While a junior at Saint Louis University, Lucas Rydberg had an idea to create smartphone-based medical devices. He proposed the idea to SLU Associate Professor of Biomedical Engineering Andrew Hall, who told Rydberg he had a research partner in mind.
“He said, ‘you should meet this other student named Dan. He just pitched me the same idea a week ago. You guys should work together,’” Rydberg said.
That other student, Dan Ebeling, wouldn’t just become Rydberg’s research partner. He’s became a business partner, too. The research the pair conducted at SLU eventually became the basis for Phas3, a software startup that created an app to facilitate remote cardiac rehabilitation.
Rydberg and Ebeling’s company achieved a key milestone this week, announcing its acquisition by Austin, Texas-based Ucardia Inc. The deal brings together two companies focused on providing software for cardiac rehabilitation, turning Rydberg and Ebeling’s initial research project into a local startup exit.
Phas3’s co-founders said they believed an exit was one day possible for their company, but reaching the milestone took perseverance for the first-time entrepreneurs who turned their attention full-time to the company out of college, after their graduation from SLU in 2017.
“We had people tell us when we were just starting out ‘you’re 22-year-olds trying to sell to hospitals and health systems. What are you doing? You can’t do this. You’re just kids.' We just didn’t listen to them and I’m happy that we didn’t,” Rydberg said.
How a scrappy mindset built Phas3
Rydberg and Ebeling built Phas3 with a scrappy approach, mostly bootstrapping the company. They raised a small amount of capital from friends and family, but otherwise relied on grants and revenue to finance the startup’s operations. Phas3 in 2019 won a $50,000 grant from local nonprofit Arch Grants and also received non-dilutive funding from local innovation hub BioSTL.
Phas3’s founders said several key milestones helped them build out operations, including the Arch Grant; the completion of a feasibility study with the cardiac rehabilitation department of SLUCare Physician Group; winning Colorado’s Prime Health Challenge in 2019; and last year signing on a health system as a customer. The company said it was unable to disclose the name of the health system.
Like with any startup, Rydberg and Ebeling said there were moments that tested the company. For example, after signing a distribution agreement with a group purchasing organization, the company had a meeting with decision makers from health care organizations. That same morning, it’s website wasn’t working. Rydberg remembers having his slide deck on one screen while giving the presentation, with another screen up focusing on getting the website back up and running.
“That sums up a lot of what we went through, being such a small team and having to do a bit of everything all at the same time,” he said.
Ebeling said an experience like that shows how bootstrapping a startup can often involve “maintaining that facade of professionalism while everything is strapped together with bandaids and duct tapes in the backend,” due to the limited resources startups often have.
Why Ucardia is the right buyer for Phas3
Given Utopia and Phas3’s shared focus on cardiac rehab, it “made all the sense in the world to combine forces,” said Rydberg.
He and Ebeling said joining together with Ucardia allows the two companies to complement each other to provide technology and service that best serve medical providers focused on cardiac rehab.
“Some of the gaps we have with our business were perfectly filled by Ucardia and vice versa,” said Rydberg.
As part of its acquisition of Phas3, Ucardia announced it is launching a new product, Ucadia-at-Home, that the firm said is remote monitoring software for medical practices to help physicians track a patient’s rehabilitation progress in between doctor's office visits.
Rydberg and Ebeling will join Ucardia as head of engineering and vice president of business development, respectively. The duo said they're excited to join a larger team that has more resources and talent to focus on enhancing their technology and services.
“We have full careers ahead of us and this is really a level up for us to be able to work with such talented people and experienced people,” Rydberg said.
