the-report-live

[the-report-live]

Inside Memora's fire sale

Investors and former employees in patient navigation business Memora Health were stunned when the startup was sold to AI company Commure in what appears to be a fire sale, after being initially led to believe Memora was a roaring success.

In monthslong examination of what led to the $30 million sale found that Memora's change in fortune followed repeated sunny projections and a shared valuation of roughly $430 million from then-CEO Manav Sevak.

For its reporting, spoke with four former employees, two investors, two people with knowledge of the company's inner workings and a hospital professional who worked with Memora. They all requested anonymity because of fear of reprisals. Driving the news: After raising nearly $81 million over five years, Memora sold to Commure for the equivalent of roughly $30 million last December. Catch up quick: Memora pitched its tech as a conversational AI-powered agent that could alleviate provider burden and engage patients on "complex care journeys." The San Francisco company conducted three publicized raises between 2021 and 2023, including a final General Catalyst (GC)-led $30 million round in April 2023 that included previous investor Andreessen Horowitz (a16z). GC is also an investor in Commure. In November 2022, one investor had a call with Sevak in which a valuation of $430 million for Memora was shared. The number is also cited by PitchBook, which declined to disclose By the numbers: In late 2022, Sevak told two sources and the investor that Memora had ARR of roughly $20 million, the three said, and which Sevak confirmed.

Sevak to an investor in 2021, claiming Memora had contracted ARR of $13.8 million and an ARR of $7.27 million. Reality check: Memora's revenue was $1.2 million in 2023 and roughly $1.5 million year-to-date as of October 2024, per the document shared with investors at the time of the Commure merger.

The document entitles shareholders to an estimated $30 million in Commure shares, before earnouts or other adjustments. Because previously agreed-upon liquidation preferences entitled preferred stockholders to up to $87 million, all common stockholder shares were effectively wiped out. Flashback: When Memora launched in 2018, Sevak was 21.

Born and raised in Phoenix into a family of health care providers, Sevak considered becoming a physician but decided to start Memora after seeing his close friend John struggle to manage his colitis. In 2021, Memora announced a16z had led a $10.5 million round in the company. In a 2022 blog post announcing that investment, a16z partner and Memora board member Vineeta Agarwala lauded Sevak and his co-founder as "scrappy technologists." "Since we led their last financing, [Memora's] ML engine is live and seamlessly integrated with the electronic health records and data repositories of dozens of new health care organizations," Agarwala's post read. The same year, Sevak and his co-founders landed a spot on the coveted Forbes 30 Under 30 list of health care leaders in an article noting that "more than 50 health care organizations pay a monthly subscription fee to use [Memora's] software."