The ScOp Venture Capital team is excited to partner with Pearly, a Santa Barbara based startup that helps dental groups and DSOs automate patient billing and revenue cycle management. We’re thrilled to work with co-founders Jeff, Sean and Billy who are repeat entrepreneurs with a strong product background and conviction in this industry.
Overview: The share of venture capital flowing to fintech has tripled over the past decade - exceeding 18% in 2022, up from 6% in 2012. One of the drivers behind this trend is the rapid consumer adoption of digital-first payments and the resulting demand from businesses to modernize their payment infrastructure and workflows to meet customer expectations and improve cash flow.
Startups have helped many industries adapt, but healthcare lags in the movement to consumer-first financial engagement. For example, according to the J.P. Morgan Trends in Healthcare Payments 2021 annual report, 75% of providers still primarily use paper and manual processes for collections, but nearly 3 out of 4 millennials would switch providers for a better healthcare payments experience.
One area of opportunity for fintech innovation in healthcare ScOp VC identified is revenue cycle automation software for the dental industry. Nearly 200,000 dental offices in the United States generate over $150 billion per year, with approximately 40% coming directly from patients. The industry is rapidly consolidating, leading to more complex patient billing operations and increasing pressure to scale revenue cycle workflows.
Problem:
Most dental practices still rely on mailing statements and making calls to collect patient balances, which are increasingly ineffective given digital-first payment preferences. The result is patient accounts receivable balances that pile up for months after treatment has been provided, along with rising costs of manual billing operations that don’t move the needle.
Practice cash flow and profitability suffers – with the problem only escalating for growing dental groups and DSOs.
Solution:
Pearly, a Santa Barbara based startup, puts dental patient billing and A/R collection on autopilot. Dental groups using Pearly get paid more, faster, while significantly reducing staff time spent on patient billing. With an industry-first ledger integration with a wide range of practice management systems, Pearly empowers practices to automatically engage patients on modern channels, provide easy-to-understand statements, and offer a range of digital-first payment options available on any device, at any-time.
After adopting Pearly, practices see a 31% increase in collection rate, 66% reduction in cost, and ultimately deliver a superior patient financial experience.
Takeaway:
As industries increase their rates of software adoption and technology entrepreneurs continue to innovate, we foresee further fintech and B2B SaaS verticalization. Startups like Pearly will win their markets by turning once-infuriating tasks like bill collection into automated workflows that equate to meaningful business savings and an ROI that justifies their continued usage. Further, this investment validates our belief in partnering with local entrepreneurs and Santa Barbara Venture Capital firms building along the Central Coast. We enjoy meeting with local startups and encourage you to reach out to us if you’re building by the beach.
Pearly team:
“Pearly partnered with ScOp because of the team’s entrepreneurial and operational expertise. ScOp is more than just a capital provider as the firm’s partners have founded, built, and scaled world-class software businesses. As the Pearly team navigates challenges, it’s incredibly valuable to have a team like ScOp available for hands-on help with problems versus just providing high-level feedback.
We’re building Pearly in Santa Barbara because it’s a great place to live and grow a business. The entrepreneurial community is thriving with accomplished entrepreneurs always willing to help early-stage startups and, because people want to live in SB, it helps with recruiting.
Pearly is growing and looking for smart and hard-working team members to join us on our mission to reimagine dental billing, payments, and engagement. Please view our careers page here and apply!”
- Jeff Cole, Co-Founder & CEO at Pearly
New frontiers:
We anticipate there will be further fintech innovation in tools that help bridge the timing of booked revenue to cash flow for businesses and give finance organization leaders the tools to automate existing functions in order to free up their time to more strategically manage their balance sheet. If you’re building in fintech, we’d love to chat with you. Reach out to us at investments@scopvc.com.