A local digital healthcare company nabbed a few million in investment this week, a nod to Pittsburgh’s growing life sciences sector.
Healthcare IT company ThoroughCare, announced this week that it closed on a $3 million investment from Dallas-based Cypress Growth Capital. ThoroughCare, which has offices on the North Side, was founded in 2013 and specializes in the development of a digital care coordination platform offered as a SaaS product to the startup’s more than 600 customers.
ThoroughCare founder and CEO Dan Godla noted in an email to Technical.ly that this raise marks the company’s Series A round through Cypress’ royalty-based financing model that will allow ThoroughCare to maintain ownership. The model is different from a traditional equity round, as this royalty-based funding provides startups with funding in exchange for a fixed percentage of future monthly revenues.
Once the total royalty payments over time reach a previously agreed upon amount, the startup’s obligation to provide royalties to Cypress is fulfilled. The VC firm’s website notes that its royalty-based capital is often a good option for startups looking for a bridge to future funding or in need of a funding option that doesn’t give up a significant amount of equity.
“ThoroughCare has a proven SaaS solution serving a rapidly growing segment of healthcare,” Cypress Partner Pat McCaffrey said in a statement. “Dan and his team have built an exceptional business and it is poised for dramatic growth. Preserving their increasingly valuable equity is a top priority.”
Data from PitchBook and Crunchbase indicate that ThoroughCare previously raised undisclosed amounts of money from Innovation Works and Iron Yard Ventures, a South Carolina-based accelerator focused on digital health and education tech startups. That funding comprised the startup’s seed round and included a few convertible notes along the way, Godla said. But overall, ThoroughCare’s organic growth over the last nine years didn’t require a major round, he added.
“This capital investment recognizes the mission and value proposition of ThoroughCare to help simplify care coordination and value-based care delivery through digital solutions,” Godla said in a statement. “Through this funding, we look forward to growing our team and expanding our reach to provide software solutions that enhance clinical and operational efficiency for healthcare providers across the country.”
The startup made headlines last summer by ranking at 854 on the Inc. 5000 list for the 5,000 fastest growing companies in the country. It was the second highest ranking in Pittsburgh, falling only behind 2017-founded employment and consultant services company eNGINE. That growth will continue with this new funding, as ThoroughCare plans to add at least 20 to 30 new employees in the near future, including roles for sales representatives, account executives, software developers and tech support representatives, many of which will be based in Pittsburgh.
Currently, the software is used by more than 600 doctor’s offices and Clinics, and its growth has happened mostly organically without a full sales organization, Godla wrote in an email to Technical.ly.”This funding will help us to rapidly build out our sales team nationwide,” he added. “We’ll also continue to enhance our platform to keep up with the changing needs of physicians and health systems.”
ThoroughCare’s round is the latest in a recent batch of Series A raises for Pittsburgh companies, including $6.5 million for Arieca yesterday and $12 million for OtterTune last week. The numbers are still behind the first quarter of this year, which was anchored by a $70 million Series D and a $73 million Series C for RoadRunner Recycling and Gecko Robotics, respectively.
ThoroughCare’s success is another demonstration of Pittsburgh’s growing capacity for life sciences companies. The city saw moves with the recently acquired ALung Technologies and novel drug development for Peptilogics.
“Pittsburgh is a great city to grow our business. When we relocated the company to Pittsburgh in 2017, we were welcomed by many of the local groups (Innovation Works, URA and Pittsburgh Life Sciences Greenhouse) with both funding, support and mentorship,” Godla told Technical.ly. “Pittsburgh is a great town for a healthcare industry that’s craving innovative ideas. The low cost of living and high quality resources make it an attractive space to continue to grow our business.”
Sophie Burkholder is a 2021-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Heinz Endowments. -30-