Neal's Deals (Vol.33) - Healthcare strikes shed light unto alarming staffing shortages ??????????

Hey everyone - As many of you know, this week over 75,000 unionized workers at Kaiser Permanente, which is an integrated managed care consortium with 39 hospitals and more than 700 medical offices, went on strike. This event stands as the most extensive healthcare worker strike in the history of the United States. The striking workforce, a coalition of unions representing 40% of Kaiser Permanente’s total staff, made a resounding statement about their concerns and demands, which in large part regard acute staffing shortages, specifically amongst nurses.

For context, decades of nursing shortages got even worse with the pandemic. A 2022 survey found 35% of nurses want to quit due to burnout. The top reason for attrition, however, is mass retirement, given that the average registered nurse is 52 years old. The American Nurses Association (ANA) was so worried about the situation that they sent a letter to the U.S. Department of Health and Human Services (HHS) calling the nurse staffing shortage a national crisis.

What is more shocking, however, is that there are tens of thousands of people who want to become nurses but cannot. For example, last year, almost 78,200 capable applicants got rejected from nursing schools. Among them, around 66,300 hopefuls were aiming for entry-level bachelor’s degree programs.

Why are applicants getting rejected from nursing schools? Because of the lack of educational infrastructure to teach and train. There are a scarce number of faculty, clinical placements for students, and preceptors who supervise the students during their rotations at health care providers. Nursing schools have nearly 2,000 full-time faculty positions to fill, according to the nursing college association.

Why are there not enough teachers? They do not get paid enough! Nursing school professors with master’s degrees earn a national median salary of just under $89,000. Schools claim they cannot match the earning potential on the practice side with what they can offer. Moreover, limited clinical rotations at hospitals or healthcare providers, along with a shortage of seasoned nurses and other medical professionals to oversee them, creates a major capacity issue—current nurses simply lack the bandwidth to fully support training the newbies.

The Kaiser Permanente strikes bring attention to the widespread healthcare shortages resonating throughout the industry. This predicament isn't confined—it's a national concern that will intensify in the upcoming years, especially with an aging baby boomer population. Consequently, the public and private sectors are starting to take notice.

This summer, the government revealed plans to inject an extra $26.5 million into the Nurse Faculty Loan Program, which offers low-interest loans to individuals pursuing studies to become nursing school faculty. In the private sector, a handful of exciting startups raised significant funding to tackle the problem. Regardless of these efforts, schools and healthcare systems must develop partnerships to increase educational resources and training capacity (McKinsey even posted an article on this same conclusion last week).

Until then, be extra kind to healthcare professionals because they do not have it easy.

Let’s get to it:

Cellply - a Bologna, Italy, startup that specializes in assessing the efficacy of immunotherapies in cancer treatments, raised a $3.8 million round.

Why this is interesting: Unlike conventional chemical medications, immunotherapies utilize living cells, each possessing distinct characteristics. While these treatments show potential, they come with a hefty price tag, with certain patients encountering costs up to hundreds of thousands of dollars. Cellply’s patented monitoring system is capable of reducing these development times, costs, and risks. It helps biotech, pharma companies, and clinics identify the most effective production methods, specifically those that optimize the generation of potent "superkiller" cells targeting tumors. Considering cancer is the leading cause of death worldwide, this solution has the potential to save many lives, making it very hard to put a price tag on its potential.

Boisson, a New York startup that makes non-alcoholic beverages, raised a $5 million round co-led by Convivialité Ventures and Connect Ventures.

Why this is interesting: In recent years, consumers have embraced a more mindful approach to drinking, whether by abstaining altogether or enjoying low-proof beverages. In 2022, the sales of no-and low-alcohol beverages experienced a remarkable growth of over 7% in volume across 10 major global markets, surpassing a market value of $11 billion. This marks a significant increase from the $8 billion reported in 2018. Non-alcoholic beverages have been around for years, but Boisson is looking to expand their product line and grow at an opportune time when consumer tastes and preferences are clearly shifting. I always question whether any craft beverage business can truly support a venture-scalable outcome, but our friends over at LiquidDeath (literally selling canned water) are now somehow valued at $700 million so you never know!

Humata AI, a Austin Texas startup that uses AI to let users quickly obtain answers to questions they have about the content of PDF files, raised a $3.5 million round from Gradient Ventures, ARK invest, and M13.

Why this is interesting: Humata stands out for its exceptional simplicity of operation. True to its core concept, the platform allows users to pose questions about their files, particularly PDF files, and receive prompt answers. Users have the flexibility to upload one or more PDFs and inquire about them. The platform caters to a diverse user base, including academics, legal professionals, individuals in the oil and gas industry, and those in customer support. The immediate concern here is defensibility, considering open source LLMs like ChatGPT and Anthropic’s Claude offer similar file-analyzing features. Unlike these sources, Humata claims that they have implemented data privacy measures and strong safeguards against data bias. I am skeptical whether that creates enough competitive differentiation; however, their AI use-case-specific approach has been able to garner thousands of customers in a few short months, so they are clearly going to be a short-term winner at worst.

Deals in the Works:?If you want to learn more - feel free to reach out

1. Vertical SaaS for home improvement contractors with embedded financing
2. Co-branded credit card with healthcare plans to provide health & wellness rewards across medical-related spend
3. Market intelligence platform looking to displace expert networks and connect investing and research firms with technical tech talent
4. Social network for the creator economy
5. Mission control for in-house legal teams that functions as a data layer for all point solutions

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Quote of the week:

“Someone is sitting in the shade today because someone planted a tree a long time ago.” —Warren Buffet ??????

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I am very excited to be kicking off Ground Up’s Campus Partner Program next week, which is an opportunity for college students to get hands-on experience in venture capital. This year’s cohort has over 50 students from universities across the country! Feel free to reach out if you would like to learn more!

Have a great weekend, everyone!