Butterfly Network, which is the developer of a next-generation ultrasound system, has landed on CNBC’s Disruptor’s list for 2020. In its first appearance on the annual list, it’s ranked 32nd. And yes, in light of the success, the company has had little trouble raising money. Entities like the Bill & Melinda Gates Foundation, Fidelity Investments and Shanghai Fosun Pharmaceutical (OtherOTC:SFOSF) have opted to invest in Butterfly Network stock. The valuation is at about $1.3 billion.
Let’s get a backgrounder on the company. In 2011, Dr. Jonathan Rothberg founded Butterfly Network and his mission was quite ambitious: “to democratize healthcare by making medical imaging accessible to everyone around the world.” Keep in mind that about 4.7 billion people lack access to medical imaging services.
Dr. Rothberg got the idea for Butterfly Network when he attended a presentation by MIT physicist Max Tegmark. The topic was in regard to the enormous potential for AI (artificial intelligence). So Dr. Rothberg recruited one of his students, Nevada Sanchez, to help create Butterfly Network.
But this was not his first venture. In fact, Dr. Rothberg is a serial entrepreneur. Some of his startups include Ion Torrent, Hyperfine Research and CuraGen, an early genomics company that went public in 1999 and had a $5 billion market capitalization a year later.
How It Works
Butterfly Network’s device is called IQ. It has a sleek modern design that is made out of anodized aluminum, making it durable and thermally efficient. IQ allows for whole body imaging, which uses sophisticated array of micro-machines sensors. These essentially act a transducer.
You then connect the IQ to your smartphone where you can get the images and analysis for areas like the heart, bladder, lung and so on. There is also top-notch security features that comply with HIPPA and GDPR (General Data Protection Regulation) rules. A key part of this is the use of AES 256-bit encryption for the data.
The costs for a device? Well, the IQ is relatively very affordable. The pricing starts at under $2,000. By comparison, a traditional ultrasound device can easily cost more than $10,000.
And in terms of the software, there are four different membership plans. They range from free to $1,200 per year (there is also an enterprise edition, for which the pricing is not disclosed). The membership plans have features like telemedicine (where you connect to a doctor), messaging, unlimited storage and sharing, billing, third-party device support and EHR (electronic health record) integration.
Interesting Use Cases
So how has been the traction with IQ? It is tough to tell. The company has not released any details on revenues or the customer base.
But there have certainly been some interesting use cases. Just look at Butterfly Network’s partnership with Atrium Health, a healthcare system with 40 hospitals and 900 care locations. In May, it agreed to use IQ for its patients. Here’s what Dr. Rasu Shrestha, executive vice president and chief strategy and transformation officer at Atrium, had to say:
“The Butterfly iQ devices have already given Atrium Health greater abilities in screening and monitoring COVID-19 patients by providing an immediate and clear picture of what’s happening in a patient’s lungs. But we see its benefit going well beyond the current pandemic. Our teams are already using it to provide care for heart patients, and we anticipate this device ushering in a new era of frontline care.”
Invest in Butterfly Network Stock?
The last funding for the company came in September 2018. This was for a Series D round of $250 million. In all, the company has raised $370 million at a $1.3 billion, unicorn valuation.
So might there be an IPO — in which anyone can invest in Butterfly Network? Perhaps so. The company has a product that is disruptive and is addressing a massive target market. In other words, Butterfly Network would seem like a pretty good candidate for a deal.
Tom Taulli (@ttaulli) is an advisor and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. As of this writing, he did not hold a position in any of the aforementioned securities.
