CEO Scotte Hudsmith
Update Jan. 4, 2012: An Innova filing with State ECD indicates the fund has invested at least $750K in Parent Health.-Ed.
PARENTAL HEALTH, the two-year-old Franklin "age-in-place" telemedicine startup, announced Innova Fund II, a TNInvestco, has led further investment to close of an A round of undisclosed amount.
Tullahoma-based NEST-TN, a TNInvestco fund created by Relevance Capital, joined the round, said founder and CEO Scotte Hudsmith. Innova's Jan Bouten and NEST-TN's Cameron Newton were active in the deal.
Newton this morning confirmed his fund's involvement and stressed the quality of Parental's offering, the convergence of factors in healthcare delivery and the fact that in his view the company is poised for strong growth.
News of Innova's move on Parental Health comes just days after Innova revealed it had completed a TNInvestco fund's first exit from a portfolio company, with most ExtraOrtho medical-device assets being sold to Zimmer on as-yet undisclosed terms. In July, VNC reported Innova had invested nearly $800,000 in ExtraOrtho.
A year ago, Hudsmith told VNC his funding scenario at that time called for raising an initial $2 million, as part of a raise that might eventually total $5 million.
Reached for this story, Hudsmith declined to provide details on the raise, but said no former investors exited through the latest funding. In a press release this morning, he noted that the round's closure came "2 years and 5 days" after the company was created, adding, "It is great seeing that idea become a reality."
A source close to the latest transaction said Parental Health's story has gotten steadily "more interesting" and, more important, investors have confidence in Hudsmith.
He confirmed that heretofore unannounced investors in the firm include, among others, former Nashville Predators owner Craig Leipold, now majority owner of the Minnesota Wild NHL team (among other interests); and Ed Lang, who served three years as president/COO of The Preds and is now CFO with the New Orleans Hornets.
Parental Health markets MISTY, an "intuitive touchscreen technology platform" that allows patients to access services from caregivers and contact family members, among other features. (Product details here.) Its strategic technology partner is Hewlett-Packard, and MISTY operates via the HP Touch Smart personal computing device.
Parental has not confirmed all its investors, but others previously reported by VNC include former HCA president and Clayton Associates founder Clayton McWhorter, who several sources say is instrumental in Parental's fundraising; as well as Jim Lackey, CEO of EnableComp and chairman of Passport Health Communications; Michael Burcham, CEO of both StartupTN and the Nashville Entrepreneur Center; Joe Cashia, CEO of Vivere Health [merged 12/2017 with Prelude Fertility]; and, eMids Technologies.
In today's release, McWhorter said Parental Health is "the way remote healthcare needs to be delivered," and added that he has "believed in and supported the company for over one year" and is "excited to have Innova and NEST-TN complete the financing round."
Updated 10:54 a.m.: Innova's Jan Bouten provided comment after initial publication, saying in part, "We've spent the past several months investigating Parental Health and the market it plays in. Clearly the aging population is already a huge market that is only set to become bigger over the next decade. Parental Health's MISTY solution is by far the most scalable and was extremely well conceived. Scotte and his team spent a lot of time understanding the end user, who often is not the paying customer, and developed a system that strikes the right balance between information richness and privacy concerns. In addition, building a system that does not rely on proprietary devices allows the company to partner with developers of best-of-breed, innovative devices without huge upfront investments and inventory cost. This keeps the company capital efficient and lean, and allows it to quickly adapt to changes in this rapidly moving marketplace."
Parental's formalized board now includes McWhorter, Lackey, Bouten and Hudsmith, the 47-year-old CEO confirmed.
The most recent investment is "all growth," Hudsmith emphasized this morning, adding that several sales rep's have been identified for near-immediate hire and that the company's workforce could reach as high as 20 by end-2012. It has four full-timers, now, as well as outsourced resources.
The company has signed some "very good" home health and senior- and independent-living customers, he said, adding that the company is likely to market to payers, eventually.
Asked whether he contemplates a B-round as the company works its way through its early-stage lifecycle, Hudsmith said that's to be determined. He noted that its Cloud-based strategy might well allow scaling-up without further institutional funding, but added that if momentum and opportunity warrant it, another round is likely.
VNC previously reported Parental advisors include Baker Donelson Bearman Caldwell & Berkowitz, and Bass Berry & Sims.
Hudsmith chartered Parental Health a few months after departing Passport Health Communications, where he had shouldered finance and development duties as executive vice president.
Prior to Passport, Hudsmith was president of LBMC Technologies and has held CEO, COO, CFO, accountant and other posts with Deloitte and Syngistics, an IT services provider, among others. He earned his bachelor's in finance at the University of Memphis. VNC