OrthoFi, which provides software for the orthodontic industry, just raised $1.2 million by approaching its users instead of pitching to VCs. OrthoFi’s users are orthodontists, a group who isn’t known to be the most tech-savvy bunch. But that fact didn’t stop about 18 orthodontists from backing the one-year-old software company over the course of three angel rounds.
“Our investors are so intimately involved in the business because they are using the service,” CEO Dave Ternan said. “When raising this round, we got an amazing response. It was a huge milestone; orthodontists believe enough in the service to use it and to invest in it.”
OrthoFi’s fundraising approach is really an ideal situation: its customers are financially supporting its product, something all startups strive for.
Orthodontists love OrthoFi’s solution because it gives them the ability to acquire, finance and manage their patients. Doctors that use OrthoFi are starting more patients per year, unloading time-consuming admin processes and allowing patients to choose the best payment plan for them. Already, the software is used in about 20 orthodontist offices across the country strictly from mouth-to-mouth referrals (orthodontic pun intended).
Because the 20-person OrthoFi team has confidence that their users want and need their product, they are looking to scale now. First, they will hire implementation and training specialists who can help with launching the product in new orthodontics offices (which Ternan and CTO Nathan Gudritz, as the first employees of the company, did themselves at first by flying to offices all around the country).
Next up, OrthoFi will be bringing on more .NET developers to launch new insurance processing features and reporting analytics processes. As the team expands over the six to nine months, OrthoFi will outgrow its dear suite in Galvanize. But the upside is that a beefed-up team means more bandwidth to iterate and execute, Ternan said: “The product has evolved a ton since last April. We are continually launching new features, seeing how it went and then adjusting."