Seattle Week in Review: Healthcare IT, Machine Learning, and the 12s

Summer weather may finally come to Seattle in earnest this weekend. Before you head to the lake, check out Xconomy Seattle’s review of a couple of healthcare IT investments; Apple’s acquisition of Turi (nee GraphLab, then Dato) and the future of the iPhone; new funding for Zenoti and Kepler Communications; a new fund for Keiretsu Capital; a 12th Man licensing deal; and Paul Allen’s new music festival.

—We’ve seen a couple of significant healthcare IT investments in the last week. Accolade, which provides personalized guidance on healthcare decisions to employees of large, self-insured employers, topped up its Series E funding round to the tune of $70 million from Andreessen Horowitz and Madrona Venture Group, among others. The company recently established a second headquarters here under the leadership of Rajeev Singh, a co-founder of Concur, one of the Seattle-area’s biggest startup success stories.

That followed last week’s $11 million investment in 98point6, which is hiring software engineers and physicians to “deliver direct patient care through technology.”

Both companies have in common a focus on delivering healthcare help—or, in the case of 96point8, care itself—through technology. The Northwest, and specifically University of Washington, has been a hub for development of telemedicine practices going back four decades, at first as a way to provide care in remote areas.

It’s an area that appears poised for significant growth, according to a new survey by the National Business Group on Health, which represents 425 large employers. The survey, which polled 133 companies with more than 15 million covered individuals, found that nine out of 10 employers plan to offer telehealth services in 2017, in states that allow it. That’s up from seven out of 10 that planned to do so in 2016.

The group’s CEO, Brian Marcotte, says large employers are placing less emphasis on the design of their healthcare plans for the coming year, and thinking more about “optimizing how health care is accessed and delivered. That translates into expanded telehealth services,” among other efforts, he says in a news release.

And that should bode well for companies like Accolade, 98point6, and their competitors.

For more on what Washington can do to encourage healthcare IT innovation, check out Rob Arnold’s piece in the Xconomist Forum.

—ICYMI late last week, Turi—formerly known as Dato and GraphLab, but all the while one of Seattle’s most prominent machine learning startup companies—was acquired by Apple. GeekWire first reported the news (and today has a report on rumors that Apple may be looking for a very large chunk of Seattle-area office space) but oddly, a week has gone by with no public acknowledgement of the deal from Turi’s leaders or investors.

Need to know basis.

Need to know basis.

For a glimpse at why Apple is making acquisitions in machine learning, check out Wade Roush’s iPhone 7 predictions. He argues that the software on our mobile devices needs to catch up with the hardware, which is nearing perfection—at least for the current world of the touch user interface.

“What’s missing is an organizing idea—a new way of packaging and interacting with the information on our mobile devices. Something that will make iOS look as primitive as the operating system on a 2003 Treo or Blackberry.

“And here’s my big prediction: that idea is Siri. Or rather, her future offspring. To make the next leap, Apple and its competitors need to figure out how to build more powerful conversational agents, so that computing can finally move off the screen and into our daily lives.”

To do that, Apple needs to race against the rest of tech giants for experts in machine learning and other artificial intelligence precursors. Turi’s staff included lots of people with that expertise.

See, for another example, Intel’s $400 million-plus acquisition this week of Nervana Systems, a San Diego machine learning startup.

Zenoti, which provides management software geared for spas, salons, and resorts, raised a $15 million Series B funding round from lead investor Norwest Venture Partners, and Accel Partners, which invested in the company’s $6 million Series A round. The 6-year-old Mercer Island, WA-based company says it will invest some of the new capital to expand its offerings for fitness and yoga businesses.

Kepler Communications, a 2016 Techstars Seattle company based in Toronto, Canada, announced a $5 million seed funding round from lead investor IA Ventures, joined by Techstars Ventures, Liquid 2 VC, SK Ventures, Zelkova Ventures, Plug & Play Ventures, V1 VC, Globalive Capital, and BDC. The funding will support the company’s launch of two communications satellites by the end of 2017, which will form the initial pieces of a network that the company says will reduce costs and latency for accessing satellite data.

Co-founder and CEO Mina Mitry has high praise for the support the company received during its time in Seattle, citing in particular Techstars Seattle’s managing director, Chris DeVore, and Joe Landon of the Space Angels Network.

It’s worth reading Mitry’s perspective on the fund-raising process, and the out-sized attention the tech world pays to venture funding events, as opposed to more meaningful milestones on the path to building a real business:

“All too often I find entrepreneurs get praise for raising investment while those building businesses that bootstrap to exciting revenues go unnoticed. The converse should be true as bootstrapped businesses have actually built a machine (business) that works. We’re only at what I like to call step 0 of execution; we’ve got the parts and resources to build our machine, but some assembly is required.

“Fund raising quickly becomes a toxic activity that takes away from building a real business. It’s easy to get roped in by the allure of travelling to different destinations, meeting exciting people, and landing investor checks, so much so that you unwittingly ignore (or want to ignore) very real problems that need to be solved. To that end, I made every effort to minimize how much of the team’s most precious and finite resource – time – would be spent to get the necessary money resource. This came at the cost of isolating myself from most business operations and the team for an extended period of time. Needless to say, I’m happy to be off the fundraising trail.”

Keiretsu Capital, the managed investment fund set up in 2015 to invest alongside angel investing groups, including its namesake, Keiretsu Forum, announced a $4.2 million second fund. That brings the fund’s total to $10 million, of which more than $5 million has been invested in upwards of 40 companies. The remainder is earmarked for investment through early 2018. Keiretsu Capital is headed by CEO Nathan McDonald, who also chairs the Keiretsu Forum Northwest, which last year saw its members plough a record $43.5 million into startup companies.

—At Xconomy, we pay close attention to university technology transfer and intellectual property licensing deals. This one doesn’t have much to do with tech or biotech, our usual focus areas. But hey, it’s almost football season, and today happens to be August 12, so:

When the Seahawks first went to the Super Bowl in 2006, putting their 12th Man fan base in the national spotlight, it attracted the ire of Texas A&M, whose football team has a proud 12th Man tradition dating to 1922. I wrote about it for The Seattle Times. A decade later, Texas A&M says it has reached a new licensing agreement for the “12th Man,” which the Aggies trademarked in 1990.

A clip from the Seahawks website. 12s, not 12th Man.

A clip from the Seahawks website. 12s, not 12th Man.

The five-year deal prohibits the Seahawks from using “12th Man” on the Ring of Honor in the stadium, and the Seahawks franchise can’t use it on social media. The Seahawks pay Texas A&M a licensing royalty covering limited use in the Pacific Northwest. But the team mostly now uses “12” or “12s”—which is much more inclusive than the gender-specific 12th Man—in reference to the fan base.

Anyway, the first pre-season game is Saturday at the Kansas City Chiefs.


A rendering of a concert stage in the North Plaza of CenturyLink Field. Via Upstream Music Fest + Summit.

A rendering of a concert stage in the North Plaza of CenturyLink Field. Via Upstream Music Fest + Summit.

—And while we’re on the subject of the Seahawks and CenturyLink Field, word came this week that team owner Paul Allen is launching a new festival around another one of his passions: music.

Allen’s Vulcan Inc., which just pulled off a well-received art fair, announced the Upstream Music Fest + Summit to take place May 11-13, 2017, in venues in and around Pioneer Square, including the plaza north of the football stadium. The event looks like a South By Southwest-style combination of conferences and concerts, highlighting artists based in the Northwest. From the event’s Website: “At our Summit we’ll collide music, gaming, tech, media, design, and more to tackle today’s toughest industry challenges and open up opportunities within the new entertainment economy.”

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