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This NYC Startup Raised $750K to Prevent this Debilitating Disease

 

blue mesa health

With nearly 90% of Americans at risk of developing type-2 diabetes and affecting 29M Americans, diabetes has definitely taken its toll. But while this may seem bleak, the silver lining is that type 2 diabetes is completely preventable by changing your dietary habits and Blue Mesa Health is leading the charge. With their digital diabetes prevention program, Blue Mesa partners with your doctor to provide health coaches, wireless scales, and fitness tracker software to measure and change your dietary habits. With type-2 diabetes affecting more and more Americans, it is time to start fighting diabetes before it fights you.

AlleyWatch spoke with founder and CEO Curtis Duggan about the company and their most recent round of funding.

Who were your investors and how much did you raise?

We’ve raised $750K in our seed round of funding and are closing some more this quarter. Our investors include Blueprint Health, Mobio Technologies, Pallasite Ventures, Redbrick Media, Stanley Park Ventures and John R. Patrick. Given the traction we are seeing, I imagine we will be raising a Series A this year as well.

Tell us about your product or service.
Blue Mesa Health delivers a science-based, technology-enabled digital diabetes prevention program to prediabetic individuals. Our remote program, based on the CDC’s National Diabetes Prevention Program, provides individuals with a year-long program delivered by a dedicated health coach. The program is aimed at reducing the risk of developing Type 2 Diabetes. In addition to the remote health coach, we deliver a wireless scale and FitBit to the participants’ home and leverage this technology to help them through our 16-week curriculum with the goal of instilling sustainable healthy behaviors and a reduction from starting weight of 5-7% body weight. A description of the features of our product alone, however, are not sufficient to encapsulate the impact of what we do: we are fundamentally outcomes-focused, and all of these features serve to guide our outcomes: 78% of our participants reach 5.2% body weight loss at six months into the program.

What inspired you to start the company?

My inspiration to start Blue Mesa Health was two-fold. In recent years, I’ve watched several family members and relatives pass away from lung cancer, among other chronic diseases. Although lung cancer is not a disease generally associated with prediabetes, it’s a disease that is largely the result of behavioral choices, just as prediabetes is. I felt drawn to leverage my experience in product and in mobile across a variety of industries to help others change their behavior and prevent chronic disease. This experience is something I gained at my previous entrepreneurial venture, a mobile app design agency, which I exited in 2014. After a period of research and reflection on what to do next, I felt inspired by the enormity of the growing crisis of the effects of diabetes on society, leading me to dive in and start Blue Mesa Health.

How is it different?

Blue Mesa is unique in its tailored approach to diabetes prevention. Unlike other digital providers with a fairly one-size-fits-all approach (despite superficial marketing claims to personalization), we have three distinct-from-the-ground-up programs, Transform, Tranformemos, and Transform-By-Mail.
Transform is our flagship Digital Diabetes Prevention Program, a mobile-centered program that places individuals in peer cohorts for continued support.
Transformemos is our Digital Diabetes Prevention Program in Spanish, providing individuals with Spanish-speaking health coaches that are familiar with Latino and Hispanic culture.
Transform-By-Mail is our low-tech platform, providing individuals that are less familiar with mobile applications access to a health coach and weekly lessons through phone calls and mail.

Our approach allows us to create a truly global digital therapeutics company that can address customers, participants and patients in markets globally, with a vision to make diabetes prevention available to all global citizens regardless of age, technology level or language spoken.

What market you are targeting and how big is it?

We are targeting the global diabetes prevention market, starting with a focus on the US. Digital diabetes prevention is rapidly approaching a $1 billion market size by 2020. If you consider the global market, the market size increases again by an order of magnitude. Currently in 2017, digital diabetes prevention encompasses roughly a 100-150 million dollar market but it is ready to rocket in the next five years. Digital health is truly at the stage where personal computers were in 1980 and where the Internet was in 1992.

What’s your business model?

Our value proposition for the payers in the healthcare system is to reduce costs related to chronic disease claims, specifically to Type 2 Diabetes. Our business model is to work with risk bearers like self-insured employers, health plans, ACOs (Accountable Care Organizations), and hospital systems. We coach their employers, plan members, and patients to reduce their risk for Type 2 Diabetes.
We earn our fee in delivering our behavioral change program in a pay-for-performance model, meaning we get paid when participants actually engage with the program and lose weight. The individuals themselves take the program at no co-pay. This business model holds us accountable and is attractive to payers who have been frustrated by many decades of poorly-measured wellness programs.

What should everyone know about diabetes?

Type 2 Diabetes is a very common, chronic health condition in which individuals have difficulty managing their blood glucose levels. It’s usually due to the body’s inability to make or use insulin, a hormone responsible for regulating blood sugar levels. Type 2 Diabetes is acquired throughout an individual’s life and there is no cure. However, diabetes can be prevented and managed by making lifestyle changes to nutrition and exercise habits, which is what we aim to help accomplish at Blue Mesa.

Type 1 diabetics face unique challenges that are beyond the scope of this response and we encourage them to find solutions that will work well for them.
The number one thing everyone should know about type 2 diabetes is that it is entirely preventable, and that one-third of the country is at risk for it. 8 out of 9 people at risk don’t know they are at risk. We would encourage everyone to understand that screening and referral into a prevention program like Blue Mesa’s Transform can vastly improve quality of life: resources are available and there is massive support nationwide for helping to stem the tide.

What was the funding process like?

One of the things I’ve learned as an entrepreneur is that, no matter how much you try to plan, you can’t predict how a funding process will pan out. As an international team, we raised money in multiple countries from different types of investors – angels and institutional firms. Some investors were ready to invest right away while others wanted to see more funds close. My advice to other entrepreneurs is to simply do what it takes to get the deal done. Don’t over-optimize. Once we had arrived at basic, fair terms and valuation cap for our convertible note, we found a lot of success by just connecting with the right people, sharing our vision, and deciding to work together.
The funding process is never really over. We are always looking to talk to individuals and firms that can help support our growth with capital.

What are the biggest challenges that you faced while raising capital?

As a digital health company that delivers a clinical program, and for whom success is highly tied to the success of our clinical outcomes, one of the early challenges we faced was overcoming skepticism about our outcomes when we had smaller data sets. Many investors had likely seen similar pitches for companies that made claims they couldn’t ultimately back up. As we continued to run more participants through the program and prove our results, rejections became easier to overcome.
This particular aspect of fundraising has had an extremely positive effect on our team culture and product: everyone knows how important it is to put our money where our mouth is and think about driving real, measurable outcomes every day that we wake up and go to work at Blue Mesa.

What factors about your business led your investors to write the check?

I think that, as with all companies that are successful at fundraising, there are several sector-agnostic common themes present whenever an investor writes a check: team, market size, and ability to execute.

When investors decided to write a check for us, it was because the stars truly aligned in all of those three key areas. Even since I first thought about raising money a year ago, there has been a significant macro shift towards interest in digital health and healthcare in general in the investing space.

When I first started to pursue raising money, digital health was on an upswing. Now, we are seeing even more momentum with technology giants like Apple, Google, and Microsoft pivoting entire business divisions to tackle technology solutions for health problems. In addition to the specifics of what we’ve accomplished with our founding team, I think investors also recognize that at a macro level, this is going to be one of the biggest spaces of the next ten years. There’s over a trillion dollars to be made in disrupting healthcare in the next ten years.

What are the milestones you plan to achieve in the next six months?

In the next six months, we will expand our program to 5,000 more participants and expand internationally to several more countries. It’s going to be an exciting new stage in our growth. We have some very exciting new developments I can’t talk about that are going to be really interesting to launch.

What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
I would give companies two pieces of advice. Firstly, do whatever you can to cut your burn rate down as much as possible and compensate with equity. Founders should have difficult conversations about reducing their salaries. Burn is always what kills startups so difficult conversations about ways to cut down on burn are a number one priority.

Next, make sure at least one founder is a full-time fundraiser and salesperson. This person should not be distracted by product, operations, or unimportant administrative items. Companies grow in two ways – through paying customers and through investors. Fundamentally, you want revenue traction to drive the investment traction, so founders should always be closing.

Where do you see the company going now over the near term?

In the near term (next few months) we are going to help over 2,500 people reduce their risk for type 2 diabetes. It’s what we do!

What’s your favorite restaurant in the city?

There’s a vegetarian restaurant in Nolita — I didn’t even know that was the name of a neighborhood until I looked it up — called The Butcher’s Daughter, which I love. After a fairly intense session playing street basketball on the Lower East Side, a couple of friends and I chose The Butcher’s Daughter for a post-game dinner and juice.

Although we weren’t sure if it was for us at first glance, I have to say, that particular dinner was one of the most delicious, fresh, and well-prepared meals I’ve ever had. We shared several dishes and I was just surprised at a fundamental level that I could experience raw vegetables in a totally new way.

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