grants equity or options to most employees to align them with the mission. Hiring remained a key bottleneck given the competitive job market.
Revenue and Pricing
Ariel Efergan declined twice to share revenue figures publicly - first on a 2022 target ("That's not something that we share publicly") and again when pressed on whether $10M next year was realistic, saying MDI Health does not publicly share its revenue and financials. Contracts in the space are typically structured on a per member per month basis or a shared savings model, and large enterprise clients in this category typically spend in the millions of dollars, though he would not say what MDI Health's contracts are worth. The company reported zero churn since its first paying customer in 2020.
Growth Strategy
Founder Brand and Clinical Network
The first customer, Hadassah, was secured through the reputation and relationships of a co-founder who had led pharmacy services for a major HMO and founded the Pharmacovigilance Department of the Ministry of Health. Early growth was driven heavily by this clinical credibility.
Pilot-to-Commercial Conversion Model
MDI Health structures commercial agreements to begin in a pilot phase that automatically converts to a full commercial contract once clinical efficacy is validated. This lowers the barrier to entry for risk-averse healthcare buyers while building a path to full contract value.
Targeting Large Enterprise Payers and Providers
The company focuses on large health payers and health systems. Ariel Efergan said contracts in their space are typically in the millions of dollars, with smaller clients closer to $500,000 and pilots cheaper still. He declined to say what MDI Health's own contracts are worth.
Shared Savings Model
By offering a shared savings payment structure, MDI Health aligns its revenue directly with the value it delivers to clients. Clients pay based on the savings generated, reducing perceived risk and making the platform easier to justify to enterprise buyers.
Inbound Interest from Funds and Clients
Ariel Efergan noted the company had more incoming client interest than it could handle at the time of the interview, and that multiple funds were actively watching the company ahead of a potential Series A. This inbound momentum was cited as a key growth driver.
Best Quotes
“I'm part of the founding team. Yes. ... I'm not a founder.”
“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.”
“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.”
“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 private clinics.”
“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 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.”
“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.”
What Happened Next
When this interview was recorded in November 2021, MDI Health had closed an $8M seed round around the turn of 2020 into 2021, was working with about six parent organizations - large health payers and health systems, some still in a pilot phase that converts automatically to a commercial contract - and had grown to a team of about 25. Ariel Efergan, who runs the business side of the company with the CEO, declined twice to disclose revenue or a revenue target. He said MDI Health was not actively fundraising but would probably raise a Series A sometime in the following twelve months, and named hiring and the 12-to-18-month healthcare sales cycle as the two bottlenecks. These figures are a point-in-time snapshot and may not reflect the company's current status. Visit the MDI Health profile on GetLatka for the latest available data.
View MDI Health’s current profile and metricsFull Transcript
Chapters
- 0:00Introduction and Background
- 0:28Founding Team and Equity
- 1:08What MDI Health Does and Who They Sell To
- 1:26Sales Cycles in Healthcare Enterprise
- 1:38Contract Structure and Pricing Model
- 2:41Funding and Launch Status
- 3:41Customer Count and Pilot-to-Commercial Model
- 4:53First Customer: Hadassah and Founder Network
- 6:19Ariel's Role and Day-to-Day Responsibilities
- 6:49Why MDI Health Won't Share Revenue
- 7:36Fundraising Plans and Series A Timeline
- 8:30Hiring Challenges and Bottlenecks
- 11:26Product Use Case Walkthrough
- 12:23Churn and Customer Retention
- 12:48Famous Five Rapid Fire
- 13:50Closing Thoughts and Wrap-Up
Introduction and Background
Nathan Latka
00:00Hey, 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
00:20environment. 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?
Ariel Efergan
00:27>> Yep.
Founding Team and Equity
Nathan Latka
00:28Alright. So just to be clear, are you a founder? Do you own equity?
Ariel Efergan
00:31>> I'm part of the founding team. Yes. Okay. I'm not a founder.
Nathan Latka
00:35How many of you guys are there?
Ariel Efergan
00:37>> In the company in total now, we're about 25.
Nathan Latka
00:40Founders.
Ariel Efergan
00:41>> Oh, founders. So there's three founders
00:45>> in the company. Yeah.
Nathan Latka
00:47Got it. So three of you guys. And and when did you really start working on this thing? What year?
Ariel Efergan
00:52>> So I they started the company in 2019, and I joined about a year ago.
Nathan Latka
00:59Okay. 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
What MDI Health Does and Who They Sell To
Ariel Efergan
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.
Nathan Latka
01:21Okay. And and so are these long sales cycles you're selling to governments, things like that, or no?
Sales Cycles in Healthcare Enterprise
Ariel Efergan
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.
Nathan Latka
01:33Wow. And so what is the average customer paying you per month or per year to use the technology?
Contract Structure and Pricing Model
Ariel Efergan
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.
Nathan Latka
02:04I 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?
Ariel Efergan
02:14>> Yeah. No. So contracts in our space are typically in the millions of dollars.
Nathan Latka
02:18Okay. So you so if people aren't willing to spend, know, a million dollars more, you're you're not a fit for them?
Ariel Efergan
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.
Nathan Latka
02:37I see. And what stage are you guys at today? Have you launched?
Funding and Launch Status
Ariel Efergan
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.
Nathan Latka
02:59When was the seed?
Ariel Efergan
03:01>> So we did that at the begin the end of last year, beginning of this year.
Nathan Latka
03:07Got 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?
Ariel Efergan
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.
Nathan Latka
03:34Mhmm. But so where are you though today in terms of customers signed on and paying, or is everyone still in pilot mode?
Customer Count and Pilot-to-Commercial Model
Ariel Efergan
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.
Nathan Latka
04:09I 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?
Ariel Efergan
04:16>> About six.
Nathan Latka
04:18About six.
04:19Take me back to the first one. Do you No. Know who was
Ariel Efergan
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.
Nathan Latka
04:37Yeah. 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.
Ariel Efergan
04:47>> Yeah. More than that, but
Nathan Latka
04:49Yeah. Yeah. Take me back to the first customer. Who was it? And then how'd you guys close them? Or
First Customer: Hadassah and Founder Network
Ariel Efergan
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.
Nathan Latka
05:30So 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?
Ariel Efergan
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.
Nathan Latka
05:47Yeah. Well, so so how many total team members are there?
Ariel Efergan
05:50>> About 25.
Nathan Latka
05:51And and where does founding teams stop? Is it employee seven, eight, nine, ten, 20?
Ariel Efergan
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.
Nathan Latka
06:14Mhmm. So got it. So you joined, now you're leading growth. What does that mean? What does your day look like?
Ariel's Role and Day-to-Day Responsibilities
Ariel Efergan
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.
Why MDI Health Won't Share Revenue
Nathan Latka
06:49Mhmm. So what's the big revenue target? I mean, what are you guys thinking you can do next year in in 2022?
Ariel Efergan
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.
Nathan Latka
07:07Well, 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?
Ariel Efergan
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.
Nathan Latka
07:30Can can you get to that goal with the money you've already raised, or are you out fundraising another round right now?
Fundraising Plans and Series A Timeline
Ariel Efergan
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.
Nathan Latka
07:53Mhmm. 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?
Ariel Efergan
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.
Hiring Challenges and Bottlenecks
Nathan Latka
08:30So 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?
Ariel Efergan
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.
Nathan Latka
08:52Mhmm. 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?
Ariel Efergan
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.
Nathan Latka
09:39Why are you excited about it? You joined as employee number six. What were you doing before?
Ariel Efergan
09:44>> Yeah. So I was had just recently finished my first startup and then was doing some
Nathan Latka
09:50Well, what does that mean? Finished your first startup? What finished how's how'd you finish?
Ariel Efergan
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
Nathan Latka
10:15How do you define success?
Ariel Efergan
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.
Nathan Latka
10:50Fair. 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?
Ariel Efergan
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.
Product Use Case Walkthrough
Nathan Latka
11:26Talk 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?
Ariel Efergan
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.
Nathan Latka
12:17Interesting. And and so I guess, do you have do you have any customers that started paying you and stopped? Do you have any churn?
Churn and Customer Retention
Ariel Efergan
12:23>> Zero churn.
Nathan Latka
12:24It's just because you're too early, though. Right? I mean, you you have, like, your handful of customers.
Ariel Efergan
12:28>> It it could I mean, people could have left during a pilot period and could have left.
Nathan Latka
12:33Was your first pilot? When did the first customer pay a dollar? What month?
Ariel Efergan
12:37>> We started working with probably in 2020.
Nathan Latka
12:42Yeah. Okay. Like, mid twenty twenty?
Ariel Efergan
12:44>> Yeah. Probably. Maybe a little bit earlier. Yeah. Yeah. Interesting.
Famous Five Rapid Fire
Nathan Latka
12:48Very cool. Alright. Let's wrap up here with the famous five. Number one, what's your favorite book, Ariel?
Ariel Efergan
12:53>> My favorite book is probably The Originals by Adam Grant in terms of business book.
Nathan Latka
13:00Number two, is there a CEO you're following or studying?
Ariel Efergan
13:05>> Yes. I really closely
13:10>> I I follow a lot of CEOs. I really like Satya Nadella, though.
Nathan Latka
13:16Number three, what's your favorite online tool for building MDI Health?
Ariel Efergan
13:22>> I find honestly, G Suite is what I use most.
Nathan Latka
13:28Number three, how many hours of sleep do get every night?
Ariel Efergan
13:31>> Probably around seven.
Nathan Latka
13:33Okay. And situation, married, single, kids?
Ariel Efergan
13:36>> Single.
Nathan Latka
13:37Nice. No kids running around. How old are you?
Ariel Efergan
13:39>> No.
13:41>> 26.
Nathan Latka
13:4226. Last question.
13:43What do you wish six years what do you wish you knew six years ago when you were 20?
Closing Thoughts and Wrap-Up
Ariel Efergan
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.
Nathan Latka
14:00Guys, 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
14:22series a in the next twelve months, we'll see what happens. Ariel, thanks for taking us to the top.
Ariel Efergan
14:26>> Thank you very much.
Nathan Latka
14:29One 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
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