investment – Bredemarket

Artificial Intelligence and Healthcare, A Qualified View

As I’ve noted before, healthcare is a pioneering user of artificial intelligence, although (hopefully) under robust controls to maintain accuracy and preserve HIPAA-level privacy.

And a number of companies poured $125 million into Qualified Health to advance AI in healthcare.

Why?

“We are living through a generational shift, one where AI doesn’t just augment how organizations work but fundamentally transforms them from the inside out,” said Mohamad Makhzoumi, Co-CEO of NEA, who will join Qualified Health’s Board of Directors in conjunction with the financing. “From NEA’s nearly five decades of company-building experience, we believe the organizations shaping the next era of healthcare innovation will be those helping health systems reimagine every administrative and clinical workflow from the ground up, and Qualified Health is exactly that company. We are thrilled to lead this financing and to partner with Justin and team to accelerate healthcare’s AI transformation and shape the future of healthcare enterprises across the country.”

“Health systems today are operating under extraordinary pressure, from rising labor costs to tightening reimbursement, while managing increasing complexity in patient care,” said Jared Kesselheim, MD, Managing Partner at Transformation Capital. “What stood out to us about Qualified Health is that the team approaches this work as medical care specialists, with a deep understanding of the realities health systems face every day. That perspective allows them to identify where AI can create meaningful clinical and operational impact. We’re excited to partner with Justin and the Qualified Health team as they help leading health systems navigate this next phase of healthcare.”

Fantastic Creatures Can’t Thrive in the Real World

It’s easy to toss around phrases like “customer-focused benefits” without comprehending what they mean.

So I’ll provide an example.

Years ago I wanted to learn about a particular company—and no, I’m not going to name the company—so I read what it said about itself. And what did the company’s product marketing say?

“We’re a unicorn!”

For the benefit of normal people, when businesses talk about being a unicorn, they are saying that the firm, based upon funding from private investors, has a theoretical valuation of over $1 billion. For example, if Ventures R Us pays $100 million for 10% of the company.

Well, this company was really proud about its unicorn status, to the exclusion of everything else.

With reason, when you think about it.

Taking an example from my own industry, if you are the police chief of a medium sized city that needs an automated biometric identification system, would you risk buying one from a provider with an actual or theoretical valuation of less than $500 million?

Because isn’t company valuation the most important thing to a prospect?

What? It isn’t? Prospects care about results?

(For the record, you can buy a perfectly fine ABIS from firms with actual, not theoretical, values of less than $100 million.)

In fact, I would go so far as to say that if the first sentence of your company description includes the word “Series” followed by a letter from the beginning of the alphabet, your focus is the investment community rather than your prospects.

But if the first sentence of your company description talks about what you deliver to your customers, then you’ll impress both your prospects and the discerning investors. Nothing magical about that.

Take care in how you market your products.

Biometrics IS the financial sector

“Have to update my chart again.”
C. Maxine Most of Acuity Market Intelligence. From https://twitter.com/cmaxmost/status/1418306725510193152

Since I’m treading into financial territory here, I should disclose that Bredemarket has financial relationships with one or more of the companies mentioned in this post. This is not investment advice, do your own due diligence, bla bla bla.

CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=243386

I don’t monitor the market enough to know if this is part of an overall trend, but there has been a lot of biometric and digital identity investment recently. Both Biometric Update and FindBiometrics (and other publications such as FinLedger) have written about some of these recent investments, and IPVM has published its acquisition analysis (for subscribers only). Here’s a partial list of the biometric and/or digital identity companies who have received new funding (via investors, IPO, or acquisitions) recently:

I am not a financial expert (trust me on this), but I suspect that these companies are benefiting from two contradictory factors.

The apparent WANING of the COVID threat suggests better market performance in the future.
Some biometric and digital identity investments are very attractive precisely BECAUSE of the COVID threat, and the resulting attractiveness of remote and touchless technologies.

Of course, markets run in cycles, and it’s hard to predict if this is just the beginning of money flowing to biometrics/digital identity companies, or if all of this will suddenly come to a grinding halt. Remember how hot so-called “fever scanners” were a year ago, until their deficiencies were identified? And remember how Microsoft was prompted to divest from Anyvision not too long ago?

It’s possible that a number of external factors, such as an increase in government bans of facial recognition use, consumer resistance to digital identity, or the entry (or re-entry) of much larger players into the biometrics and/or digital identity markets, could dampen the revenue hopes for these funded companies.

Of course, investors are used to analyzing risk, and in many cases the investments with higher risk can yield the greater rewards.

It’s all just a game.