A healthcare startup that made progress on two very different business models but struggled to raise capital in this year’s venture pullback has shut down.
Uleet Inc. co-founder and CEO Alex Husted said he’ll definitely be back.
“It’s a taste, that I want more. I want to do it again,” Husted told me. “I don’t know what it’s going to be yet."
“The superpower of entrepreneurs is the naïveté we have (in believing we are) able to change very large systems ... and the broken aspects of what we see in the world,” Husted said.
Just shy of its second anniversary, Uleet was back down to its three co-founders when it quietly wound down operations in mid-October. A few weeks later came the much more high-profile closure of Columbus unicorn Olive AI Inc.
Uleet was among Columbus Inno’s inaugural “Startups to Watch” class of 2022. One of the dozen was acquired. Another abandoned its Medicaid managed care business model and eventually merged into a regional disability-care agency.
Uleet also started on an insurance model, then pivoted to a wellness marketplace – both aimed at incentivizing healthy behavior.
“Our belief in the mission and the need to address the challenges we set out to solve remains unwavering," the company said in a statement on its website. "This industry needs fixing, yet we hope that our work has made a meaningful impact and contributed to positive changes.”
Husted, the eldest son of Ohio's lieutenant governor, had started from a data science fellowship at a health innovation offshoot of the American Medical Association. His co-founders came from startups that grew fast and got acquired: COO Heath Rittler spent four years at Dublin’s Updox and CTO Mike Berkman worked for five years in engineering at Columbus unicorn CoverMyMeds.
Uleet’s first model was to create a digital health insurance plan that rewards healthy behaviors, such as exercise as measured by a connected device. The startup applied to become a licensed Ohio health insurer to offer individual plans on the Affordable Care Act exchange, designed to appeal to entrepreneurs and gig workers.
But insurance requires a lot of capital – Uleet would have had to raise about $15 million not only operations but also to guard against claims losses.
VCs said they liked the idea, but not how much money it required, Husted said. Meanwhile, other insuretechs were hitting rocky times.
“We were probably six to 12 months too late with what we were trying to do,” Husted said.
The co-founders jointly decided to pivot and took a few months to research a new model.
The Uleet health and wellness marketplace launched in October 2022 and by this spring grew to about 10,000 active users and more than 200 service providers such as yoga studios and personal trainers.
Overall, Uleet raised about $750,000, mostly from angel investors. Even though it was bringing in revenue, it would have needed $1.5 million to $3 million to cover operations until the marketplace hit a large enough scale to be profitable.
This year's attempt at fundraising started about the time of Silicon Valley Bank's collapse.
“It was another terrible timing moment for us,” Husted said. “Our second life was hanging by a thread.”
Husted recalls a week in July when he slept a total of six hours. After the last flurry of unsuccessful investor pitches, the co-founders had to cut the startup's eight employees. They kept the marketplace going while doing consulting until shutting it down in mid-October.
“I wouldn’t say what we had built was firing on all cylinders,” Husted said. “It had promise and trajectory.”
Why Uleet didn't leave Ohio
The team only briefly considered moving somewhere with more free-flowing capital, but it was not really an option.
“We love this place. We want to be part of Columbus’ growth trajectory,” Husted said. “We wanted to grow economic value in this area – kind of a chip on our shoulder that we could do it here.”
When Husted announced the shutdown in a LinkedIn post at the start of November, he was met with an outpouring of support from Central Ohio investors and entrepreneurs, many encouraging him to stick with startups.
"Founders found! Can't wait to see what you choose to build next," Alex Frommeyer, co-founder and CEO of Beam Benefits, said in a comment on the post.
Matt Scantland, founder of CoverMyMeds and new telehealth startup AndHealth, wrote he was proud of Husted and the team.
Overwhelming support from the community is another reason to stay, Husted said. Experienced entrepreneurs were always quick to offer introductions and advice.
“It’s not easy where we are. It’s not Silicon Valley or New York where you can trip on $3 million walking down the street,” he said. “People who’ve done it before understand how difficult it is.
“The mentors here do a great job of saying, ‘Here’s how I did it; here’s how it’s possible here.’”
The journey was worth it, he said. And next time, the 28-year-old already knows how to incorporate a business and operate a company. There are some things he'd do differently to increase chances of success, but no regrets for what Uleet tried.
"We made the best decisions with all the information we had," he said.
Berkman is now CTO at prescription delivery software maker ScriptDrop Inc. in Grandview Heights, and Rittler consults for various startups including SureImpact (a 2023 Startup to Watch).
Husted is working with Columbus venture development studio 1870 Ventures, gaining exposure to new founders and business models.
"I'm going to be patient, for a little while," he said. "There's still time to learn and grow."
Husted does have one sleepless new venture ahead: He and his wife are expecting their first daughter on New Year’s Day.
