As a venture firm with investment roadmaps in both healthcare and fintech, Walnut is almost too good to be true. If Roshan and Yash hadn’t already built Walnut as a lending platform for healthcare, we would’ve had to seriously think about starting it ourselves (but we’re glad they beat us to it)!
Walnut’s mission made a lot of sense to our team, as through our health investment roadmap we have followed the crushing debt burden created in the healthcare space – $140B in the US with 50% of Americans carrying some form of medical debt. Medical debt not only has a potential impact on credit, it also leads many people to defer medical procedures because of cost concerns. Therefore the patient challenge has become a provider challenge as patients delay care or put off payment - sometimes indefinitely. This isn’t a new problem, but what has changed is the way many people will seek care in the future as the pandemic created many more digital pathways to care. Hybrid and digital-first care models have led to a replatforming of patient engagement and check out flow.
On a parallel path, through our fintech investment roadmap we have been leaning into the opportunity for vertical focused financial solutions that leverage APIs for faster and more robust data access. We believe with the new connectivity in fintech, payment and lending can be overhauled across a range of industries. Companies like Affirm and Klarna are proof that the real-time API-first underwriting models can work at scale, and Stripe, Plaid and Pinwheel provide the connectivity to processing and data that make it possible. We have made a number of investments behind this thesis, in companies including MoCaFi, Quiltt, Wax and LendingFront.
The overlap of these trends in healthcare and fintech create a perfect opportunity for Walnut, a digital-first check-out integration for healthcare, with real-time underwriting and lending. We first invested in Walnut’s pre-seed round in 2021, and are proud to have led their new financing in April of 2022.
We believe that Walnut not only solves for all of the above pain points, but it fills an important gap in the existing market. Certainly, medical debt is not a new problem and there are companies, such as CareCredit, who have built $1B plus businesses lending in the space. However, current players are only solving part of the problem. As legacy lenders, none of the established companies in the space are patient-friendly or at all focused on consumer experience. Most also fail to take advantage of newer integration technology and are unable to create a truly digital-first experience, which would allow patients to engage with providers the same way they engage with other products and services in their lives.
Walnut’s unique BNPL solution for the healthcare industry takes advantage of embedded fintech APIs that have emerged in recent years mixed with new data sharing protocols for EHRs. This positions Walnut to be the leading digital-first solution built for healthcare lending and payments. The company’s technology forward and vertical specific approach will allow patients to have quick access to credit for medical care, and allow providers to generate more revenue by solving for payment. With Walnut, getting care and paying bills is not only possible, it's easy.
That is where Walnut is starting, but in the long run we believe they can help underwrite healthcare services both for providers and hospital systems, helping providers get out of the lending business and enabling patients to get better and more affordable access to care. As Walnut integrates with more providers and grows their patient end user base, they will accumulate new data sets that will help underwrite with alternative data in a way that is unique and not dependent on the credit score folks – who have no unique access to the industry. This is a trend that we believe will play out around embedded finance across many industries – that will develop verticalized payment and lending solutions.
We have developed a thesis around fintech for specific verticals, as the technology and business model advances in the consumer space can be applied to B2B use cases within industries that have legacy payment and lending solutions. We are in the early innings of this evolution both in the US and across Europe, LatAm and Africa. We've already backed several promising startups around this thesis, and are looking for more great founders to work with. If that might be you, or someone you know, we'd love to hear from you.
To learn more about Walnut and their Series A round, visit TechCrunch, here.