Back in December, Nick Desai was flying from his home in Santa Monica out east, hoping to secure funding for his telehealth startup, Heal.
Humana, the healthcare behemoth, had Desai out to Louisville, Kentucky, to pitch the team. What he didn’t know was that Humana had invited several startups out in something of a pitch competition, where the winner would walk away with $100 million in funding. More importantly, the winner would be Humana’s partner in its expansion plans for home-based healthcare.
“It was a bake off to see which company they should pick as the foundation of their home strategy,” Desai told Business Insider. “They had a vision that was very close to our reality. It was an instant meeting of the minds.”
After pitching 12 to 15 people that day, Desai said that the deal was set in motion. By January, a group of more than a dozen Humana employees came out to Santa Monica for another round of interviews and meetings as part of what Desai called an exhaustive due diligence process.
It paid off: On July 29, Heal announced that it had raised $100 million in strategic funding from Humana and the partnership was official. The deal valued Heal at $300 million.
“I went out there in February for one more critical meeting, but that was the last work-related travel I took,” said Desai, who is Heal’s cofounder and CEO. “It was the second week of February and we were following the developments with the coronavirus, and my wife told me ‘okay, no more planes.’ Had we not been able to do those meetings, the deal would’ve taken a lot longer.”
Heal provides doctor house calls and virtual visits to its growing network of patients, Desai said. The former engineer explained that the company combines automated tech services with tools like a mobile app to cut inefficiencies, and therefore costs, from primary healthcare.
Now, the five-year-old startup is using its latest funding to expand its doctor house call and virtual appointment services to new markets such as Chicago, Houston, and Charlotte just as demand skyrockets. The new markets are part of Heal’s growth plan, Desai said, but were helped along by Humana’s network and the recent funding.
Desai said that, although the funding deal was well under way prior to the pandemic, the growth from patients wary of doctors’ offices has shown that the deal was a fortuitous one, and that Heal’s model is here to stay.
“Obviously no one wants to go to the doctor’s office right now, but we believe you should never want to go to the doctor’s office for the same reasons,” Desai said. “If it’s not COVID, it’s something else. It underscored the importance of our solution and showed that it’s not a one-trick pony.”
Even so, partnering with an entrenched company like Humana could have drawbacks. Many startups of Heal’s age and size opt out of working with corporate investors for fear that the team and its hard work will be swallowed by corporate bureaucracy, an outcome that outweighs the benefits those companies could provide. But Desai was adamant that working with Humana as a strategic investor was the right decision, at the right time, as Heal continues to grow.
“If we got another venture investor, we would have to go out and get more customers,” Desai said. “That’s the thing, Humana is going to become a customer of ours and their revenue and investment are enough for us to build on.”