Exclusive: Clinical AI startup Mendel rakes in $40M

Clinical AI startup Mendel collected $40 million in an Oak HC/FT-led Series B round, the company tells Axios exclusively.

Why it matters: Abstracting useful insights from unstructured medical data is challenging and time-consuming. With artificial intelligence and natural language processing (NLP), Mendel aims to provide richer, analytics-ready data to empower other data companies, and ultimately various health care stakeholders.

• “In health care, you’ll find decisions are being made in a very subjective manner. What we do at Mendel is make medicine objective,” says CEO Karim Galil. “The only way you can do that is if you’re able to learn the journey of every patient at scale.”
• The cash infusion will allow Mendel to build out its bench of engineers in order to meet surging demand, ultimately fueling wider adoption.

Details: The funding pushes Mendel’s post-money valuation north of $120 million, a source tells Axios, reflecting the highest-ever valuation for any startup in clinical NLP.

• Existing investor DCM, who led its $18 million Series A funding, also participated in the round.
• San Jose, Calif.-based Mendel wasn’t in fundraising mode, but Oak HC/FT approached the company eager to invest and preempted the round, Galil notes.

How it works: Clients come to Mendel with unstructured clinical data, which it analyzes to then spit out contextual meanings.

• “Mendel is basically a machine that knows how to read medicine like physicians,” Galil says.
• Done manually, it typically takes almost five years to abstract 2 million patient lives. Mendel says its technology can do the same work in less than 24 hours.

State of play: Some 95% of companies work with structured data — offering a pixelated picture of the patient, Galil says. Others extract a preprogrammed list of things, like specific symptoms, from unstructured clinical data.

• Mendel, in contrast, extracts everything, and lets its customers build on top of that information infrastructure. “It’s counterintuitive. If we know what we need to extract, why are we doing it?”

Between the lines: The CEO says he is trying to do to health care what Stripe and Twilio did to fintech.

• “What they did was they offered advanced tech in a box -- enabling others to build applications that they wouldn’t have done in the past.”
• “The immediate goal: to make other data companies better, then we are going to move more to the end-user — pharma, payors and provider.”

Background: When COVID hit, Mendel was running out of money and had about 30 days of runway, forcing it to commercialize because nobody wanted to invest in a company with IP only, Galil says.

• Fast forward: Mendel went from 5 employees to 25 over from start to finish in 2021, and has since doubled to around 50 today.

The bottom line: “The success of Mendel is going to be enabling the next 50 or 100 big companies that are going to change medicine," Galil says. "That’s the mission — to enable others.”