Elemeno Health is offering Preferred Equity in its current funding round. The pre-money valuation for this round is set at $6 million, with shares priced at $0.06 each. This valuation reflects the company's current stage and its potential for growth within the healthcare technology sector.

Just last week, SJF Ventures committed to lead a parallel Reg D convertible note financing of $1.25 million. This will inject new money into the company – in addition to investments made by Wefunder investors in this Series Seed priced round. Elemeno has commitments for all $1.25 million but may take less if the full $1.25 million is not deemed necessary to provide cash runway into 2026. The first closing, representing half of the $1.25 million, funded on December 16, 2024. The new convertible note terms include a $15 million valuation cap as well as a 2x liquidation preference in the event that it does not convert prior to a liquidation event. The convertible note will be senior to all other securities, including the Wefunder Series Seed priced round.

There are approximately $14 million of prior junior liquidation preferences. Assuming a future growth round, we expect (but it’s not certain) that preferred will be converted into common. This would help the Series Seed take advantage of this valuation. If preferred were not converted into common, then waterfall calculations indicate an investor in this round would generate above a 1x at a company exit value in the high $20s million and begin to take advantage of the low valuation. For example, an investor would receive a 20x in the low-to-mid $200s. These are rough numbers and assume no further financings/dilution for simplicity.

The healthcare professional training market in the U.S. is valued at approximately $271.8 million, with an annual growth rate of 7.6%. This market is driven by several key trends and factors, including the increasing complexity of healthcare delivery, the need for continuous professional development, and the focus on reducing medical errors and improving patient outcomes.

One of the primary market drivers is the ongoing workforce crisis in healthcare, characterized by high turnover rates and staffing shortages. This situation underscores the need for effective training and team communication solutions, which Elemeno Health provides. The platform’s ability to facilitate consistent practice and real-time access to best practices can help healthcare institutions address these workforce challenges, improving retention and efficiency.

Another significant trend is the growing emphasis on digital transformation within the healthcare sector. Adopting digital tools and platforms for training and communication is becoming increasingly common, driven by the need for scalable and flexible solutions that can adapt to the dynamic healthcare environment and the learning styles of a rising workforce of “digital natives.” Elemeno Health’s digital platform aligns well with this trend, offering a modern approach to professional training that leverages mobile technology to enhance learning and operational efficiency.

Elemeno Health targets a broad segment within the healthcare professional training market, including nurses, doctors, and allied healthcare professionals. While its platform particularly benefits hospitals and clinics looking to improve point-of-care training and team communication, it also has potential applications in other healthcare settings such as outpatient facilities and long-term care institutions. Just this week, pharmaceutical industry tech accelerator PharmStars announced Elemeno as one of its Fall 2024 graduates, filling the niche of Digital Health Innovations in Clinical Trials. This broad applicability means that Elemeno Health is not limited to a niche market but can address the needs of a wide range of healthcare and life sciences providers.

Elemeno Health is led by Founder and Chief Medical Officer Dr. Arup Roy-Burman, who completed his education and medical training at Berkeley, UC San Francisco, and Stanford. He began his career in academic medicine at UCSF Health. He then served as a Pediatric Intensivist and President of Children’s Critical Care Medical Group at Children's Hospital Oakland. From there, he went on to serve as both Director of the ICU and Director of Transport, Access, and Outreach at UCSF Benioff Children’s San Francisco. Concurrently, he has served as Associate Medical Director at REACH Air Medical Services and California Shock Trauma Air Rescue. He has founded and led regional and international collaborations as Chair of the Northern California Pediatric Intensive Care Network and Chair of 501(c)3 Global Healing. Finally, he continues to actively serve as a part-time Pediatric Intensivist at UCSF Health. 

New at the helm of Elemeno is Tim Coulter, who joined as CEO on December 16, 2024. Tim replaces Linda Hand who served for one year, reorganizing the company and processes to improve gross margins from 21% in 2023 to a projected 62% for 2024 YE. Tim brings deep experience in managing operations and leading sales and account management teams that serve health systems. At Medicity he led client growth to ~100 health systems and 1,000 hospitals. He was also a key team member that led Medicity’s $500M acquisition by Aetna. The founders of Medicity brought him on to serve as President and COO of their next healthtech company Dina, where he has led nearly $25 million in financing, growth to back to back years as an Inc. 5000 company, and recognition on Newsweek's World's Best Digital Health Companies 2024 list.

Elemeno Health operates in a competitive landscape with several notable players in the healthcare professional training and communication space. Two prominent competitors include HealthStream and Relias, both of which offer comprehensive training solutions for healthcare providers.

HealthStream is a well-established company that provides workforce development and training solutions tailored to the healthcare industry. With a larger market presence and extensive resources, HealthStream offers training modules, compliance solutions, and performance management tools. In terms of company size, HealthStream is significantly larger than Elemeno Health, with a more extensive product portfolio and a well-established customer base. However, Elemeno Health focuses specifically on point-of-care training and real-time team communication, offering a more specialized solution that addresses immediate needs in clinical settings, and the unique localization needs of each individual hospital and department.

Relias, another major competitor, offers online training and compliance solutions for healthcare providers. Similar to HealthStream, Relias has a substantial market presence and provides a wide array of training programs across various healthcare disciplines. Relias's platform is known for its comprehensive content library and robust analytics capabilities. While Elemeno Health may not have the same breadth of content as Relias, its platform's emphasis on real-time access to best practices and team communication provides a unique value proposition that can enhance day-to-day clinical operations. Additionally, Elemeno’s growing shared content library is fueled by clients, providing a unique opportunity for hospitals to access the crowd-sourced knowledge of their peers.

In terms of pricing, Elemeno Health's subscription model is designed to be competitive and accessible for healthcare institutions of varying sizes. This contrasts with some larger competitors who may have more complex pricing structures due to their extensive range of services and features. Elemeno Health's focus on affordability and ease of use makes it an attractive option for smaller hospitals and clinics that may not require the full suite of services offered by larger competitors.

Elemeno Health has demonstrated notable growth over 2023. The company reported a 50% increase in subscriptions, contributing to its annual recurring revenue (ARR) of $2.5 million. This marks a significant improvement from the previous fiscal year's revenue of $1.7 million, reflecting a year-over-year growth rate of 47.1%. This growth in ARR indicates a positive reception of Elemeno Health’s platform among healthcare institutions and suggests an expanding customer base. On further discussion with the company regarding 2024 YTD performance, the company lost one major client which was on the brink of financial insolvency, and then rebounded in Q4 with over $500k in new contracted ARR and another $100k in one-time revenue.However, the company’s financial metrics highlight some areas of concern. Elemeno Health's most recent monthly burn rate is approximately $200k, with cash on hand reported at $438k as of December 2024. This equates to roughly two months of operational runway without additional funding, underscoring the critical need for capital to sustain operations and support further growth initiatives. With additional November staffing and expense reductions to be reflected this month and forward, the company expects a further decrease in burn by 27%. Now that these changes are completed, SJF Ventures is leading the parallel $1.25 million Reg D convertible note financing, to assure at least 12 months of runway.

In terms of profitability, Elemeno Health is still in the pre-profit phase, with a net income loss of approximately $5 million for the most recent fiscal year. This loss is higher than the previous fiscal year's net income loss of around $4 million, indicating increased expenditures as the company scales its operations. The current financial trajectory suggests that Elemeno Health must continue raising capital to bridge the gap to profitability.

Despite these challenges, Elemeno Health's revenue multiple of 3.49x indicates a reasonable valuation relative to its current revenue. This multiple is within a typical range for growth-stage companies in the healthcare technology sector, suggesting that the company’s valuation is aligned with industry standards.

Investing in Elemeno Health involves several specific risks that potential investors should consider. One notable risk factor has been the company's current financial situation, characterized by a low runway and, highlighting the urgency for new investment to sustain operations and growth. The previous risk of reliance on the Wefunder raise has been mitigated by the December 2024 SJF Ventures’ commitment to invest $1.25 million on a parallel Reg D convertible note, resulting in a projected runway of 12+ months.

Another risk is the company's net income, which was a loss of approximately $5 million for the most recent fiscal year. This indicates that Elemeno Health is still in a high expenditure phase and has yet to achieve profitability. Sustained losses at this level may require continued fundraising, which could result in dilution for current investors.

Elemeno Health also operates in a highly regulated industry, which poses significant compliance and regulatory risks. The healthcare sector requires stringent adherence to regulations and standards, and any failure to comply could result in legal issues, fines, or operational shutdowns. While Elemeno Health does not hold protected health information and has thus far navigated these regulatory waters, the evolving nature of healthcare regulations remains a persistent risk.

The competitive landscape of the healthcare technology market presents another challenge. Elemeno Health faces competition from numerous established and emerging players, all vying for market share in the healthcare professional training space. The company's ability to differentiate itself and maintain a competitive edge is crucial for long-term success. Additionally, the company’s current business model does not include a "moonshot" potential, which implies that while it may not be extremely high-risk, it also might not offer the extraordinary returns some investors seek.

The company's unique strengths provide a competitive advantage. Elemeno Health's focus on point-of-care training, hospital-specific customization, and real-time team communication differentiates it from broader training platforms offered by competitors like HealthStream and Relias. This specialized approach addresses immediate needs in clinical settings, helping to reduce medical errors and improve practice consistency. The platform's ability to provide real-time access to actionable best practices and instructional content is a notable strength that aligns well with current trends toward digital transformation in healthcare and the learning styles of the rising workforce.

Elemeno Health has seen strong annual recurring revenue growth over 2023 into 2024 (50%), boasting an extremely strong net dollar retention of 130%. These improving metrics have led two prior VC investors, SJF Ventures and SustainVC, to make follow-on investments in this equity round. Moreover, with the recent hire of experienced early-stage healthtech executive Tim Coulter as CEO, SJF is leading another $1.25 million of investment in a convertible note. These are positive signals that existing institutional investors will continue funding the company. In total, these two firms will have invested over $9 million into Elemeno Health. Additionally, as mentioned above, Elemeno has strong case studies with Benioff Children’s Hospital Oakland (75% reduction in time to implement training), North Bay Health (40% decrease in orientation time), and Children’s Hospital New Orleans (75% reduction in serious patient harm events).

Favorable investment terms and valuation also contribute to the bullish outlook. Considering the company's growth potential and market opportunity, the pre-money valuation of $6 million and share price of $0.06 offer a reasonable entry point for investors. The Preferred Equity structure provides added security, prioritizing dividend payments and liquidation preferences.

Several factors contribute to a bearish outlook for Elemeno Health. One of the primary concerns is the highly competitive nature of the healthcare technology market. Elemeno Health faces competition from established players like HealthStream and Relias, both of which offer comprehensive training solutions with extensive resources and established customer bases. Elemeno Health's platform, while specialized, may struggle to differentiate itself sufficiently to capture significant market share in the face of such competition.

Market challenges also pose a risk. While the healthcare professional training market is growing, the rate of adoption for new technologies can be slow due to the conservative nature of the industry. Healthcare institutions may be hesitant to switch from established training solutions to a newer, less proven platform. This slow adoption could limit the speed at which Elemeno Health can expand its customer base and achieve substantial market penetration.

From a financial perspective, Elemeno Health's current metrics raise concerns. While growing, the company's annual recurring revenue (ARR) of $2.5 million may not be sufficient to sustain long-term operations and achieve profitability without substantial increases in revenue.

This equity crowdfunding round is a substantial down-round for Elemeno Health, raising at a pre-money valuation of $6 million ($5 million early-bird). The company’s 2021 and 2020 rounds were at $20 million and $12 million valuations, respectively. In response to questions about this, the company admitted that revenue growth and margin improvement, while both rising, have not met expectations of the company’s venture capital investors. As a result, SJF Ventures and SustainVC severely adjusted the valuation down to reflect this. This, while certainly a risk and evidence of underperformance, allows new investors to invest the company at a favorable valuation-to-revenue multiple.

Elemeno Health is a healthcare technology company offering custom-built training platforms for hospitals and clinics. Elemeno's cloud-based app offers "just-in-time" actionable information to frontline staff 24/7, through bite-sized multimedia job aids delivering access to essential information for equipment, procedures, and workflows specific to each hospital/clinic. Using Elemano's platform, customers have seen 75% reductions in time to implement training, 40% decrease in orientation time, and 75% reduction in serious patient harm events. The company has raised two prior equity crowdfunding rounds in 2021 and 2020, raising a total of $2.3 million. Overall, the company has raised $21.7 million in capital over the life of the company.

The company is raising funds through Preferred Equity, with a pre-money valuation of $6 million and shares priced at $0.06 each. The valuation reflects the company's current stage and potential for growth within the healthcare technology sector. Preferred Equity offers advantages such as priority in dividend payments and liquidation preferences, providing an added layer of security for investors.

The U.S. healthcare professional training market, valued at approximately $271.8 million and growing at a rate of 7.6% annually, presents a significant opportunity for Elemeno Health. Key market drivers include the ongoing workforce crisis in healthcare and the increasing adoption of digital training solutions. These trends create a favorable environment for Elemeno Health's platform, which addresses the need for effective training and real-time communication among healthcare professionals.

In terms of performance, Elemeno Health has shown promising growth, with a 50% increase in subscriptions and an annual recurring revenue of $2.5 million. However, the company reported a net income loss of $5 million for the most recent fiscal year, highlighting the need for continued capital infusion. The company’s runway is being extended to 12+ months with a parallel Reg D convertible note, led by SJF Ventures with a commitment for $1.25 million.  

Elemeno Health differentiates itself from competitors like HealthStream and Relias through its specialized focus on point-of-care training, hospital-specific customization, and real-time team communication. The platform's unique value proposition is its ability to provide real-time access to updated practices in the form of custom, contextual multimedia job aids, which sets it apart in a competitive market. The primary customer demographics include healthcare institutions and frontline healthcare professionals.

On the bullish side, Elemeno Health's growth in subscriptions and annual recurring revenue, coupled with favorable market trends, provide a strong foundation for future expansion. The company's specialized focus on point-of-care training and real-time communication addresses critical needs in the healthcare sector.

On the bearish side, the company's financial health, characterized by a high burn rate and need for additional capital beyond the crowdfunding raise, poses significant risks. Additionally, the competitive landscape and regulatory challenges present hurdles that Elemeno Health must navigate to achieve sustained growth.

Kingscrowd Capital, after an in-depth analysis of Elemeno Health, has decided to invest $10,000 into the company’s current Wefunder round. There are multiple reasons we are excited to invest in Elemeno Health at this valuation. 

First off, we must address the major down round that the company has undergone with this current raise. The company raised in 2021 at a $20M valuation and is now raising at a $6M valuation ($5M early-bird). In speaking with Dr. Arup Roy-Burman (Founder & CMO of Elemeno), discovered that the company pivoted in 2022 from focusing on quality and safety resources to leaning completely into workforce training. This led to a massive margin reduction to 23% and a period of uncertainty for the business. However, the company has now stabilized its margins to 60% and is still growing revenue year-over-year. We remain confident that the company is on the right trajectory and will continue to build towards profitability in the coming years sustainably. Additionally, we are purchasing Preferred Stock, giving us senior liquidation preference to existing capital raised and solid downside protection.

Secondly, as Elemeno Health focused on efficiency in 2024, it reset to conservative growth, with staff reductions, and a revised budget projecting $2.3M in 2024 and $2.8M in 2025 (projecting a modest 19% growth and determining financing needs accordingly). The company is already ahead of the 2024 YE target. While perhaps not the hyper-growth we typically look for in early-stage investment opportunities, the low valuation reflects realistically achievable growth expectations and higher likelihood that the current Reg CF and Reg D new investments will indeed provide 12+ months of runway. Additionally, the company’s most recent fiscal year has 130% net dollar retention, indicating low churn and a healthy flow of new leads.

Third, we are excited about the addition this month of Tim Coulter as CEO, given his track record of growth and exit at Medicity, and growth, fundraising, and company performance at Dina. We believe he is well-positioned to scale the business by drawing on his deep expertise in serving and selling to hospitals and leveraging the infrastructure improvements that have been put in place during the past year.

Finally, the efficacy of the platform is evident, with customers seeing a 75% reduction in time to implement training, a 40% decrease in orientation time, and a 75% reduction in serious patient harm events. The company is in 40 hospitals and is increasingly focusing on upselling current hospital systems, given the long sales cycle of entering new ones (68% success rate). 

Overall, we are very excited about the growth prospects of Elemeno Health and are particularly impressed with its ability to weather an early storm back in 2022. At its current valuation, we believe this is a perfect entry point for KC Capital, and we are excited to join Elemeno Health on its journey to becoming the leading platform for healthcare training.