#StartupsEverywhere Profile: Eric Alvarez, Founder & CEO, Grapefruit Health
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Fighting Health Care Worker Shortages With Paid Clinical Rotations
Grapefruit Health is a B2B tech-enabled platform helping to solve one of the biggest problems in health care: the workforce shortage. We spoke with Founder and CEO Eric Alvarez about his background in health care, the importance of startup support organizations when it comes to generating early funding, and the company's own fundraising journey.
Tell us about your background. What led you to create Grapefruit Health?
I'm a Latinx military veteran born and raised here in Chicago with a background in health care and a master's degree from Rush University—a top five MHA program. Early on, I led clinical and non-clinical teams of over 100 Full Time Equivalents (FTEs) at the University of Chicago and Northwestern. After that, I worked at a startup that was eventually acquired by a large electronic medical record company. Throughout the years, I was constantly working with clinical and non-clinical students, coaching and mentoring them in their fields. I found that I could understand their unique challenges and experiences as students. At my core, I’m an entrepreneur—when I see a problem, I’m driven almost beyond reason to solve it. That was our original value proposition as a company.
What is the work you all are doing with Grapefruit Health?
We’re working to address the massive workforce shortage in the health care field. The U.S. will be short 3.2 million health care workers by the year 2026, and that number is getting worse. We’re seeing a lot of clinicians retire and experience burnout, but we’re also in a reverse-pyramid population-wise, which has an impact. Moreover, clinical education programs are lacking in preceptorships, internships, and other career opportunities. Existing solutions to these issues—like recruiting firms or travel nursing agencies—aren’t helping; they're actually driving costs significantly higher for presently available programs. At Grapefruit, we recruit, train, manage, and build an entire workforce of clinical students. There are 1 million people today pursuing clinical education. If we can build an opportunity for clinical staff and students, and provide substantial value for the health care system, that's a chance to inject 1 million new workers—who are sorely needed—into the health care system each year.
We have a HIPAA-compliant platform where we sell student-patient interactions and telephonic outreach to health care systems. We only charge five dollars per interaction, which is an extremely low cost for our providers. The students gain valuable experience, and we pay them for their work (they generally aren’t paid for clinical rotations), so it’s a win-win situation.
What role have accelerators and startup support organizations played in helping to sustain and grow your company?
MATTER was super helpful in that they gave us a physical space to work out of. They also provided custom programming, like pitch competitions, and other opportunities for founders to generate early funding, which is so important. They also have an extremely high quality mentor network of folks that probably collectively have 1000 years of health care, policy, and leadership experience, which, in turn, benefitted the company.
We were also awarded a grant from the inaugural Google for Startups Latino Founders Fund. Our experience there was great—Google offers network building and founder-to-founder support. They also provide funding in exchange for wanting founders to utilize the Google Cloud Platform (GCP) platform and to help drive utilization there.
There’s another community here in Chicago called Tech Rise/P33 which helps underrepresented founders. Last year, I won their people's choice award and received another $25,000 and exposure to venture capital funds. Underrepresented founders do more with less funding, yet many still face barriers to accessing the capital they need to run their businesses; only 2 percent of venture capital has gone to Black and brown founders in recent years. Involvement with accelerators like Tech Rise/P33 has been beneficial because they help connect us directly with traditional venture capital funds that want to increase this number and invest in women and minority founders.
What has been your experience raising capital for Grapefruit Health?
The process has been extremely difficult. We’re fortunate that we have immediate work to do and problems to solve, but if we don’t grab the funds available to us now, our runway gets really short and I’m stuck perpetually fundraising when I could be working on the issues our business addresses. Investors know how hard it is for us right now, and they are leveraging that, which can hurt startups like ours in the long run. I've had over 80 meetings since early May with venture capitalists and other private investors. Fortunately, there’s been growing interest from family funds and strategic investors. They're excited about what we're doing because it relates to so many of their missions.
Before creating Grapefruit Health, you mentioned working at a startup that was eventually acquired. Can you share what the acquisition experience was like?
Overall, my experience was very positive. Not only was the experience personally lucrative, but having the exit experience on my resume looks great to investors and helps as I fundraise for Grapefruit Health. And it’s great to see the technology we built live on within the acquiring company, too.
There have been hearings with the Department of Labor regarding attempts to restrict who qualifies as an independent contractor and to codify California’s ABC test. Would a nationwide rule change your experience working with your clinical student contractors?
If the nationwide framework copied the California rules exactly, we ultimately would still be fine. All we can do now is be ready to respond to changes and keep the situation in the back of our minds. Our current economics allow us to serve the most underserved patient populations and pay our students well for their work. Charging just $5 per interaction allows us to then pay our students a $500 to $1,000 stipend as opposed to receiving no payment at all. It will be tough if they start requiring us to give them benefits where students typically get benefits from their schools or parents through a certain age.
What are your goals for Grapefruit Health moving forward?
Our short term goal is getting to revenue, which we're on the cusp of accomplishing. We’d also like to make one other big foundational hire, and we're making an offer soon. For the longer term, we’ll be testing lots of use cases supported by a runway of about two years. After that, our aspirations are big: international IPO, acquire companies, and become synonymous with clinical education.
All of the information in this profile was accurate at the date and time of publication.
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