HealthTap now has $11.5 million to expand its social network of 6,000 physicians who answer patient health questions online--money it'll use to try to keep those doctors busy.
That's a lot of cash for a health tech startup to raise in its first formal round of funding. Even more impressive is HealthTap's list of VC investors: Mayfield Fund, Mohr Davidow, and Eric Schmidt's Innovation Endeavors.
"We're very fortunate, and I'm humbled to say that in our case the decision was more about choosing the right people to lead our round, rather than the challenge of raising money," says HealthTap CEO and founder Ron Gutman. "I think the climate for raising money is still pretty good--the question is really by whom."
HealthTap received seed funding in early 2011 from an all-star cast of angels including Esther Dyson and Mint.com founder Aaron Patzer. Add Eric Schmidt and Tim Chang (recently named the managing director of Mayfield Fund and on the Forbes Midas List) and this is your investor dream team.
Unlike Q&A communities (Quora, Yahoo Answers, Ask.com or Facebook Questions), HealthTap answers come from real doctors. Unlike WebMD, the answers are specific to the patient asking them. Patients get their basic health care questions answered for free (the types of FAQ doctors are happy to get down on the record) so face-to-face time with doctors, if necessary, can be more targeted. Doctors demonstrate their knowledge on HealthTap and move up in HealthTap's physician rankings when their peers vote on their patient replies. The visibility can lead to new patients and larger practices.
But HealthTap is still relatively unknown. Physicians are onboard (all of which undergo a HealthTap background check to verify their medical license and good standing) but HealthTap has yet to prove patients are receptive.
Many have seen too much bogus health advice from Q&A sites and their knee-jerk reaction is to just call their doctor to figure out if they need to be seen. Why should they suddenly trust a virtual practice?
HealthTap says this service isn't here to replace doctor visits. It is simply designed to provide reliable health information online and help patients find the doctors best suited to address their health concerns. But HealthTap has an investor team that will push Gutman and HealthTap's technology to do more.
Gutman says HealthTap is completely focused on product and distribution and he plans to keep the service free, but HealthTap does have a plan to make money. Gutman just isn't ready to share it yet.
"I'm very confident this is going to make money," says Rowan Chapman, a partner at Mohr Davidow who also provided seed funding for HealthTap. "When I met Ron three years ago I said 'this is a guy that I want to invest in.'"
Chapman says there are "several" ways HealthTap can make money, but defers to Gutman to give specifics.
Chapman says the health tech industry is an attractive investment opportunity because of three forces: First, the iPad and its massive adoption rate is making health tech more accessible and user-friendly for providers and patients alike. Second, cloud computing has caused a massive reduction in the cost of infrastructure, making huge networks like HealthTap possible. Third, health care reform and it's tangled mess of issues is a ripe environment for innovation.
HealthTap launched its mobile service two months ago. The free mobile service was, in my opinion, the cherry on top for HealthTap. Asking medical questions on the fly without having to call a provider--who typically needs to call you back only to tell you to just come in--is a major step towards the mobility the health industry needs. Once HealthTap harnesses the power of the iPad, something the company plans to do in 2012, this app has the potential to be a powerful communication tool in the medical industry.
In the meantime, HealthTap is going to need to spend its $11.5 million on raising awareness and trust. The company says it will also spend the money on new hires.
Gutman has one piece of advice for other health tech startups hoping to raise money in the new year: "Don't wait."
"With concerns over the financial state of Europe, and other macro economic financial indicators, we may be heading into a challenging and uncertain 2012. So now is still a good time to get the right investors on board," says Gutman.