Excited to announce our investment alongside Epsilon Health Investors in the $5M series A in Banjo Health which employs artificial intelligence in prior authorization (PA) i.e., reduces medical paperwork. Tau Ventures is an AI-first fund in Silicon Valley investing primarily in mature seed, typically when there is a pipeline of customers, but we occasionally take earlier or later bets when we see immense promise. Banjo falls on that latter exception, having been founded in 2019, raising a pre-seed with strong angels, and skipping the seed altogether. They impressed us with (1) addressing a strong need, (2) building an execution-focused team, and (3) creating a differentiated product.
1) The Need
80% of the work in PAs is manual. It’s also close to a uniquely American thing, with the only other major country with a similar PA system being Singapore. The US is overall off the charts in terms of healthcare expenditures, spending ~$1T just in paperwork, corresponding to ~1/3 of all costs. 2/3 of that paperwork is the direct and indirect cost from ~500M PAs. When it comes to direct costs we are talking about $30-35B from payors and similar amount from providers. Bottomline, like most things in healthcare the market is not an issue given the inefficiencies. The much bigger challenge is usually go to market and in the case of Banjo, they have shown promise in their pipeline.
2) The Team
CEO / cofounder Saar Mahna brings deep domain knowledge, having been previously 19th employee at RxAdvance and before that an investment banker. CTO / cofounder James Rollins was formerly IT systems and solutions manager for the US Marine Corps Systems Command; he also helped supervise the maintenance for the transport of the President and Vice President. The company has fully embraced being remote, being spread across 8 locations in the US. We appreciated the CEO’s emphasis on maintaining a strong culture, case in point they ask every candidate to read Ego Is The Enemy so they can evaluate the reaction to judge fit.
3) The Product
Banjo’s product is composed of four modules, as described below. They are currently focused on payors and a near future on providers. The data they are collecting can train their system to be increasingly automated. Right now Banjo is able to improve processing time by an average of 20%, with the vast majority of claims taking between 5 and 60 minutes. We were also positive on their partnerships, for instance with ELMCRx Solutions — overall the PBM space requires much skill to navigate.
We are honored and excited to be part of Banjo’s journey, using technology to solve a big problem. More at http://banjohealth.com.
Originally published on “Data Driven Investor,” am happy to syndicate on other platforms. I am the Managing Partner and Cofounder of Tau Ventures with 20 years in Silicon Valley across corporates, own startup, and VC funds. These are purposely short articles focused on practical insights (I call it gl;dr — good length; did read). Many of my writings are at https://www.linkedin.com/in/amgarg/detail/recent-activity/posts and I would be stoked if they get people interested enough in a topic to explore in further depth. If this article had useful insights for you comment away and/or give a like on the article and on the Tau Ventures’ LinkedIn page, with due thanks for supporting our work. All opinions expressed here are my own.
