PathologyWatch Radically Improves Skin Cancer Diagnostics for Dermatologists

March 25, 2020

pathologywatch-blog

SpringTide was a Major Investor in PathologyWatch’s $3M Series Seed round in early 2019, taking a board seat. We continued to support the company through 2019 with Elastic Sales, building the in-house sales force, and led PathologyWatch’s $5M Series A round in early 2020, doubling the valuation within one year. 

Sourcing

Dan Lambert, our Co-founder and Technology Partner, founded PathologyWatch in late 2017 with two colleagues he had been working with over a period of years. The company developed an exceptionally strong team, tech stack, and first customers in its first year, allowing us to make an investment in their Series Seed round in early 2019.

Due diligence

We prioritize investment opportunities that boast multiple experienced founders with complementary skill sets (including at least one software engineer), are using AI / ML in the tech stack, are capital efficient, have early sales traction, and high growth potential. PathologyWatch checked all of these boxes and more. 

With PathologyWatch, we asked a third-party software engineer to validate their code architecture, we interviewed multiple customers for each round, replaced Dan with a Limited Partner Advisory Committee member on our Investment Committee, and worked with a highly experienced legal partner on the legal due diligence.

Deal structuring

We treat the founders whose companies we invest in well, and do not introduce off-market terms that may inhibit or disincentivize companies’ growth potential. At the same time, we are careful and prudent to properly assess and reflect risk. We take advantage of QSBS tax savings opportunities, and work with our highly experienced legal partner to finalize our term sheets. 

Governance

We took a board seat in PathologyWatch’s seed round, and retained the seat by leading their Series A financing round one year later in early 2020. Whether or not we take a board seat in our other deals, we strive to secure Major Investor information and pro rata investment rights. 

Post-investment support: elastic sales + led Series A 

After we first funded PathologyWatch in early 2019, we provided our Elastic Sales service in tight coordination with their Co-founder and Vice President of Business Development, Michael Torno. We worked to recruit fractional sales reps, first in three target territories: Southern California, Florida, and Texas. We placed experienced reps excited about the opportunity to join a new great company under contract as 1099 Independent Contractors. They worked to generate leads and organize in-person sales pitches during ride-alongs with Michael. During this phase, we managed all legal agreements, payroll, and taxes for these contractors so PathologyWatch could focus on higher value activities.

PathologyWatch elected to convert 2 of the first 4 Independent Contractor reps to full-time W-2 Employees. 

We continue to support PathologyWatch in building a high quality in-house sales force with proven performance in a much more cash retentive way for the company. 

Whether you’re an entrepreneur or an investor, we’d love to hear from you. Send us a note.

Whether you are an entrepreneur or an investor, we’d love to hear from you.