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We cover a lot. Health startups here at TechCrunch, and you know what’s really hard to get any joy from? An online pharmacy that has raised another round of funding.
Make no mistake, Alto Pharmacy’s Series E raise is impressive, raising $200 million. But in reality, those companies usually don’t use my radar: they’re too big to be startups, and they haven’t had a liquidity event (ie, IPO, acquisition, or bankruptcy), so there aren’t many. News there.
“The company disrupted an existing industry with a new business model, it’s been doing well for a while, and now it’s raising a lot of money, with a lot of exceptions” It’s hard to tell the amazing story that surrounds it. In particular, that – albeit with slightly lower numbers – was also the story in 2017. And in 2020, the company will raise $250 million in Series D.
I know that sounds a little odd for someone who writes about companies for a living, but listen to the founder’s quote from the company’s press release about this fundraising:
“For the past seven years, he has been laser-focused on building solutions to the fundamental issues plaguing the fractured pharmaceutical industry. “We are very proud of the progress the team has made, quietly strengthening our position as a market leader in the fast-growing digital pharmacy market,” said Jamie Carraker, founder of Alto. “We are thrilled that this new funding will allow us to continue to define this growing industry and help more patients get the care they deserve.”
That’s a lot of words, well… yeah. The company has been doing well for a while, disrupting an existing industry with a new business model, and now it’s doing the same, having raised $200 million.
This comedian standing on the slide deck stage, staring at attention, says, ‘Pharmacies, amirite?’ He is grumbling.
In the fast and furious world of early-stage startups, it’s hard to forget that there’s often a middle ground. Some companies make billions of dollars quickly. A few crash and burn in cavalry charges. But as journalists, we’re doing ourselves (and our readers) a disservice: there are too many companies that grind themselves on the road to success, customer by customer, metric by market. Let’s face it, there aren’t many companies that raise five rounds of institutional growth with half a billion dollars worth of investment along the way.
When you’ve made multiple rounds and several years down the line, you better have some tricks up your sleeve, solid metrics, and some plans for what to do next to get the company where it wants to be. Alto seems to have done it – in January of this year he told the world about a $200 million fundraiser. Then on June 30, the company announced it had a new CEO in former Amazon exec and 25-year GM veteran Alicia Boller Davis.
After reading all of this, I was curious to see how a company could tell the above story to investors in the form of a pitch deck. And, perhaps especially, which parts of the story Don’t do it Show on deck.
We’re looking for more unique pitches to break down, so if you’d like to submit your own, here’s how to do that.
Slides on this floor
- Cover slide
- Summary of attraction and parameters
- Cover Slide – Business Overview
- “Current pharmacy experience is not very effective” – problem slide
- “Pharmacy is still the largest offline consumer industry” – Opportunity Slide
- “The current experience is broken for patients and providers” – Problem slide
- “The Alto Experience fixes that” – the solution slider
- “Alto Patient Value Proposition” – value proposition slide
- “Alto Supplier Value Proposition” – Value Proposition Slide
- “Powering the Next Generation of Pharmacy with an End-to-End Software Platform” – Product Slide
- “Alto offers a different approach” – competition slide
- “Alto uniquely reshapes broader healthcare ecosystem” – Market Context Slide
- Cover Slide – Business and Development Strategy
- Income traction slide
- “Our growth strategy” – go to market slide
- “Alto is expanding quickly and efficiently” – regional release slide
- “Alto’s Supplier-Led GTM Movement Drives Patient Engagement, Enables Wallet and Margin Expansion” – Marketing Strategy Slide
- “Expansion opportunities for Alto are attractive and important” – Adjacent market growth strategy slide
- Cover slide – overview of operations
- “Pharmacy sits in the middle of a complex and confusing supply chain” – Operations Chart Slide
- Closing the slide
The company removed three slides from the deck they sent me and some of the numbers in the deck were adjusted. Two of the removed slides were screenshots of a product demo, and the last contained financially sensitive content.
Three things to love
There’s a lot of incredibly slick data and presentation in this 21-slide deck, with some huge wins along the way. Here are three of my favorites:
Hit them with information
[Slide 2] Getting straight to business. Image Credits: Alto Pharmacy (Opens in a new window)
Traction is everything – this is true for every startup, but it becomes more and more important the longer the company. Hitting those milestones, making that progress — that’s the name of the game. Alto won’t spoil it with a five-point summary of why investors should show him the money. Frankly, this slide is an award-worthy list of accomplishments.
Doubling your ARR year after year makes every investor ask, “How can you do it again?” It is a sign of progress that makes one wonder. “A positive contribution margin per order,” says Finance, “is that if we sell more things, we’ll make more money.” The company In 2019, the figure shows that it is negative. This means that in 2019, the more orders the company fulfilled, the more money it was losing. In three years, he turned that around. He turned around.
The geo expansion model is very interesting; Later in the pitch he might convince me that the company has done 11 Geo releases and now has a playbook on how to conquer new markets, making the company a relatively safe bet, for starters.
Read between the lines and beyond the business-speak: the company is growing incredibly fast and has incredibly happy customers. It’s raising money there because operating and R&D costs are high enough that it’s generally running at a loss. But if it can streamline marketing and customer purchases, it can be a profitable company. And look! It has a way of rolling out to new markets easily and quickly.
It’s a great summary of an amazing company, and as an investor (if I invest in late-stage growth) I’m excited for the next 55 minutes of my life.
‘Ripe market ripe for disruption’
[Slide 5] Let’s be curious. Image Credits: Alto Pharmacy
(Opens in a new window)
This slide tells two incredible stories, both related to market size and opportunity. For one thing, as an industry, pharmaceuticals outnumber Uber and all food delivery services Combined. Here’s another one: Catering and driving and travel have all gone online, and you can probably imagine a dozen unicorns popping up in each category. If I were a CEO, I would be jumping up and down at this point, pointing to the 1% number and saying something very strongly to me, “How much do we have to do to prevent success in this market?
Based on the company’s performance so far and its size in the market – barring some major red flags that show up later in this pitch, this looks like a safe investment with great potential. There’s a whole class of VCs dedicated to taking startups from “good job” to IPO, and I wouldn’t be surprised if we see one of them from Alto in the near future.
Also, folks, that’s how market size slides. Very well done.
Let’s tease the reader a little
[Slide 6] It’s the slide-deck equivalent of a comedian standing on stage, staring intently into the spotlight, saying, “Pharmacies, amirite?” grumbling. Image Credits: Alto Pharmacy(Opens in a new window)
The best storytelling in a playbook is making it come to life. And, in the US, with unimaginably complex health care, the above diagram is painfully familiar. From buying a prescription from your doctor to getting your hands on the drug can be a Sisyphean frustration and deadly rage. By playing into that experience and waving a magic wand to make everything better, you’ll bite the empathy bone in your investors.
You get exactly one guess for what slide 7 is.
Oh ok, well, since you asked so nicely:
It’s storytelling as self-contained as marketing: set up a painful problem that viewers can identify with, and sell that problem to that same issue in the next episode.
It’s so simple, but Alto does it so wonderfully here.
For the rest of this teardown, we’ll look at three things Alto Pharma could improve or do differently with a full pitch deck.
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