Health IT

Health IT startup CloudMine files for Chapter 7 bankruptcy

The Philadelphia company, which enabled organizations to create secure digital health applications, had raised capital from Safeguard Scientifics, Dreamit Ventures, Robin Hood Ventures and Ben Franklin Technology Partners and had customers like Thomas Jefferson University Hospitals and the American Heart Association.

CloudMine, a Philadelphia-based company offering the ability to build digital apps through a HIPAA-compliant cloud-based healthcare platform solution, has filed for Chapter 7 bankruptcy, according to a court filing from last week.

Founded in 2011, the startup aimed to help providers pharma companies, payers and others develop and manage digital health applications. Customers could build a digital health application, integrate patient data, scale their technology infrastructure and keep all information secure. For example, the company touted its ability to pull patient data from a variety of health record vendors be it Epic or Cerner as well as medical devices and wearables. At the same time, providers could also build apps aimed at improving patient engagement while payers could build tools that sped up claims processing.

But seven years after its founding and after millions in venture capital were raised, it has all come to naught. CloudMine’s attorney, Jeffrey Kurtzman, said in a phone interview that the company has shut down and has no employees at this time. He directed additional questions to Terry Dershaw, the trustee assigned to handle the CloudMine case. Dershaw did not respond to a phone call, and an email sent to him generated an out-of-office reply. A voicemail left at the phone number listed on the CloudMine website was not returned. The startup did not respond to an emailed request for comment. The bankruptcy filing said the company has at least 200 creditors and liabilities anywhere between $1 million and $10 million. 

Over the course of its existence, CloudMine raised $16.5 million in capital, according to Crunchbase. It had a slew of investors including Safeguard Scientifics, Dreamit Ventures, Robin Hood Ventures, Mid-Atlantic Angel Group and Ben Franklin Technology Partners.

When reached via email, a member of Ben Franklin’s investment team declined to comment. Investors representing Dreamit Ventures and Safeguard Scientifics did not respond to emails for comment. Neither did the president of Redox, whose testimonial resides on the CloudMine site. CloudMine and Redox unveiled a partnership in 2017.

In 2017, CloudMine added a new CEO, Stephen Wray, as co-founder Brendan McCorkle shifted to a new role as chief innovation officer and president. Wray left the company as part of the bankruptcy proceedings, according to Philly. McCorkle left the company earlier this year to found a new startup called TrekIT Health, according to the Philadelphia Business Journal.

In its seven years in existence, the company had garnered customers such as Thomas Jefferson University Hospitals and the American Heart Association. It even won accolades. In July 2017, the company won in the category of Best Information Service Delivered as Mobile App or Platform as part of the annual CODiE Awards held in San Francisco and hosted by SIIA, an association representing the software and digital content industries.

Still it faltered. 

Taha Jangda, general partner at venture capital firm HealthX Ventures, said that cloud-based services companies like CloudMine face an uphill climb given competition from the larger tech companies like AWS [Amazon Web Services] and Microsoft Azure. 

He was surprised that CloudMine with its smart investor set wasn’t able to sell its technology instead of going under. He, however, expects more healthcare startups that have raised Series A rounds to go under instead of at the seed level.

“There’s a lot of money and momentum keeping companies afloat, but as both the market and companies mature, later stage investors are going to be more keen on metrics,” Jangda said.

Photo: utah778, Getty Images