Use case - L - D'Ornano + Co

Objective

New Investment

Investment stage

Venture Capital

New Business model

SaaS [Horizontal Applications]

Case Study

D’ORNANO + CO. PERFORMED HYBRID GROWTH DILIGENCE ON A FAST-GROWING DIGITAL INFRASTRUCTURE FOR HEALTHCARE PLATFORM IN THE HEALTHCARE INDUSTRY IN THE CONTEXT OF ITS SERIES C ROUND

The investor wanted to make a late-stage investment in a SaaS business operating in the HealthTech vertical. The company has integrated machine learning to power a secure solution to exchange medical documents between hospitals and medical practitioners. It also has ambitions to move beyond its core functionality to become a broader platform for healthcare data. Healthcare is one of the world’s biggest markets, but it has also been notoriously slow to embrace digital transformation.

Challenge

The startup’s rapidly evolving product set meant that many of its products only had short operating histories. Also, its customer base led to different growth dynamics across the public and private sectors. Traditional due diligence is backward-looking and, for High-growth and Disruptive companies, does not provide comfort on a company’s ability to deliver sustainable growth and create value. Also, because traditional due diligence takes a broader industry approach rather than a more precise business model approach, it can only generate a surface-level view of a company’s financial health with a limited picture of an asset’s strengths and weaknesses to consider in the investment process.

Solution

The investor retained D’Ornano + Co. to apply its Hybrid Growth Diligence for Late-Stage VC product which identifies in a short timeframe any deal-breaking items, secures key aggregates, and challenges the existence of a clear path to profitability. The product also delivers in-depth analysis to validate the company’s execution capabilities, critical at this financing stage. Going beyond classic due diligence, the firm’s HGD methodology layers Financial, Legal and ESG diligence on top of preliminary business model analysis and incorporates operational data mirroring the company’s economics in the assessment performed. The result is an in-depth analysis performed in record time to satisfy the expectations of an investor assessing a high-growth + disruptive asset in the context of a late-stage round.

Mission outcome & key client impact

We assessed the target’s intrinsic value drivers and resilience through validating:

The feasibility of expected new logo acquisition in the near future, in light with historical trends, notably of traditional public health institutions that could be harder to convert;
The existence of a clear scalability of its model by recalculating gross margins;
The quality of its customer base, in understanding customer concentration and revenue mix between health player types, as ARPA dynamics can be elastic between actors;

In validating the target’s ability to grow at scale and its level of profitability, we helped our client confirm its investment thesis.

New Business Model

+ Vertical

SaaS [Applications] companies allow end users to access software applications over the internet through the payment of subscription fees. D’Ornano + Co. has historically conducted multiple SaaS [Applications] assignments for global investors.

HealthTech companies provide mobility and other information technologies to improve healthcare delivery while decreasing costs. The vertical includes the use of technology services – like cloud computing, internet services and social mobility – to optimize patient-centric healthcare. D’Ornano + Co. has historically conducted multiple HealthTech assignments across multiple business models.