5 on Funding with Eric Alvarez, Founder and CEO of Grapefruit Health

Welcome to 5 on Funding! This weekly newsletter asks venture-backed startups 5 detailed ways they plan to use the new funding to scale their companies.

Quick Facts About Grapefruit Health:

Company Description: At Grapefruit Health we are addressing the massive staffing shortage in healthcare by creating the first and only workforce composed completely of clinical students. We recruit, train, and manage these students to perform work on behalf of healthcare organizations remotely.

Industry: Healthtech

Amount Raised: $1.3m in May 2023

What 5 things will you do with this funding?

Key Priority for Funding: Invest and test

1. Maintaining burn rate to execute contracts with a long sales-to-execution cycle

“In B2B enterprise healthcare, the name of the game, in my opinion, is survivability. We average about a nine to 18-month sales cycle. And so when you think about what you will spend money on, the number-one thing we will be spending money on is surviving: maintaining our current team and burn. That’s what we need to support to get to contracting on some of these exciting contracts we have coming up.”

2. Investing in an engineering team?

“We have a strong, single engineer for our technology, as well as an amazing nearshore team in Bogota, Columbia. We plan on spending more with them. It's a great way to have onshore quality, and then use the offshore engineering team as a force multiplier at a fraction of the cost, so we can get a lot more done. It’s all about how we can do more for less.”

3. Test a B2B2C model

“This is what I say about the pre-seed timeframe; if you’re going to test, now is the time to do it before you have a board and other controls like that. We’ve confirmed that we do really well in the B2B model, but those sales cycles are really long. So we want to test something where, what if we could do have students outreaching to patients for family and loved ones? We're checking in on them on a weekly basis over the phone. And the way we would acquire those patients is through case managers, discharge planners. So that's the B2B (business to business), who then share the word with their C (consumer).”

4. HITRUST certification

“In healthcare, the level of security needed is second to none, with fintech being a distant second. Everyone's familiar with SOC 1 and SOC 2. In healthcare, many organizations are going to require HITRUST certification, which is an expensive and very time-consuming process. And the biggest part of the cost is in the project management to do it. This isn't one of those things where the founder can take it on in addition to other stuff. This is a serious job to achieve HITRUST. We want to begin the process in this round, and it'll probably take us into the next round to actually finalize that.”

5. Testing event marketing strategy

“We want to do some go-to-market testing by attending conferences, for example. There are a lot of opinions on this. You could go to the giant 80,000-attendee events and be a small fish in a massive pond. We’re in Chicago, so Illinois has Medicaid conferences. We're going to be attending those. We're going to be attending an Illinois case managers conference. And you could be still a small fish, but a very small pond. That's what I love about this zero-to-one stage, it’s all the iteration and testing.”

About the founder: Eric Alvarez is the CEO and founder of Grapefruit Health. Prior to this adventure, Eric has held multiple positions within the healthcare industry. Most recently he was the COO of a healthcare technology startup called Fibroblast, which was acquired by the EMR giant Cerner Corporation in 2020. Before joining Fibroblast, Eric was a hospital administrator at the University of Chicago Medicine and Northwestern Medicine. He is a military veteran who earned his Masters in Healthcare Administration from Rush University, where he also holds an adjunct faculty role.