When lifetime value is for life, or why we’re backing Echo’s Series A
By: Christian Hernandez
Managing Partner, White Star Capital
The United Kingdom’s National Health Service (NHS) estimates that over half of all adults take a prescription medication. The NHS currently spends close to £18 billion on prescription medication each year and pharmacies in the UK dispense over one billion prescriptions annually. In other words, the business of health and medication is big!
And yet for those millions of patients, the repeat process to get their prescription is painful: Try to book an appointment with your doctor, wait in the lounge of their practice, receive your paper prescription, go to your local pharmacy, wait for the pharmacist to fill the prescription (if they have it in stock at all), repeat all of the above on average eight times per year!
Despite the scale of this market, it is a vertical that has yet to be improved through the use of technology and digital commerce, in part due to the regulatory and medical complexities of managing a person’s health. Echo, the mobile-first prescription management platform, is seeking to change that, and today we are proud to be leading Echo’s £7m Series A to join them on this mission.
The story of Echo starts with its founders, Sai and Stephen, both of whom take prescription medication on a regular basis and have personally felt the pain of the current process. They designed Echo to integrate with the NHS’ IT systems and to make the process as painless as possible for patients and GP’s alike.
The Echo team is delivering on their promise to delight patients by giving them back their time, improving the customer experience and, most importantly, ensuring patients have their medications when they need them, and take it as recommended by their Doctor.
Apart from delighting customers day in and day out, Echo is also building a business that sees data as a competitive advantage. Through simple notifications, the Echo app reminds patients to take their medication based on the suggested schedule. This is a critical, but often overlooked challenge in healthcare: When patients don’t take their medication as prescribed, they can often return to the NHS much worse off health-wise. It is estimated that non-adherence to prescriptions costs the NHS £500m per annum in wasted medicine alone. The cost of non-adherence overall is likely in the billions of Pounds if you take into account the lost income, longevity and productivity from those patients and the fact that as much as half of all prescribed medication is not taken as directed.
By engaging with a user on a daily basis, Echo can help increase adherence and work with the NHS and GPs to help improve long-term care of patients.
All of the above helped us gain conviction on our investment into Echo, but at the end of the day, we needed to evaluate their potential under more traditional metrics of e-commerce businesses such as acquisition cost and lifetime value of customers…and this was the crucial turning point for us: Assuming that Echo continues to delight customers and work closely within the NHS framework and with GPs, the answer to “how long is the lifetime value of a customer?” is actually that customer’s life! And that is a metric that has implications well beyond a financial model.
We are proud to welcome Sai, Stephen and team to the White Star Capital portfolio family and look forward to working with them to scale the business and achieve their vision of a digital health platform that benefits us all.
White Star Capital is an early-stage Venture Capital firm investing in exceptional entrepreneurs who are building the iconic companies of tomorrow. With a presence in London, New York, Montreal and Paris, and a team with deep operational expertise, we partner closely with the teams we back to help them scale globally. For more information, visit www.whitestarvc.com.