I guess its a bit of yes and no on that one. Mistral Ai was backed by Lightspeed which is a pretty big VC firm, they can only make big investments and their business model relies on large investments so they can clip a management ticket. It's often commented on about Blackbird and Airtree that if you strip out a couple of investments the rest looks pretty average. Maybe Lightspeed have picked a winner? Maybe it's getting ticked up too to get liquidity on the next round to close out a management fee? Dunno? Mistral Ai is a hopeful in the generative ai business and that is the hottest place to be especially with Microsoft coughing up a $1b for Chat GPT's parent.
I'm not sure if you saw Milkrun? They went out really hard, great founder, big name VCs on board, multiple raises of increased valuations, land grab using tech to out-compete existing players, bankrupt and wiped out this year. Not all Tech land grabs work out, lots don't. Mr Yum raised a crapload of cash a year or so ago, great team, great growth, Tiger capital lead the round, currently putting off staff and changing the way they use metrics to assess their business growth. Mr Yum is a pure tech play that needs to focus more on cash flow as the big cash splash of zero interest has gone. Right now in funding circles it's all about risk free rate of return and can runways, a year or 2 ago it was all about growth. Business cycle has changed and so have expectations for money raised.
The significance of hitting revenue neutral is not a question of growth or anything like that, it is a means to an end. Should HeraCARE be able to attract enough PAYING customers in healthcare then it has an actual product and service that has been validated by the market. If HeraCARE can start enrolling and maintaining a client base of hospitals, platforms, state health systems etc and clearly demonstrate a validated product and service that has compelling need then the future raises won't be about keeping the lights on, they will be about growing like there's no tomorrow. Health is slow and boring to invest in, I'm sure that you've experienced this plenty of times. FDA, TGA, CE approvals, peer reviews, gold standards etc are all vital to success in Health however so is the commercial reality of cash flow. Cash Flow in a start up demonstrates that not only does it fill a need but it does it better than whatever else was/is there and at a price that is more attractive. There's plenty of equally praised and validated devices, therapeutics, platforms etc that don't make it commercially. FDA approval does not equal commercial success.
Aiming low at 15,000-20,000 licenses is not a negative. HMD aimed high and missed with Mednax. That was the 100,000+ license deal that didn't come off. Lots of questions were asked about the ability of the team to close deals and about their ability to even be able to understand client needs and hurdles. Mednax was a bit of disaster. Mednax did also give birth to e-Lōvu who recognised the issues at hand and sought a new pivot for a solution. Looks like they found it and guess what... it's aiming low and hitting small targets repeatedly. e-Lōvu could not raise sufficient funds by talking up a huge game full of giant targets, they had to find compelling need that was justified by the demonstration of cash paying customers. Even now they are reaching out to Australian investors as the US isn't the happy hunting ground of tech sophisticated investors.
The date of 2025/6 that you're mentioning could well be full of 100,000+ licenses for HMD, however in order to get 1 license paid for there needs to be a pilot. The pilot is about introducing the tech and device to a hospitals systems etc, in the USA they reckon thats a 90 day timeframe. After that 90 days has expired it will take about 6 months to get everything (including the delivery of devices) aligned and working. That's 9 months from sign off assuming everything goes along swimmingly. Realistically, 12 months is a better timeline from sign off to full commercialisation. That's the US with their regulations, it's a longer period over here. In order to have 100,000 licenses in play by 2025 we need to see 100,000 licenses (or at least the ability to use that many) sign up in 2024. In order to get to 2024 as a going concern something in the order of $2-$2.5m has to be raised at a minimum. In order to tip more money down the HMD drain (I'm at about $500k now) there has to be some sort of reason. Cash flow confirms the market is there. Revenue neutral confirms growth and management ability. Without meeting a revenue neutral position then the money will stop and so will HMD.
Personally I would have preferred to come into HMD on a private raise of an unlisted entity where valuations are more readily understood and dilution is just part of the game that everyone playing along understands. It probably is being ticked up for a raise, maybe it's also just punters that have seen NEU, TLX, LDX, AL1 and others go for a run and just having a flutter on this one? Maybe it's a bit of both? I'd rather see a raise higher than lower as would everyone with shares in HMD. Maybe the raise will be fewer shares as the price is higher for less dilution? Maybe the dilution will be the same but the raise will be for more money with a higher price? No idea?
I really appreciate your input as it levels out some of the excitement of other posts.
HMD Price at posting:
8.5¢ Sentiment: Buy Disclosure: Held
