Euc Series C Notes

AV & Eucalyptus: The Journey So Far..

Last week Athletic Ventures' maiden portfolio company Eucalyptus closed out their Series C, securing $60m led by highly renowned US venture fund, BOND. Since first investing as part of their Series A two years ago, we have been fortunate to be a small part of Euc’s journey, watching the business grow from a fledgling ‘house of brands’ startup to a disruptive healthcare powerhouse. The group of athletes backing Euc packs some serious power itself, with names such as Mitchell Starc, Dylan Alcott, Mattew Delavedova, Sarah Wall, Michael Hooper, Nat Fyfe, Alyssa Healy, Cam Murray and many more joining forces to back the business. So in light of Euc’s successful raise, we thought we would take the opportunity to discuss the business in more detail, highlight what we have learned along the way and share why we are so excited about what’s next.

Who is ‘Euc’?      

Euc has developed a telehealth platform that provides digital experiences and treatment options for patients across a number of condition areas. Whilst COVID-19 propelled telehealth to overnight notoriety, Euc’s mission goes much deeper than simply shifting healthcare online. Their technology offering aims to evolve the current primary care experience from a high friction and disconnected model to one that is seamless and personalised. Today, Euc’s platform allows patients to complete an asynchronous, text-based doctor's consultation from their mobile/desktop device and, if appropriate, receive the necessary treatment delivered discreetly to their door. This has been a significant first step in changing how healthcare is delivered. In time, the business will evolve this experience from the largely transactional process today towards a deeper, more proactive and data driven care offering across a wider range of health issues. At scale, this will provide a fundamental shift in the way healthcare is delivered. 

Today, the business operates 5 telehealth brands:

Pilot is a mens telehealth platform that provides access to doctors and treatment options for a range of conditions involving sexual health, hair loss, skin, sleep and weight loss.

Kin supports women on their fertility journey. The brand began by launching Australia’s first online contraceptive prescription service 2 years ago, and has now evolved to support women through contraception, fertility, conceiving, pregnancy and postpartum care. 

Software connects patients with dermatologists to provide personalised treatment plans for skin conditions and the effects of aging. 

Normal is a Australia’s premium sexual wellness brand. By bringing sex toys and education into the 21st century the team are making the the conversation around sexual wellness, normal.  

The newest member of the Euc stable, Juniper is dedicated to providing woman with support and treatment through Menopause. 

The Euc model of delivering healthcare under a portfolio of brands approach is somewhat unique, but in many ways is their secret sauce. It allows each brand to be hyper-focused on their condition-specific needs and operate a bespoke offering of content and care for their patients. The brands then plug into Euc’s technology and creative infrastructure meaning they can scale faster and more efficiently than they could independently. Investments that might not be financially justifiable for one brand alone can be shared across many, meaning that the portfolio as a whole benefits. Acting like a coach managing their players' form, the Euc team then manages each brand depending on where they are in their growth cycle. This means that whilst one brand may be in an investment phase with slower growth, others are likely to be in a growth phase and the overall growth of business does not slow. 

In 3 short years the business has scaled at a remarkable pace to be treating over 200k patients today. Perhaps more impressively, the business has done so whilst maintaining exceptional capital efficiency in customer acquisition costs (CAC) and in an industry with a heavy regulatory burden and zero margin for error in compliance. 

What have we learned?

The last 2 years have taught us plenty, but here are some of the things that stand out:

The Power of Vision – Founder Tim Doyle’s ability to articulate the vision of the business was abundantly clear from the beginning. This is critically important in the early stage of startups, where the basis for deploying one's capital as an investor or your time and skills as an operator is often done on the belief in the vision alone. This is at least partly the reason why Euc has been able to raise capital 4 times in 3 years and can boast tier one venture firms Blackbird, Airtree, NewView, and now BOND as investors. To hear Tim discuss the business in more detail, check out this podcast.  

The Talent Flywheel  - As athletes, we know intricately the power of a great team. So it is no surprise that underpinning Euc’s success is the world class team they are rapidly building. Instead of running the brands centrally, each brand is headed and run by its own ‘founder’. This, along with some incredible early hires in key function areas, meant that Euc was able to aggregate an amazing amount of talent into key roles very early. These early hires acted as social proof and inspired other highly sought after people to subsequently take the leap of faith in joining the startup. As they have scaled, this has created somewhat of a talent flywheel and Euc now employs ~150 of some of Australia’s brightest up and coming operators and medical professionals. This has proved to be a distinct and difficult to replicate competitive advantage for the business - and just in case you hadn't noticed, they are hiring. (Click here)

How to Grow - Despite the incredible rise of the domestic startup ecosystem, the fact still remains that Australia is a relatively small market. There just simply are not that many multi 10 billion dollar TAM’s in Australia and the list of truly successful international expansion stories is still quite small (although growing quickly). The challenge then becomes to scale quickly enough to warrant continued VC funding, but do so in a way that doesn't destroy your unit economics. There are many reasons why Euc has been able to grow efficiently, but one that is worth noting is their in-house creative and marketing capability. By spinning up and testing content, killing the losers quickly and doubling down on what works the business has become very effective at producing successful marketing content. On top of this, they have developed an ability to exploit cheap, mispriced and overlooked media channels such as late night TV. This has allowed them to continually get outsized returns on their marketing spend overtime and avoid the deteriorating unit economics that can come with high growth. Their now proven ability to continually execute on this gives us confidence that they have a repeatable formula to deliver growth for many years to come.

What’s Next?

When we look back on the Series A deck it is striking how close the business has tracked to their growth forecasts. With this level of execution, we think the next chapter will be equally  exciting. Here’s what's next:

 Expand treatment offerings and extend deeper into patient care - Euc has ambitions to expand their offering across more condition areas such as diabetes, heart health, weight management, mental health and more. These conditions are often chronic and more complex, meaning a deeper and more continuous relationship with patients will be required. The solution lies in creating a single platform with the ability to collect data, meet with condition specialists, receive medications, track results and follow-up with the same (or new) practitioners. 

Own more of the critical infrastructure  - With the front end now up and running the next step will require building out more of the backend infrastructure. Owning and integrating with important capabilities such as pharmacy, pathology and clinics will provide a more seamless patient experience and ultimately capture more value for the business. 

International Expansion - The team Euc has assembled gives us conviction that they are capable of going beyond Australia to impact healthcare globally. Whilst still early days, the business has begun to build a measured presence overseas. Normal has launched in the US and the team is in the process of building a UK team for a launch later this year. 

The potential for technology to improve outcomes for patients is enormous and we think Euc has assembled the building blocks to do just that. We are thrilled to be supporting Tim, Charlie, Benny, Alexey and the entire Euc team on this mission and we wish them well on the next phase of the journey.

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