Ectosense, a Protechting Alumnus, secured €1.5 million in funding this week
When Ectosense participated on Protechting they ended up with a pilot with Luz Saúde. Since then they’ve come a long way, managing to secure a €1.5 million in seed funding in a round led by Saffelberg Investments, a leading Brussels-based private equity group, this week.
One year ago they spoke with Maria Almeida about their product, how they closed important partnerships with big corporates in the industry and how is it like to build a startup in healthcare.
In light of the recent events and since Protechting has its applications open it’s only fair we republish the interview they did a year ago.
So, Duarte, for those who don’t know, what is Ectosense?
Ectosense is a startup in the area of medical devices, more specifically to diagnose sleeping disorders, particularly sleep apnea. For those who don’t know, sleep apnea is a condition that makes people stop breathing while they’re sleeping. Imagine that you’re going to bed and after you fall asleep I cover your mouth and nose with my hands and you can’t breathe, so you wake up to take my hands from your mouth and nose and fall back to sleep. After a few minutes of sleep, it happens again, and you can’t breathe, and so on. It happens during the whole night. In serious cases, this can happen up to 100 times per hour. The problem with sleep apnea is that prevents oxygen from flowing into your brain, leading to an adrenaline charge, which speeds up your heart rate so that you can wake up and breathe again. This has some pretty negative consequences for your body. Not just for the low levels of oxygen but also because of the effort your heart makes.
Sleep apnea can lead to many chronic diseases that contribute to a considerable loss in quality of life. This also represents significant healthcare costs, which are usually supported by insurance companies, and for us, this was actually one of the reasons why we wanted to join Protechting.
And how are you currently developing your product?
What we initially developed was a software that would automate the diagnosis for sleep apnea through sensors which could be integrated with mobile solutions. Instead of having the usual method of diagnosis that is very complex. They basically make you sleep with many different sensors attached to your body, like on your head, on your face, on your eyes… Or, if you want to do the most accurate exam you have to sleep at the hospital and be monitored during that time. Later on, the doctor will review the results manually. This is very expensive, people have to wait for a long time to schedule this exam, in Portugal for example, it takes you between 6 months and 2 years to schedule the exam.
What we do is take a few sensors from this complex system, which can be integrated with mobile solutions, and we add artificial intelligence to these sensors so that we can have better quality in the diagnosis and more information from these sensors that weren’t previously extracted. Nowadays, you register the results and analyze them manually, while we use algorithms to extract more information from these sensors.
The current method of diagnosis makes no sense. It’s complex and costly, and it deals with a condition that affects 4% to 7% of the population and in more than 80% of the cases people haven’t yet been diagnosed. We’re talking about a condition that has severe consequences in your quality of life, in your work, in your productivity, so we thought why hasn’t somebody developed an easier solution?
As any healthcare product, you must have to conduct studies to test it before you actually launch it. How is it going so far?
These tests or studies serve 2 different purposes actually. First, it helps in the development of the product, because as we have machine learning algorithms we need a large amount of data to make it reliable. Second, it’s needed to validate the product with doctors, university professors, and showcase it to the medical community and show it has a good performance when compared to the current solutions. And actually for us, it helps in terms of marketing because we’re not selling this as a gadget, we’re selling it as a medical device to be used in the medical practice.
Who are your customers then? Who is your target?
Our customers are the hospitals, but also the healthcare insurance providers. These insurance providers are the ones who mostly feel the economic impact of this condition not being diagnosed. Just to give you an idea, in the US the hidden costs of sleep apnea are estimated to be between 60 and 65 billion dollars, which is a tremendous amount.
Which studies have you conducted and how were you able to get the hospitals to run these tests?
In Portugal we’re running a study with one of the major hospitals in Lisbon, “Hospital Santa Maria”, and that on is still on-going. And another one that’s about to start at “Hospital Beatriz Angelo” that will be longer as we will monitor people’s sleep during several nights in the patient’s home. The goal is to see how the patient responds to sleeping with this device for several nights, and it has a particular advantage because sleep apnea can vary a lot from night to night, and sometimes the current diagnosis method can miss this because they only do it for one night. This means that 1 out of 4 patients can miss his or her treatment because of this. So, during this study will analyze the benefits of using the device more than once.
What feedback have you received so far?
It’s been really good and we’ve achieved the CE certification with these studies. So, that’s already taken care of. The doctors see this as a necessary solution that is very different from what’s now available, and that can diagnose many cases which they struggle with in the past. As for the insurance providers, they spend enormous amounts of money which correspond to a significant percentage of their revenues. So, insurance companies have all the interest in the world in having this kind of product.
Talking about insurance providers, you have participated in the first edition of Protechting, the accelerator by Fidelidade and Fosun. Fidelidade is one the leading insurance companies in Portugal. Were you able to work with them while developing your product?
Yes, we did work closely with them, particularly with Luz Saúde, which belongs to Fidelidade. Actually, the “Hospital Beatriz Angelo” where we’ll conduct one of our studies is from Luz Saúde and this deal came from Protechting. After the program, we kept on talking to Luz Saúde and this opportunity came out. However, we haven’t yet focused on having Luz Saúde using our product, because we’re not there yet, we’re still conducting the study so, we’ll see where it goes from here. From Multicare, which is the insurance provider of Fidelidade, we’ve been talking with them regularly and they’ve been giving us a lot of support and mentoring on how we can deliver the best value proposition to insurance providers. Multicare is actually considering including this exam in their insurance plan so, we’ll see.
Protechting, overall, was a great experience. It is actually very different from most acceleration programs because it allows you to have direct contact with very experienced mentors from your industry and with a wide network of contacts mostly in the areas of healthcare and insurance. It would be extremely difficult to reach out to these high-level players if we weren’t in Protechting. Another thing is that you also get plenty of exposure from Fidelidade, Fosun, and Luz Saúde, so in the end, Protechting acts like a shortcut for you to tap into this tough industry.
What is your current biggest challenge?
The health certifications and bureaucracies were one of our biggest challenges, but fortunately, we’re done with that. So, for now, we have two big challenges ahead of us. The first one is that our product has to be used with a specific hardware that the hospital needs to buy. This equipment is very expensive so, our plan is to go for a different model in which we also provide a specific hardware that can be used with our software. This hardware will be development in partnership with the biggest investigation and development institute of nanoelectronics in the world, which is also based in the same city we’re in, Leuven. This institute also has part of our company and we’re working closely with them to develop a hardware that is produced at a lower cost and that can be sent by mail. So, one of our biggest challenges is developing this hardware, and getting the medical certification, as this is another medical device.
The second and probably biggest challenge is going to market with this product. So, we’ll have to sell the software, which already exists, in combination with the hardware we’re developing. This includes selling to insurance providers and a few hospitals, even though our main focus is the insurance providers because they can reach to a larger number of people and their main focus is in prevention, which is greatly aligned with what we’re doing. Sleep apnea causes many chronic diseases including, heart failure, hypertension, diabetes, and many others, so, this early exam to diagnose sleep apnea can be extremely helpful to prevent these diseases.
Healthcare is an over-regulated and expensive industry to disrupt, and it has a history of failing to implement ambitious IT projects. What makes you think you’ll be able to disrupt this industry?
In this area, startups have lots of disadvantages. For example, for us, it’s much more difficult to start from a medical certification process from scratch, because we have very little experience, and the process is extremely arduous and bureaucratic. On the other hand, startups have the advantages of being small, efficient, and young. So, we usually work very long hours and we execute faster. In our case, for instance, the development of the product and getting the certification took us 1 year. Every time I say this to anyone who is working in healthcare, they’re usually surprised that it took us so little to get a product in healthcare up and running in so little time. And, I honestly think this has to do with us being a small company which allows us to be more efficient and cut the bureaucracies that most big companies have. However, these big companies have the industry knowledge that we don’t have, and they also have the funds to invest in this kind of solutions, which for a startup is usually harder to get. So, it’s obviously crucial for you to get partnerships and work together with other players in the industry.
I strongly believe that Ectosense will overcome all the obstacles and be successful because we are the most cost-effective, convenient, and accurate solution in the market. We have the only solution that allows you monitor sleep for several nights, and it’s the smallest and cheapest device.