Fundraising on Startengine, Elemeno is a simple yet effective and much-needed idea—a mobile-first platform in which frontline nurses and doctors can find the hands-on training they need to perform their day-to-day jobs.
To make it simple, if you are a nurse and don't remember how to perform a certain task, you can pick your phone and search for the related guidelines and how-to videos on Elemeno.
The company surpassed $1M ARR in 2020 and is projected to reach $2M ARR in 2021. But what's more interesting is that only one client cancel the subscription since the company's inception in 2016, while all the others are renewing and expanding.
That's for a good reason.
The company did multiple tests to evaluate how Elemeno helped organizations cut medical errors and costs. They divided hospitals departments into two parts, one of which used Elemeno, and the results are quite interesting.
For example, in a study published in the 2018 American Journal of Medical Quality, it is reported that UCSF Medical Center cut Central IV infections by 48% with Elemeno, saving $1.1M.
There are no doubts—a product that solves a real and significant problem while making customers save millions can be a direct path to a company's success.
And VCs seem to think the same about Elemeno.
The company is backed by Y-Combinator, Launchpad Digital Health (one of the most active early-stage venture capital firms in digital health), and Dreamit Ventures.
A deeper look at the product
Elemeno is a mobile web app developed to assess a significant problem—it is extremely challenging for nurses, doctors, and therapists to stay ahead of rapidly growing healthcare practices. This is mainly because healthcare institutions still rely on traditional team training and communication modalities like binders, fliers, email, and in-person staff meetings. This makes it difficult to reduce medical errors, waste, and job turnover.
Elemeno takes all those complicated practices and converts them into actionable guidelines, smart checklists, and concise how-to videos that nurses can access at any time through their smartphones (Below are some screenshots.)
In addition to connecting departmental knowledge point-to-point with frontline staff across the organization, the platform also offers analytics insight into caregiver behavior and practice effectiveness. This feedback loop allows management to address frontline needs before they manifest.
As you can see, the product is surprisingly straightforward but useful. In addition to being validated from 20+ hospitals renewing/expanding their contracts and $1M+ in ARR, some other awards confirm the market need.
In a study published in the 2018 American Journal of Medical Quality, it is reported that UCSF Medical Center cut Central IV infections by 48% with Elemeno, saving $1.1M.
In April 2021, Elemeno won 1st place in the Jewish Healthcare Foundation 2021 Healthcare Safety Challenge from a select group of 125 innovations across 15 countries. The Challenge was sponsored by the Jewish Healthcare Foundation, which aims to eliminate medical errors. Here's the official press release.
Nevertheless, I was really curious to know more about their content development process, so I reached out to the founder and asked him the following:
I'd love to have some insights into the content development process. How is each client's website delivered? Do you have pre-made content that they can use right away?
Below is the founder's response:
Elemeno is a single-instance multi-tenant build. Each website is branded and gated for the client. Delivery is on any web-enabled device, adapting to browser for both desktop and mobile experiences. Web-app can be easily saved as a branded tile on mobile device.
We have a constantly growing library of shared best practice content from our client base available for immediate approval and use. Moreover, shared content is often used as a template, where the client then customizes a key portion of the shared content to adapt to specific resources, devices, people, etc, unique to their team or institution. This way, clients do not reinvent the wheel-- rather creating derivative content from the effective solutions of their peers.
We have a dedicated content production team, led by a manager from Elsevier, one of the major healthcare best practice publishing companies, who appreciates the value we add beyond what curated generic clinical resources have historically provided. This team is charged with converting original content provided by clients (powerpoints, pdfs, images, video clips) into Elemenoized mobile-friendly content, structured as easy to find, easy to consume bite-sized resources focused on “how to” accomplish the task at hand. The team additionally modifies shared content originally produced by other clients to meet the receiving client’s needs. For example, the clinical considerations for a particular procedure could be very similar, but the equipment, or location where the equipment is stored, vary, or who to call for assistance will vary.
In our years of experience across clients, we have learned patterns-- templates on how to best present different types of content to frontline staff. This has allowed incremental automation, increasing efficiency of both our internal staff and our clients.
Content development is the most intensive contributor to our cost of goods sold (COGS). In early 2021, we began a major investment in making content production and content sharing far more efficient and effective through updates to our platform and processes. Code named “Project Toscana”, we expect these capabilities to fundamentally decrease the work effort and chronological time to onboard new clients or client units, decrease our cost of service and increase our margin. This will accelerate growth of our shared content library, and Natural Language Processing and Knowledge Graph strategies are being applied to make surfacing of relevant content easy for our growing client community. These capabilities will help us leverage our first-mover advantage, increase our barrier to competition, and reinforce the barrier to churn. This investment is a significant proportion of our spend over the next 18 months.
One of the drawbacks of having a straightforward product is competition. Indeed, the first thing I thought when I heard of Elemeno was, "Ok, let's see how many others companies are doing the same."
Contrary to my expectations, no other companies are working on a similar product. So there are two things to go deeper into:
- Who are Elemeno's indirect competitors? How is this problem being assessed right now?
- What prevents other companies from doing the same? Can Elemeno build a sustainable economic moat?
In an era of mobile-based learning where companies like Duolingo go IPO and reach a $5B valuation, I was surprised that no one else has thought of a mobile solution for the healthcare staff. Indeed, Elemeno's indirect competitors are:
- ("LMS") Learning Management Systems: such as Healthstream and Cornerstone.
- (“BPL”) Best Practice Libraries: such as Lippincott, Elsevier, and UpToDate.
- Other Learning Materials: such as flyers, emails, and staff meetings.
While both systems are designed for regulatory and compliance purposes, Elemeno is designed to solve a real problem exactly where and when it is needed, being mobile-friendly and readily accessible at the point of care.
So now the question is, what prevents other companies from doing the same? Can Elemeno build a sustainable economic moat?
Although there is no deep-tech involved in the product and no particular intellectual property, there are certainly a few ways in which Elemeno can leverage its first-mover advantage to build an economic moat around the business:
- Brand loyalty: We've seen before how, in 4 years of activity, only one hospital withdraw its Elemeno subscription. That was because the organization started using Elemeno in 2020 mainly to face the Covid pandemic. So they stopped using the service once that need was over. However, all the other clients (including those that started using Elemeno in 2020 to face Covid) keep using the service today, renewing or expanding their contract to more departments. That's certainly a sign that Elemeno can leverage its customers' loyalty to build a moat.
- Switching cost: Although there is no real cost involved in moving to another product, we've seen how Elemeno helped different hospitals cut costs significantly and reduce medical errors. Would an organization that used Elemeno for the past 5 years switch to another product and put at risk their patient in the meanwhile just to save some money? It wouldn't probably be worth it.
- Specialized skills: Working on a similar product would require significant knowledge of the industry and healthcare practice. And this is probably one of the reasons why no one has started working on an Elemeno alternative in the past 4 years.
- Content: As discussed above, the company has a constantly growing library of shared best practice content from their client base available for immediate approval and use. Moreover, shared content is often used as a template, where the client then customizes a key portion of the shared content to adapt to specific resources, devices, people, etc., unique to their team or institution.
All in all, I believe that in deciding whether to develop a similar product or acquire Elemeno, a potential buyer would have many reasons to go for the latter.
Elemeno got to $1M+ ARR with 20+ healthcare facilities clients (including UCSF Health, El Camino Hospital, Children’s Hospital of New Orleans, RWJBarnabas Health, Massachusetts General Hospital, etc.)
So the first thing I asked myself was, "How many hospitals are there in the United States?"
According to the American Hospital Association, there are 6090 hospitals in the U.S., of which 5141 are community hospitals (which are nonfederal, short-term general, and other special hospitals.)
As you can guess, this is a significant market in the U.S. alone.
If we expand our research to the major English-speaking countries, there are an additional:
- 1,200 hospitals in Canada (Source: Statista)
- 1,900 in the UK (Source: Statista)
- About 1,350 in Australia (Source: Australian Institute of Health and Welfare)
- 220 in New Zealand (Source: MT Association of New Zealand)
According to Precedence Research, the global healthcare staffing market size was accounted for US$30.3B in 2019 and is expected to reach over US$48.3B by 2027, exhibit a compound annual growth rate (CAGR) of 5.1%.
Note: Healthcare staffing is referred to as a firm, services person, partnerships, corporations, and other business entities that is engaged in offering nursing personnel to healthcare agencies or an individual to render temporary nursing services.
The company adopts a B2B SaaS business model, including an annual subscription and a one-time onboarding fee. The product's pricing depends on a hospital's total staff. For example, a hospital with a total staff in the range of 50-150 would pay a $35k/year subscription and a $5k onboarding fee. (Source)
The company's clients are outpatient clinics, hospitals, emergency departments, medical transport systems, and post-acute care facilities such as nursing homes, hospice, home care.
Financials & Liquidity
The Company began operations in January 2016, with the first revenue of $5,000 coming in 2017. Since then, revenue was $228,242 in 2018, $603,763 in 2019 and $1,047,195 in 2020. ARR at the end of 2020 was $967,000, up 67% over an ARR of $579,000 at the end of 2019. (Source: Form C)
According to the founder, the 2020 growth was due to new clients contracting with Elemeno to respond to the COVID-19 pandemic. It is worth noting that all but one have renewed their contract in 2021 with a focus on different initiatives.
I also reached out to the founder to know their updated ARR, and he informed me that their current ARR is $1.2M, up 23% since Dec 31, 2021.
I know—a 23% increase is not what you would expect from a high-growth startup.
That's why I had to dig deeper into this.