Auckland med-tech HeartLab has raised $3.5 million in a funding round led by Peter Thiel's Founders Fund, supported by Icehouse Ventures, Outset Ventures and private US investor Dylan Field (more on him shortly).
HeartLab's Pulse platform uses artificial intelligence to automate analysis of echocardiograms (heart scans), which founder and CEO Will Hewitt says is not designed to replace cardiologists but rather speed processes and free up hundreds of hours of their time.
The funds will be used for product development, plus a push into the US, where Hewitt is expecting Federal and Drug Administration approval - clearing the way for a commercial launch - in the first quarter of next year.
Hewitt cofounded the startup three years ago while an 18-year-old student at Auckland University's Bioengineering Institute. North Shore hospital cardiologist Dr Patrick Gladding, who began as Hewitt's sounding-board, quickly came on board as his business partner.
Research and development and student grant funding followed from Crown agency Callaghan Innovation (see video below).
Things began to happen quickly earlier this year, as HeartLab raised $1.1m in a round led by Icehouse and supported by Founders Fund plus the Peter Beck-backed Outset Ventures.
The money was used to scale up from three to 10 staff.
A trial with the Waitematā District Health Board had just begun when the $1.1m raise was announced in October 2020. And HeartLab was in late-stage negotiations with a US clinic to begin a similar pilot.
Hewitt says several healthcare providers are now using Pulse "every day as their primary tool" - a sign of their confidence in the maturity of a product that's still officially in beta ahead of its FDA approval - with their feedback helping to hone the AI platform ahead of its commercial launch.
Now the young CEO (he recently turned 21) wants to hire his first sales team and put boots on the ground in North America (his company's main operation will remain in Auckland).
The power-eating US is potentially a huge market. While there are around 100,000 echocardiograms carried out a year in NZ, the number of scans in American hospitals runs to around 38 million.
America loses someone to heart disease every 36 seconds, despite the efforts of some 34,000 cardiologists. Heartlab's backers see the addressable market for AI analysis running to some US$1.5b per year.
Hewitt wouldn't be drawn on any financial projections, saying his focus was wholly on improving Pulse. But he did say his company is in the process of hiring 10 more full-timers.
HeartLab plans to hire the new staff within the next six months. They will join a team based in central Auckland who've held previous roles in medicine, science, and software engineering for companies like NASA, Formula car racing, and Fisher & Paykel
And on top of that, the company is recruiting for seven paid summer internships. So far, more than 350 have applied. "It shows that young people are so attracted to the type of work HeartLab's doing, its young leadership, and the team environment and culture Will's created," an insider tells the Herald.
Auckland University's Bioengineering Institute and its broader campus have something of a hotbed for AI-based med-tech startups recently, with the Herald also covering capital raises by eye-test result analysis outfit Toku Eyes and orthopaedic surgery software startup Formus Labs raising $7 million, plus physics student (and Hewitt flatmate) Fia Jones' satellite solar panel startup Astrix (although the boom hasn't always fed into a higher-education story, with young-people-in-a-hurry Hewitt and Jones both dropping out to devote themselves full time to their entrepreneurial efforts).
Textbook case of VC networking
But more broadly, HeartLab's fundraising story illustrates the power of networking in the venture capital community.
While Founders Fund managing partner Thiel has not been a frequent flyer to our shores, one of his top lieutenants, Scott Nolan, has made an annual trip to NZ to scout for startup talent (or at least he did pre-pandemic).
Icehouse Ventures CEO Robbie Paul introduced Nolan to HeartLab.
And at the start of this year, Nolan, in turn introduced Hewitt to the San Francisco-based Dylan Field - the founder and CEO of Figma, a design software platform valued at US$10 billion.
While still a university student in 2013, Field had the idea for Figma, and applied for and won a Thiel Fellowship to help get his startup off the ground (a Thiel Fellowship, awarded to around 25 young people annually, provides US$100,000 over two years to a student under 22, plus guidance and resources.)
Founders Fund then chipped in as Figma raised more than US$60m across a series of early funding rounds. Today the company numbers the likes of Airbnb and Twitter among its clients.
Hewitt says Field was initially something of a mentor with phone calls at least once a month to discuss strategy, and their similar startup stories. With the latest funding round, Field decided to become a financial backer, too.
A number of tech companies have howled about the effects of the pandemic. But while he confesses to going a bit stir crazy in his flat at times during level 4 lockdown, Hewitt says it's been pretty much business as usual.
The $3.5m raise was done remotely, with no fuss.
What about hiring?
"Everyone and their dog has had issues with border restrictions and getting people through," Hewitt says.
"But we've got staff starting during the current lockdown, in and out of Auckland. So we're adapting."
Does he worry about FDA approval - a process that's blown out for many a med-tech, at the best of times - now that the agency is under pressure to access booster shots and various Covid treatments and testing technologies?
Hewitt says it's the opposite. With the pandemic, "the FDA has been putting a big emphasis on tools like ours in the digital health area - partly because they can help so much at times where you do want to be distant and can work with patients remotely. So they've been pretty good at what pushing through technology like ours."
Nolan says, "The use of AI in medicine is reducing pressures on health systems and ultimately saving lives. The HeartLab team has built a really compelling AI-powered platform that doctors love to use. We're impressed with the progress they've made since we first backed HeartLab a year ago and we are excited to continue to support them throughout this next phase of growth."
And Icehouse's Paul adds, "Will exemplifies what we look for in founders. He's tenacious, personable, bright, and dedicated to solving an important problem. It's hard not to get excited when you come across a founder like him."