Startups talk about what it’s like to raise money in a pandemic

You might think it would be hard for a digital health startup to raise money in a pandemic, but judging from recent reports, that’s simply not the case. MedCity News recently spoke to the CEOs of Evidation and BrightInsight, two startups that have recently announced funding rounds amid the worsening COVID-19 pandemic.

At the beginning of July, Evidation raised a $45 million Series D round led by B Capital with participation from several other investors including McKesson Ventures; and on June 23, BrightInsight announced the close of a $40 million Series B funding round.

Although in-person meetings between startup executive teams and venture capitalists have traditionally been a key component of the fundraising process, are nearly impossible, these CEOs have managed to make a pitch to investors and were amply rewarded.

“I like to say that in-person meetings are so critically important in the absence of a long-term relationship,” said Evidation CEO Deborah Kilpatrick. “That still is the same, especially if you’re about to invest tens of millions of dollars into a company, you want to have a sense of the person who’s running the company.”

However, Kilpatrick said, the investors in Evidation did have a long-term relationship with the company. Lead investor B Capital was an insider, and while McKesson Ventures and Section 32 were new investors, they did have existing relationships with Evidation.

The fundraising was underway by the fourth quarter of 2019, and Evidation had already entertained verbal offers and accepted a term sheet proposal. However, the due diligence happened during the middle of the COVID-19 pandemic.

The company timed its announcement for after the close of its Series D round and the appointment of Sam Marwaha as chief commercial officer so both could happen at the same time. Evidation also felt some sensitivity about sharing great news in the middle of a pandemic while things were shutting down and people were losing their jobs.

BrightInsight CEO Kal Patel said there has been a “bifurcation of investors” into one group that is interested in shoring up their portfolios to ensure survival, and those that are genuinely open for business.

“We learned to ask those questions to separate out those investors who were able and committed to making new investments, versus the folks who want to keep the network going, but are probably not able to move in the timeline we had in mind,” Patel said.

Read the full article here.

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