The home of some of the least transparent and taxing financial transactions is where the buy now, pay later model was founded. The health tech play launched last year with millions of venture capital behind it, after being in the inaugural cohort of Plaid's startup accelerator.
Since, the public market prices have been slashed and the feeling of a cooling market has been experienced by investors. One of the first things that cut in a market downturn is the BNPL model because it encourages discretionary spending. He thinks that Walnut is still safe.
He said that being able to help patients with something that they really need versus what they want is helpful in a market downturn. He said that he hasn't seen a decrease in utilization among customers in need of different ways to finance healthcare checks. It has grown revenue 50% every month for the last six months, and now helps patients break up their bills and pay them into smaller chunks.
The growth has been noticed by investors. A $110 million Series A round of funding has been given to the startup. Existing investors, as well as new investors, participated in the round. The executives from Giphy, Afterpay, and Clearbit are also investors.
The temperature was different this time around than it was a year ago. The founder said that he got more questions about profitability and unit economics, but they weren't an issue to answer. He didn't reveal the valuation of the round, but said that they probably could have gotten a 50% higher valuation if they raised in the fourth quarter. He says it was a great valuation.
ClearHaven Capital led a $100 million debt financing that will help the company address its biggest challenge, which is the balance of paying healthcare providers upfront and collecting money from patients in the back end. The default rate has been better than expected since the startup launched, and is comparable to more mature lenders.
Patients can pay for healthcare over a period of time with the help of a point-of-sale lending company. A patient's bill can be paid back through a series of $100-a-month payments, instead of the traditional credit card payment.
The company connects to users' bank accounts to see their daily income, spending patterns and savings to see if a loan will likely get repaid by the end of the month. The method doesn't look at credit scores, so it's a more accessible way to decide if someone can handle a loan.
The startup evolved from selling to small private practices to mostly serving other digital health startups. The perk of walnuts is that they can be a platform layer for customers. In order to truly be impactful, walnuts needs to make sure they meet lower-income demographic where they are at. The companies that they work with are lowering the cost of care and targeting a lower income demographic.
Behavioral health services, an expensive but important corner of healthcare, is the most popular specialty among walnuts users. If it were to focus more on fertility, it would be more expensive, but he thinks that this sector has a good amount of startups that are working on decreasing the cost of care for patients. The startup does not charge interest or fees to consumers.
By the end of the year, the startup wants to have 50 people working for it.
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