For its latest funding round, Silicon Valley startup NowRx decided to avoid venture capital dollars.
The online pharmacy aims to raise $73 million series C funding through SeedInvest, an equity crowdfunding platform.
This is not NowRx’s first crowdfunding raise—it's its fourth—as the company's previous round, which raised $20 million, was oversubscribed and was the largest raise on SeedInvest at that time, according to NowRx executives.
Once completed, the series C round will bring the company’s total funding to more than $100 million. Since opening the series C round to reservations more than $8 million has already been committed, the company said.
The startup, which provides same-day and same-hour prescription medication delivery and telehealth services, aims to use the funds to expand into additional territories, and accelerate the technology roadmap for its proprietary pharmacy management software and logistics technology.
The raise comes on the heels of strong growth as the company charted $13.4 million in revenue in 2020 and continued momentum in the first half of 2021, the company reported.
Entrepreneur Cary Breese launched NowRx in 2016 to reinvent the pharmacy experience. The company was designed around the idea of eliminating brick-and-mortar pharmacies, replacing them with a logistics-driven pharmacy distribution model. The company also operates micro-fulfillment centers and uses proprietary pharmacy software, robotics, AI and last-mile logistics to provide free same-day delivery of prescription medications.
Over the past 12 months, NowRx has expanded from two to eight locations, delivering more than 365,000 prescriptions to more than 35,000 customers. NowRx aims to take its same-day pharmacy delivery services across the country, with plans to open micro-fulfillment centers in the top 20 metropolitan areas within the U.S.
The company also launched NowRx Telehealth in March, targeting the $61 billion global telehealth market. The first phase of service included the launch of NowPrEP, a specialty service that includes a free physician assessment, lab testing and home delivery of pre-exposure prophylaxis (PrEP). NowRx plans to offer dozens of other specialty physicians and targeted conditions that would benefit from the convenience of home-based consultations and prescription delivery.
Breese says equity crowdfunding has given NowRx a few key advantages over the traditional venture capital route.
Taking the nontraditional path of crowdfunding to raise money enables the startup to manage its own tech development and growth strategy without undue influence from large institutional venture funds while also prioritizing the customer experience, he wrote in a blog post.
"When a company receives investment from a traditional VC, the founders are under a ton of pressure to show performance (growth) as quickly as possible. A larger check usually means greater pressure," Breese wrote. "Oftentimes, this causes founders to make decisions solely based on growth. In other words, the founders prioritize growth at any cost, even if that means sacrificing quality or the customer experience.
The “build fast and break things” mentality that defines many Silicon Valley startups does not have a place in healthcare, Breese wrote.
"Equity crowdfunding has given NowRx the advantage of avoiding 'grow at all cost' pressures that have become too common in the VC world. This has allowed us to focus on scaling the business in what we believe is a more sustainable manner," he said.
Equity crowdfunding also establishes fair terms and valuations, according to Breese.
"The overall process is just much more objective and less susceptible to hype or other external factors," he wrote.
The current pandemic raised the bar for telehealth services and pharmacy delivery. Patients now expect speed, reliability, convenience and quality, Breese said.
Along with its pharmacy management software, NowRx provides a consumer app for full transparency into the prescription process and the driver app “Wheelz” that enables the company to coordinate pharmacy deliveries and transactions while allowing customers to track their prescriptions in real-time using GPS.
The company's growth comes as digital pharmacies have gained steam—and investors’ support—in recent years.
Among the latest raises has come from Capsule, which hauled in $300 million in April to support its digital pharmacy and accompanying services including telemedicine and mental health support. Alto Pharmacy also closed a $250 million series D round early in 2020, while Medly Pharmacy and Now Rx brought in $100 million later in the summer.
Each of these players is pushing forward under the looming specter of Amazon Pharmacy.
The online retail giant bought Pillpack back in 2018, launched its prescription benefits service last year and unveiled new price comparison features in May.