The digital health funding market has been rising and falling over the past five years. As the roller coaster begins to settle down, it’s clear that Randy Bolyga is turning to prioritizing margins over aggressive expansion.
Bolyga is RXNT, CEO of Medical Software Company RXNT, who was founded in 1999. The company first sold electronic prescription software, but has since grown to provide a complete tool for practice management, billing and scheduling.
According to Bolyga, RXNT is “Bootstrap Company”. He started two $150,000 Small Business Administration (SBA) loans from RXNT and paid them off within three years.
“We have been a cash-positive, debt-free company ever since – we have revenues of $600,000-750,000 this year and EBITDA's revenue is 50%.”
He believes the main reason for the company's success is that it never relies on venture capital.
Bolyga noted that in the early 2000s, when RXNT made its mark, many of the company's competitors were hunting for venture capital and brought in millions of dollars in funding rounds.
Many of these companies have “crazy burn rates,” he added. In other words, these companies spend a lot of money very quickly (usually tens of millions of dollars a year) in order to grow rapidly.
“That’s the formula for VCs to place in front of you,” Bolyga said.
He stressed that healthcare is a complex, deeply rooted industry – success requires a deep understanding of workflow and customer needs.
Bolyga notes that venture capital investors often misunderstand the healthcare market assuming innovation functions are sufficient to win customers. He criticized flashy AI tools that were not integrated into the provider's workflow, saying they would have difficulty getting adoption.
He believes in a “hare's tortoise” approach – slow, stable and fiscally conservative growth. He said he saw too many companies “crash and burn” because they chased rapid expansion without a sustainable business model or a deep understanding of the market.
But Bolyga does admit that venture capital may make sense for startups that need to expand rapidly in niches – but he warns that this should be the exception, not the norm.
Overall, Bolyga believes the industry shift from full growth to priority profitability and sustainability. Even investors are now demanding more discipline and accountability in spending, and now startups must show that they can reach specific goals and build a reliable source of revenue before doing a lot of money.
Photo: Phive2015, Getty Images
