Closing a £4 million investment round in under 2 weeks during a global pandemic: what we learnt

So we recently closed our latest seed round. In the middle of a global pandemic!

At almost four million pounds, it marked one of Europe’s largest healthtech rounds for a company at our stage. Closing was a total whirlwind of Zoom pitches and virtual signatures but we got there in the end.

Throughout the process, we learnt a lot. I thought I would share some of those learnings here in case they’re helpful to other companies

Getting started

Like many other digital health companies, we’d had a really busy Q2 and Q3. We knew we’d need to start raising again in Q1 2021. Fundraising felt a bit ropey given uncertainty in the financial markets. We’d heard mixed things. Some investors were managing mixed outcomes in their portfolios and sitting on their hands to see how it would play out. Investors like Sequoia called it early with their widely-read “Black Swan” essay .

For Nye, simply put, having access to the capital and resources needed to build on our work is critical. We need to be able to develop our products, grow our team (psst — we’re hiring, check out our open roles here!) and address the challenges faced by patients and the healthcare system at large. Building powerful, scalable products used by hundreds of thousands of patients just takes time… and time needs cash.

Learning: you can never start fundraising too early. Communicate frequently with your investors, especially those that are likely to shape subsequent rounds

Raising the round

When deciding what approach to take, we were faced with a dilemma. We were building up great momentum so were confident we could go and deliver a traditional “priced” round. However, we wanted to move fast and knew that a lengthy raise could delay us in progress towards our mission.

We spent about 2 weeks looking at a variety of scenarios such as a traditional priced equity round or a convertible loan note. We spoke to our current and potential investors and modelled out the scenarios. We’re lucky to already have backing from our VC fund, InHealth, who helped us a lot with this.

When we weighed up the pros and cons, we agreed to optimise for speed and decided to pursue a convertible loan note.

Learning: being clear about what we were solving for helped us make a quick decision that we could execute against

Once we committed to the convertible, we had the money raised and in the bank in less than 4 weeks. We were looking for speed and we certainly got it!

Looking back at our monthly board meetings, we had one meeting where we agreed we’d pursue the convertible. By the next board meeting the funds were in the bank. I think it came down to having supportive investors that believe in what we’re doing, recognise that we have a strong team, and see the opportunity.

Investors

The round was driven by existing investors including our VC fund — InHealth.

(Side note: they’re a great fund with some awesome portfolio companies such as Kheiron, Suki, Clarify and Luma. Check them out here)

Having supportive investors and being able to move quickly makes a huge difference to the company!

It means you waste minimal time on the fundraising and can focus on your execution which is critical when you’re a small team.

We were also lucky to work with Taylor Wessing, who took care of everything on the legal side.

Learning: working with investors who share your vision and have aligned expectations enables you to get the support you need quickly; raising when you have great momentum makes the job a lot easier

What does the fundraise mean for Nye?

The team had pulled off almost 100X growth in our user base in the preceding months.

We’d taken a beta product used in a handful of cases into the mainstream with high uptime and reliability.

All this whilst each on the personal rollercoaster that has been this pandemic.

As a consequence, we were all pretty exhausted!

Raising the funds unlocked the headspace for us to take a step back and think big about the next 3 years!

Learning: companies are like living organisms and benefit from a balance of “exercise” and rest. Focus on execution, but bake in opportunities to check you’re on the right track

So, what would I do differently next time?

Have a proper celebration! 🥳

Zoom celebrations just don’t have quite the same energy and we would have all loved a chance to let our hair down and celebrate the moment. Next time, we’ll do it properly!

In the meantime, any suggestions for virtual celebrations are very welcome!

Learning: always celebrate the wins. Gifs help!

Want to know more about Imran? We had a chat with him about why he started Nye and what (apart from parties) he’s excited about in Nye’s future. Read it here

Hello 👋🏽, we’re Nye Health.

We’re a little gang of clinicians, scientists and engineers and we’re doing some big things. We’re starting by working with clinicians, citizens and the NHS, to develop products which bring us one step closer to making the world well.

Originally published at https://www.meet.nye.health on November 15, 2020.