We are proud to announce that Medigate has closed a $5.35M seed round, led by YL Ventures, with participation from Blumberg Capital!Open Modal
Addressing Vulnerabilities in Healthcare
At YL Ventures we focus primarily on cybersecurity. While we excitedly track the evolution of new innovations, we must also stay keenly aware of the risks that often accompany those breakthroughs. This involves a careful study of the implications of new technologies and an understanding of where these leaps forward may give rise to new security challenges in, for example, a sector like healthcare, where the number of connected devices employed has increased dramatically in recent years, creating both value and potential vulnerabilities.
An example of the type of incident we think about is the WannaCry ransomware attack of May 2017. WannaCry, which mainly infected Windows PCs, also infected medical devices, causing thousands of operations and appointments to be canceled as the malware threatened to delete crucial files unless ransoms were paid. Just one month later, another widespread Ransomware attack named NotPetya was found to have spread, also hitting hospitals. It is frightening to think that hospitals, where human lives often hang in the balance, are so vulnerable.
With that background, today we are proud to announce that Medigate has closed a $5.35M seed round, led by YL Ventures, with participation from Blumberg Capital. Medigate, a company building a cybersecurity platform for medical devices, is a quintessential YL Ventures investment: a superb team solving a huge problem in an open space with deep technology. We could not be happier to partner with such amazing founders.
A Thesis-Driven Approach
As with many things in venture, feedback loops are long, and it can sometimes be hard to measure the direct impact of our many different activities. In this case, it took about 24 months. Almost two years ago our team surfaced devices in the healthcare industry as a space to keep an eye on. With 100 million connected medical devices in the U.S. (a number projected to double in the coming years), it was clear that the market was large, and as we dug deeper, what we saw was startling; cyber attacks on healthcare providers are increasingly frequent, even if you don’t read about them every day on the news. Personal medical information is a lucrative target for ransomware, theft, and even for manipulation. Given the sensitive and critical nature of medical information and the increasingly difficult task of securing it, it was apparent to us that someone needed to step up to address this looming problem.
Having focused on cybersecurity for over seven years, we are fortunate to meet with many entrepreneurs who are not only building exciting commercial enterprises, but who are also solving real problems that have positive bottom line impact on people’s safety, privacy and well-being. The case here was obvious – the proliferation of connected medical devices in healthcare creates a lot of value for providers and their customers, but it also represents an ever-expanding number of entry points for cyber attacks. As we see often in this industry, novel technologies are usually accompanied by novel threats.
And so, when we met with Jonathan, Itay and Pini to learn about what they were working on (a solution targeted specifically at medical devices), it was a space we were intimately familiar with and already bullish on. Over the course of the previous two years, we’d spent many hours learning from experts in the healthcare industry, and while we met with multiple teams who were thinking about securing connected medical devices, we had been waiting (and hoping) to find the right combination of team, technology and approach to address what we were convinced was a huge opportunity. As with any area where we invest, we want to team up with companies that have the potential to be true leaders in their fields.
Betting on the Jockeys
It was apparent from our first conversations with the Medigate team that they possessed a unique combination of raw brainpower, technological experience, and the charisma and grit necessary to execute in the dynamic world of early stage company building.
These three had phenomenal backgrounds, and they had all worked together before, something that we love to see. Sometimes teams full of A+ players may not mesh, but their prior experience gave us confidence in their ability to learn and grow together.
Wasting No Time
As I’ve talked about before in regards to our diligence process, we try to complement our rigorous internal analysis with industry experts from our extensive network in the U.S. In this case, we held multiple calls with healthcare operators and investors who could offer deep and meaningful feedback; one such call was with YL Ventures advisor Tom Baltis, whose experience and expertise were absolutely invaluable. We were confident that the problem space would be further validated – everyone agreed that this is a huge issue – but we were also delighted to see Jonathan and team synthesize the feedback that they received on each call and use that to iterate on their pitch and approach – a great indicator for us.
It was soon clear that Medigate is the kind of company, led by the kind of team, that we dream about partnering with. And so, with our conversations proceeding at a rapid pace, I jumped on a last minute flight to Tel Aviv (on my wife’s birthday no less!) to spend the day with the team. I was too excited about the deal to wait any longer, and while our team in Israel had spent much time in person with Jonathan, Itay and Pini, I wanted to be there myself to show how serious we were about partnering and to validate the chemistry that we had built. The rest, as they say, is history.
The pace only picked up once the term sheet was signed. Finalizing what ended up being a large seed round of $5.35M with our excellent co-investors Blumberg Capital, filling the calendar with meetings with U.S.-based CISOs at top healthcare providers and medical device manufacturers, thinking through go to market strategies, and building an exceptionally strong R&D team, the Medigate team is off to a phenomenal start on what promises to be a long and exciting journey.
Onward and Upward
We are incredibly proud to partner with Jonathan, Itay and Pini. Teams like this don’t come along often, and for us to meet one of this caliber, operating in a space where we had spent so much time, is an amazing experience. The road ahead will be a long one, but we are proud to support Medigate as they aim to protect our hospitals and citizens from an ever-increasing number of threats.