Healthtech and fintech have become two of the most exciting spaces in the early investment world over the last several years. According to a recent report from CB Insights, there are over 130 fintech unicorns, including companies like Stripe and Klarna and over 50 healthtech unicorns, such as ZocDoc and Noom.
Healthtech, in particular, has become a main investment focus for NVP. We are interested in startups solving problems like access to healthcare (mira), the social determinants of health (RideHealth), and digitizing the non-medical aspects of care (WellSheet). Similarly, some of our most successful fintech investments hit the same notes. MoCaFi, for example is making financial services accessible to traditionally underbanked communities, and LendingFront was founded on the fact that lending to small businesses was harder than it should be, creating access problems for small business owners. The synergies in these two spaces were highlighted when we met Roshan Patel and his team at Walnut.
Walnut breaks up large medical bills into small, monthly payments at 0% interest. While Affirm and others focus on e-commerce whales, Walnut focuses exclusively on healthcare. Today, when you decide to make a big purchase online, you are likely to get a popup asking if you’d like to open a 0% interest credit line to pay off the total over the next x amount of months. Walnut is that solution for medical procedures that force you to come out of pocket, or even where there may be a high deductible. It’s an excellent option for people who may be uninsured, those who may be undergoing an elective procedure or one that’s not covered, or those who are faced with paying a high co-pay or deductible all at once. It’s also a game changer for hospitals who often face challenges when it comes to collecting on bills that patients just can’t payoff at once. In fact, hospitals collected less than 20% of out-of-pocket costs in 2017.
Walnut is not the first to try to redefine medical debt financing, a $56B+ market, but NVP believes that the customer experience that patients receive as consumers has permeated into healthcare and that the abundance of individual financial data points creates a market dynamic that will allow Walnut to break through. Walnut leverages thousands of data points (only recently available at cost effective rates via FinTech APIs) beyond credit score and income and by utilizing machine learning, Walnut will create a far superior underwriting process that will be able to better predict repayment and allow more people access to interest-free financing. We recently invested in their $3.6M Seed round and asked Roshan to give our blog readers the inside scoop on the inspiration behind Walnut, fundraising, COVID-19’s impact on healthcare and more…
NVP: What inspired the creation of Walnut?
RP: A loved one of mine was hit by a car while jogging, fractured a bone in her leg, and subsequently got a medical bill for several thousand dollars. Going through the process of dealing with the hospital to dispute the bill and then dealing with harassment from the collections agency was a nightmare. This experience got me thinking about how so many Americans struggle to pay for the medical care they need. A product like Walnut would have helped us a ton, but nothing like it existed at the time.
NVP: Walnut exists at the intersection of healthtech and fintech. Do you view it as one more than the other and why, and how do you message that in-between space?
RP: We’re a B2B2C company: we distribute through healthcare providers to deliver a financial product to consumers. I view ourselves as a fintech company in the healthcare space, much like Affirm views themselves as a fintech company in the e-commerce industry. That said, we definitely do have aspects of our product, brand, and marketing that straddle both fintech and healthtech. For our healthcare provider partners that we distribute through, a lot of the focus is on the healthtech side. For our end-users that we ultimately serve, a lot of the focus is on the fintech side.
NVP: Has COVID impacted your journey or mission at all? Influenced the product, your fundraising success, or hiring cycle, or even the way the team is managed?
RP: Unfortunately, COVID has been a huge driver for Walnut demand. Millions of Americans found themselves unemployed and thus uninsured, and vulnerable to large bills with no steady income to pay them. As a company founded in 2020, we built and iterated as fast as possible to make sure we could get our MVP out there to help those impacted by COVID. Being able to help patients who need it most, especially during this pandemic, has validated and strengthened our belief in our mission to expand financial access to healthcare.
NVP: Congrats on closing your recent $3M Seed! As someone who previously worked in VC, what are some things you look for in potential investors beyond the ability to write a check?
RP: We look for investors that can help with hiring, funding, and sales as those are three constant needs throughout the life of any startup. Since we’re operating at the intersection of two complicated industries, healthcare and financial services, expertise in either of those industries is incredibly important. Above all though, we look for investors that are willing to roll up their sleeves and help us with the nitty gritty on a daily basis.
NVP: I have to know, what is the reason behind the name?
RP: Many legacy financial services and healthcare companies were founded decades ago and have generic, similar-sounding sounding names. We wanted a name that was simple, friendly, and inviting but also differentiated and “Walnut” fit the bill. Also, healthcare is a tough nut to crack!