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February 24, 2019
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Two former Qualcomm engineers are using AI to fix China’s healthcare problem

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Artificial intelligence is widely heralded as something that could disrupt the jobs market across the board — potentially eating into careers as varied as accountants, advertising agents, reporters and more — but there are some industries in dire need of assistance where AI could make a wholly positive impact, a core one being healthcare.

Despite being the world’s second-largest economy, China is still coping with a serious shortage of medical resources. In 2015, the country had 1.8 physicians per 1,000 citizens, according to data compiled by the Organization for Economic Cooperation and Development. That figure puts China behind the U.S. at 2.6 and was well below the OECD average of 3.4.

The undersupply means a nation of overworked doctors who constantly struggle to finish screening patient scans. Misdiagnoses inevitably follow. Spotting the demand, forward-thinking engineers and healthcare professionals move to get deep learning into analyzing medical images. Research firm IDC estimates that the market for AI-aided medical diagnosis and treatment in China crossed 183 million yuan ($27 million) in 2017 and is expected to reach 5.88 billion yuan ($870 million) by 2022.

One up-and-comer in the sector is 12 Sigma, a San Diego-based startup founded by two former Qualcomm engineers with research teams in China. The company is competing against Yitu, Infervision and a handful of other well-funded Chinese startups that help doctors detect cancerous cells from medical scans. Between January and May last year alone, more than 10 Chinese companies with such a focus scored fundings of over 10 million yuan ($1.48 million), according to startup data provider Iyiou. 12 Sigma itself racked up a 200 million yuan Series B round at the end of 2017 and is mulling a new funding round as it looks to ramp up its sales team and develop new products, the company told TechCrunch.

“2015 to artificial intelligence is like 1995 to the Internet. It was the dawn of a revolution,” recalled Zhong Xin, who quit his management role at Qualcomm and went on to launch 12 Sigma in 2015. At the time, AI was cereping into virtually all facets of life, from public security, autonomous driving, agriculture, education to finance. Zhong took a bet on health care.

“For most industries, the AI technology might be available, but there isn’t really a pressing problem to solve. You are creating new demand there. But with healthcare, there is a clear problem, that is, how to more efficiently spot diseases from a single image,” the chief executive added.

An engineer named Gao Dashan who had worked closely with Zhong at Qualcomm’s U.S. office on computer vision and deep learning soon joined as the startup’s technology head. The pair both attended China’s prestigious Tsinghua University, another experience that boosted their sense of camaraderie.

Aside from the potential financial rewards, the founders also felt an urge to start something on their own as they entered their 40s. “We were too young to join the Internet boom. If we don’t create something now for the AI era, it will be too late for us to be entrepreneurs,” admitted Zhong who, with age, also started to recognize the vulnerability of life. “We see friends and relatives with cancers get diagnosed too late and end up  The more I see this happen, the more strongly I feel about getting involved in healthcare to give back to society.”

A three-tier playbook

12 Sigma and its peers may be powering ahead with their advanced imaging algorithms, but the real challenge is how to get China’s tangled mix of healthcare facilities to pay for novel technologies. Infervision, which TechCrunch wrote about earlier, stations programmers and sales teams at hospitals to mingle with doctors and learn their needs. 12 Sigma deploys the same on-the-ground strategy to crack the intricate network.

Zhong Xin, Co-founder and CEO of 12 Sigma / Photo source: 12 Sigma

“Social dynamics vary from region to region. We have to build trust with local doctors. That’s why we recruit sales persons locally. That’s the foundation. Then we begin by tackling the tertiary hospitals. If we manage to enter these hospitals,” said Zhong, referring to the top public hospitals in China’s three-tier medical system. “Those partnerships will boost our brand and give us greater bargaining power to go after the smaller ones.”

For that reason, the tertiary hospitals are crowded with earnest startups like 12 Sigma as well as tech giants like Tencent, which has a dedicated medical imaging unit called Miying. None of these providers is charging the top boys for using their image processors because “they could easily switch over to another brand,” suggested Gao.

Instead, 12 Sigma has its eyes on the second-tier hospitals. As of last April, China had about 30,000 hospitals, out of which 2,427 were rated tertiary, according to a survey done by the National Health and Family Planning Commission. The second tier, serving a wider base in medium-sized cities, had a network of 8,529 hospitals. 12 Sigma believes these facilities are where it could achieve most of its sales by selling device kits and charging maintenance fees in the future.

The bottom tier had 10,135 primary hospitals, which tend to concentrate in small towns and lack the financial capacity to pay the one-off device fees. As such, 12 Sigma plans to monetize these regions with a pay-per-use model.

So far, the medical imaging startup has about 200 hospitals across China testing its devices — for free. It’s sold only 10 machines, generating several millions of yuan in revenue, while very few of its rivals have achieved any sales at all according to Gao. At this stage, the key is to glean enough data so the startup’s algorithms get good enough to convince hospital administrators the machines are worth the investment. The company is targeting 100 million yuan ($14.8 million) in sales for 2019 and aims to break even by 2020.

China’s relatively lax data protection policy means entrepreneurs have easier access to patient scans compared to their peers in the west. Working with American hospitals has proven “very difficult” due to the country’s privacy protection policies, said Gao. They also come with a different motive. While China seeks help from AI to solve its doctor shortage, American hospitals place a larger focus on AI’s economic returns.

“The healthcare system in the U.S. is much more market-driven. Though doctors could be more conservative about applying AI than those in China, as soon as we prove that our devices can boost profitability, reduce misdiagnoses and lower insurance expenditures, health companies are keen to give it a try,” said Gao.

News Source = techcrunch.com

Extend Fertility banks $15M Series A to help women freeze their eggs

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Fertility services are raising venture cash left and right. Last week, it was Dadi, a sperm storage startup that nabbed a $2 million seed round. This week, it’s Extend Fertility, which helps women preserve their fertility through egg freezing.

Headquartered in New York, the business has secured a $15 million Series A investment from Regal Healthcare Capital Partners to expand its fertility services, which also include infertility treatments, such as in vitro and intrauterine insemination. The company has also appointed Anne Hogarty, the former chief business officer at Prelude Fertility and vice president of international business at BuzzFeed, to the role of chief executive officer. Hogarty replaces Extend Fertility co-founder Ilaina Edison, who had held the C-level title since the business launched in 2016. Edison will remain on the startup’s board of directors.

Extend Fertility, in its New York cryopreservation and embryology lab and treatment center, completed 1,000 egg-freezing cycles in 2018.

“A lot of amazing things have happened for women over the last century,” Hogarty told TechCrunch earlier this week. “Now, women are permitted and encouraged to seek higher education, pursue a career, follow their dreams and end up with a partner who’s the right partner, not just any partner. Doing all those things has pushed the window for when women want to start a family from their 20s to their 30s and unfortunately, one thing that has not changed in that time is the biological clock.”

Hogarty explained Extend’s fertility services are more affordable than other options because the service was built specifically with egg freezing in mind, and the company later expanded to offer infertility treatments, whereas other services were established to provide IVF and other infertility treatments and integrated cryopreservation tools later.

We are really purpose-built to be an egg-freezing-first company, where many legacy institutions that were providing infertility services have legacy costs that come with … inefficiencies bred over decades and outmoded technology in their labs that may not be the most efficient and effective,” she said. “We have a state of the art lab with the latest equipment.”

It’s the classic innovator dilemma,” she added. “Infertility services are extraordinarily expensive and reproductive endocrinology is a new area of medicine. There are a lot of people and institutions that have been taking inordinate amounts of money for their infertility services so they weren’t looking to serve this population of women looking to preserve their fertility.”

One egg-freezing cycle with Extend costs women $5,500, and additional cycles come at a sticker price of $4,000. Each cycle includes a fertility assessment, private consultation, anesthesia and any monitoring a patient may need during their cycle. The costs don’t include medication, however. Extend can prescribe medications — which typically cost between $2,000 and $5,000 for fertility patients — but they still need to go through a third party to get their prescriptions filled and paid for. 

For reference, FertilityIQ, an online platform for researching fertility care providers and treatments, says the typical cost per cycle for egg freezing is more than $17,000 in New York City or $15,600 in San Francisco. Most egg-freezing services, including Extend, do not accept insurance, as most insurance providers don’t cover the steep costs of fertility or infertility treatments.

Some companies, however, are beginning to offer benefits that cover these costs. Facebook and Apple, for example, began subsidizing egg-freezing procedures for employees in 2014. Spotify and eBay, for their part, will pay for an unlimited number of IVF cycles.

Hogarty said Extend’s price point makes it one of the lowest-cost players in the market.

“We want as many women as possible to benefit from the advances from egg-freezing technology,” she said.

Extend Fertility, which has previously raised $10 million, plans to use the latest investment to open labs in new markets and expand its infertility services.

News Source = techcrunch.com

With its Greenlots acquisition, Shell is moving from gas stations to charging stations

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In a bid to show that it’s getting ready for the electrification of American roads, Royal Dutch Shell is buying Greenlots, a Los Angeles-based developer of electric vehicle charging and energy management technologies.

Shell, which is making the acquisition through its Shell New Energies US subsidiary, snatched the company from Energy Impact Partners, a cleantech-focused investment firm.

“As our customers’ needs evolve, we will increasingly offer a range of alternative energy sources, supported by digital technologies, to give people choice and the flexibility, wherever they need to go and whatever they drive,” said Mark Gainsborough, Executive Vice President, New Energies for Shell, in a statement. “This latest investment in meeting the low-carbon energy needs of US drivers today is part of our wider efforts to make a better tomorrow. It is a step towards making EV charging more accessible and more attractive to utilities, businesses and communities.”

Courtesy of Ed Robinson/Shell

Since Greenlots raised its cash from Energy Impact Partners, the company has become the partner of choice for utilities for electric vehicle charging, according to the firm. Greenlots was selected as the sole software provider for VolksWagen’s “Electrify America” charging program  last January.

“Utilities are playing a pivotal role in accelerating the transition to a future electric mobility system that is safer, cleaner and more efficient,” said Greenlots CEO Brett Hauser, adding, “We look forward to now working with the resources, scale and reach of Shell to further accelerate this transition.”

“Greenlots is on an incredible trajectory and, in the hands of a company with the resources such as Shell, will be able to advance the important electrification of transportation even faster,” said EIP managing partner Hans Kobler in a statement.

For Shell, the deal adds to a portfolio of electric charging assets including the Dutch-based company, NewMotion.

Across the board energy companies are spending more time and money backing and deploying electric charging technology companies. ChargePoint, a Greenlots competitor, raised $240 million in a November financing that included Chevron Technology Ventures, while BP bought the UK-based public charging network Chargemaster last year.

Despite pushback in some corners of America to the increasing electrification of U.S. highways and byways, the future of mobility needs to be electric if there’s any hope of slowing (and ideally halting and reversing) climate change globally.

Some signs of hope can be found in the latest earnings statement from Tesla, which points to increased uptake of its electric vehicles.  The teased release of an electric truck could potentially even help win converts among those drivers who like to “roll coal” in the presence of hybrids or electric cars.

 

States are already investing heavily in electric infrastructure themselves to promote the adoption of vehicles. California, New York, and New Jersey announced last June a total of $1.3 billion in new infrastructure projects focused on electric vehicle charging.

That’s still not enough to meet the goals necessary to reduce greenhouse gases significantly enough. In all, the U.S. needs to put roughly 13 million electric vehicles on the road in order to meet the targets put forward in the Paris Accords climate treaty (which the U.S. walked away from last year).

According to estimates from the Center for American Progress, the U.S. needs to spend $4.7 billion through 2025 to buy and install the 330,000 public charging outlets the nation will need to meet that electric demand.

“As power and mobility converge, there will be a seismic shift in how people and goods are transported,” said Brett Hauser, Chief Executive Officer of Greenlots. “Electrification will enable a more connected, autonomous and personalized experience. Our technology, backed by the resources, scale and reach of Shell, will accelerate this transition to a future mobility ecosystem that is safer, cleaner and more accessible.”

News Source = techcrunch.com

Former Munchery employees sue company, blame CEO for shutdown

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The Munchery saga continues.

In a new class-action lawsuit, former Munchery facilities worker Joshua Philips is claiming the startup owes him and 250 other employees 60 days’ wages, citing The Worker Adjustment and Retraining Notification Act, a U.S. labor law that requires employers with an excess of 100 employees to give notice 60 days ahead of mass layoffs.

Munchery, a prepared meal delivery company headquartered in San Francisco, announced in an email to customers on January 21 that it would cease operations, effectively immediately. The abrupt shutdown not only came as a surprise to Munchery’s community of customers, but shocked vendors, many whom had been expecting payments from the business for several weeks. Munchery’s own employees were left in the dark, too, according to several former workers who spoke to TechCrunch about their debt and dissatisfaction with chief executive James Beriker.

Munchery ordered mass layoffs on January 21, per the lawsuit, the same day customers were notified the company would go out of business. In total, Philips is seeking equal to the sum of his and other affected employees’ “unpaid wages, salary, commissions, bonuses, accrued holiday pay, accrued vacation pay, pension and 401(k) contributions and other ERISA benefits, for 60 days, that would have been covered and paid under the then-applicable employee benefit plans.”

Munchery is deep in a pile of debt. The startup’s former vendors, which includes San Francisco-based Dandelion Chocolate and Three Babes Bakeshop, say they’re owed tens of thousands in overdue payments. Those businesses, and several other small vendors in San Francisco and Los Angeles that notified TechCrunch following the publication of this story, are still awaiting overdue payments, with one supplier claiming to be owed north of $100,000.

As of Monday morning, Munchery had yet to file for bankruptcy.

“They entered into a 14-month payment plan with us to cover nearly $150,000 in debt, but never had the intention of fulfilling their obligation,” an LA-based Munchery vendor, who asked not to be named, told TechCrunch. “The entire meal prep business is not sustainable on a grand scale like these companies envision.”

On top of its outstanding debts to vendors and facilities workers, Munchery also failed to send final paychecks to delivery drivers. Several Instagram messages provided to TechCrunch show a cluster of drivers in the San Francisco and Sacramento area are confused by the lack of communication from the venture-funded startup and are hopeful checks will arrive.

After arguing with Munchery employees, a delivery driver in Sacramento by the name of Sharon Howard said she finally received a “janky looking handwritten check” from the business on Monday and is hopeful it will clear.

“My co-workers up here in Sacramento have not received their final checks and are just um…waiting,” Howard wrote in an Instagram message shared with TechCrunch. “I sort of have the feeling that if they don’t speak up, they’re just gonna be forgotten about … It’s just not right to work with the expectation of getting paid and then just allow Munchery to turn a blind eye.”

Munchery chief executive officer James Beriker joined the startup in 2016

Munchery had raised $125 million in venture capital funding at a peak valuation of $300 million from key investors e.Ventures, Infinity Ventures, Sherpa Capital and Menlo Ventures, as well as from Greycroft, M13, Northgate Capital and more since its founding in 2010 by Tran and Conrad Chu. Aside from a small $5 million check, all that cash was deployed under the leadership of Tran, who struggled to improve Munchery’s margins and was eventually replaced by Beriker, the former CEO of Simply Hired.

Munchery, however, struggled under Beriker, too, and ultimately shut down its Los Angeles, Seattle and New York operations and laid off 30 percent of its workforce. A former Munchery employee, who asked not to be named, said Beriker’s poor leadership is to blame for the startup’s failure.

“The CEO was very disconnected to the business,” the person said in a text message. “We would see him maybe once every other week and only for 15 minutes — if that. The kitchen staff didn’t even know who he was when he came to the facility. In my time with the company, he was rarely truthful or transparent about the current state of the business and the future direction. Not to mention his very hefty salary that compared to that of a publicly traded Fortune 500 company.”

“My heart goes out to all of the big and small businesses that Munchery’s closure has and will affect,” the person added. “I am also hopeful that the staff who had zero advance knowledge of the closure will find employment quickly.”

Beriker has not responded to multiple requests for comment from TechCrunch. We’ve reached out to Munchery’s investors for additional details surrounding the strange, sudden and silent shutdown.

Here’s a look at the full legal complaint:

News Source = techcrunch.com

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