Here at Valley Capital we are beginning a series of posts that will offer a brief look into portfolio companies that get us excited and we believe are changing the world. For more of these posts, follow us on LinkedIn @ Valley Capital Partners, and to learn more visit us at www.valleycapital.vc.
Clinically relevant radiology misses affect nearly 1 million patients every year in the US. Ferrum gives radiologists a safety net by finding clinically relevant findings on the image that aren’t present in the radiologist report and automatically submitting them for a second read. There are ~20 venture backed early stage companies in the AI medical imaging space, each focusing on either automatic diagnosis, computer assisted diagnosis, emergency triage, and quality improvement tools.
Meet Ferrum Health
Ferrum Health is providing AI in medical imaging to improve quality of diagnostic interpretation, and to make AI for medical imaging more readily available to hospital institutions.
Valley Capital Partners was interested in investing in Ferrum Health for three main reasons:
1) Investment in quality improvement tools for AI medical imaging – believe this category will win. This category has the lowest friction for purchase and implementation, particularly with both IT and clinical workflow. The core strategy of the company is to reduce as much friction as possible for the DICOM / HL7 integration of their Ferrum box directly into the data center for hospital systems. The Ferrum box is low cost ($5,000), seamless integrates into the existing IT and clinical work flow, and importantly allows the data for the hospital centers to stay in the hospitals. In addition, the company is not aiming to own hospital data, which we believe most hospitals would be too reluctant to give up. Indeed, this has hampered the success of many venture backed start ups in this space, as they have had issues scaling and struggled with the long sales cycle.
2) Anticipate a much shorter sales cycle for Ferrum compared to other venture backed AI medical imaging companies and large technology companies (Google, Microsoft) because of the team. Pelu Tran, CEO of Augmedix, has had a lot of success at Augmedix (>$70M in venture and strategic funding) running their sales / product division, having sold products to built relationships and sold products to 10+ large health systems over the past 5 years. Pelu is excellent at articulating the value to healthcare systems, and indeed, he is also adept at anticipating the challenges of implementation and addressing them appropriately.
3) Investment in access to de-identified healthcare images with network effects. On one side of the network, you have large technology companies, research centers, medical centers, venture backed start ups. On the other side of the network, there are health systems that own their imaging data. Pelu is adept at scaling a platform on the hospital side, which is the hardest part of the network to build. On the other side, other companies would eventually pay to to access de-identified healthcare images. Building a scalable, strong two sided network creates a significant barrier of entry.
What’s Next for Ferrum Health
Ferrum Health closed an $9m seed funding round in 2020.
The round was led by Blumberg Capital with participation from GSR, Vulcan Capital, our team at Valley Capital Partners, and a strategic family office. As part of the financing, Patrick Steele (Blumberg Capital) joined Ferrum Health’s Board of Directors.
The company intends to use the funds to continue to advance and refine its flagship AI patient safety platform, make key engineering hires, and grow its sales and marketing capabilities.