Building a Capital Efficient Healthcare AI Venture to $20M: Deepak Gaddipati, Founder and CTO of VirtuSense (Part 4)

Sramana Mitra: How many nursing homes are using the product?

Deepak Gaddipati: We did a lot of trade shows. In 2018, we got connected with Ziegler, which is an investment banker that does underwriting for hospitals and nursing homes. Whenever you want to build a new nursing home or a new hospital, they put out bonds and they raise $50 million, $100 million, or whatever it is.

Ziegler was the number one banker in that area. I got connected to the CEO of Ziegler and we had a conversation. I said, “My clients are practically your clients. The people I want to talk with are all your clients at the C-level. Could you make the intros?”. He laughed and said, “That’s not how we do business.” They made an investment in VirtuSense. That was our Series A.

Sramana Mitra: That was the $300,000.

Deepak Gaddipati: No, a few million dollars. They opened the doors. The flood gates opened up. By that time, the study came out with about 70% fall reduction. Today, we are in about a few thousand post acute care sites.

Sramana Mitra: You mentioned earlier that you had a CEO. You’re not the CEO anymore?

Deepak Gaddipati: I’ve always been the founder and the CTO. After the first year, it was David Park who was our CEO.

Sramana Mitra: How did you and David get connected?

Deepak Gaddipati: David has quite an opposite story from mine. David is a Boston guy. He met this lady in New York city who was a nurse. They got married. When they had their first kid, they decided to move. They came here. He was a venture capitalist earlier. He came in and naturally got connected to the angel community here to see what is happening. Then they connected me with David.

At that time, I was like, “I’m an engineer. I don’t know what I’m doing in terms of business. I need someone who knows how to run a business.” He was in charge of scouting all the national labs and universities and finding promising technologies. He’d give a few million dollars and get them to a few million in revenue. That was his business back then. It’s been a very interesting run for us.

Today, we not only are in nursing homes. We are also in primary care sites. We are in the neurology offices. We are used for Parkinson’s patients. Our technology is used during annual wellness visits for seniors. A medical assistant does a quick 60-second assessment and identifies who’s at risk of a fall. The primary care physician would help design a care plan and get a referral for specialty care or a physical therapist. We’ve been able to reduce ER visits by about 40%. There’s a lot of data behind what we’re doing.

Sramana Mitra: You’ve done it with a very small amount of capital.

Deepak Gaddipati: Yes, we hardly raised any capital. We grew almost organically. If you raise money, we probably would have gotten to market two years sooner. The thing with healthcare is it takes time. Healthcare takes a lot of time to first get everything up and running. Then you need to get through all the validations and research publications. After that, the real sales start. If you have raised a lot of money and if something slips a little bit, you don’t have breathing room.

Sramana Mitra: I’m not a fan of raising too much money too soon for anything. What is the total amount of capital you’ve raised so far?

Deepak Gaddipati: We’ve raised less than $10 million.

Sramana Mitra: How about your ARR?

Deepak Gaddipati: A little above $20 million.

Sramana Mitra: It’s more of the same now right? You have a product. You have validation – 73% improvement. Now the sales cycle is improving.

Deepak Gaddipati: We are engineers and we always love solving problems. It started with the assessment system. What we saw is we are impacting a 50% reduction of falls. 50% of people are still falling. We try to understand how we can help the remaining 50%. A lot of these people are falling inside hospital rooms.

There are about three to four million people falling inside nursing home rooms. How do we address this? Today they put these pressure pads under the beds and under the chairs. It sends an alarm when you get up. This is reactive. The damage may have already been done by the time you reach the room.

This segment is part 4 in the series : Building a Capital Efficient Healthcare AI Venture to $20M: Deepak Gaddipati, Founder and CTO of VirtuSense
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