Tech healthcare unicorn Ro announced today that it has raised $150 million exclusively from existing investors, led by ShawSpring Partners, with participation from FirstMark Capital, General Catalyst, Seven Seven Six, BoxGroup, Altimeter Capital, Baupost Group, Initialized, TQ Ventures and TCG. Sources close to the company, as well as Bloomberg, confirm that the money was raised at a $7 billion valuation.
The company did not immediately respond to requests for comment.
An inside round for a unicorn — which has been through its fair share of struggles and employee churn — can mean a few things. First, the fact that Ro exclusively raised from investors who already have financial stakes in the company’s future success, instead of an outsider who was recently convinced, can signal that the financing event wasn’t the result of a big road show.
Existing investors clearly doubled down — upping Ro’s valuation from $5 billion to $7 billion — but lack of participation from new investors is still surprising. Notably, the new round is less than its preceding round, a $500 million Series D closed in March 2021.
The money doesn’t come without change. We know that Ro went on an acquisition spree over the past 12 months, acquiring Workpath, Kit and Modern Fertility. As I wrote in November 2021, Ro is also in talks to acquire at-home sperm storage startup Dadi at a deal estimated to be around $100 million. Ro didn’t immediately respond to request for comment, but in the post announcing the funding round, CEO and co-founder Zachariah Reitano said that “male factor semen analysis” is one gap in the platform’s service right now.
“While we have fertility tests for people with ovaries, we don’t have male factor semen analysis. While we do have the ability to test a patient’s cholesterol, A1C, or testosterone, we can’t yet treat them,” he wrote. “While we offer services for weight management, we can’t automatically track their progress with remote patient monitoring. We can’t do so much of what we want to do for patients and it won’t all happen tomorrow. We don’t even have a mobile app.”
Ro’s biggest challenge since inception has been expanding beyond its core business: erectile dysfunction. Its ED line continues to account for half of the health tech unicorn’s revenue. In a statement, the company said that, alongside its acquisition and pharmacy growth, it launched Ro Mind for mental health and Ro Derm for skincare. In a statement in response to TC’s investigation into Ro’s culture and business, Reitano said that Derm is on pace to do over $20 million in revenue in 2021. He also said that non-Roman revenue is growing faster than Roman, reportedly 150% year over year.
If that’s the case, Ro seems to view the funding as yet another way to play offense, and to deliver its vision to create a patient-centric healthcare system. If the business is still wading through some growing pains, then a new valuation could bring new pressure to a company that is under more pressure than ever to deliver on new verticals.
Ro’s closest competitor, Hims & Hers, has struggled in the stock market since debut, but did add $57 million to its market cap in the past seven days per Nasdaq.
