Invest1 publisher2 min readPublished
B Capital's $33 million Tiny Health round backs a gut test sold as wellness
B Capital led a $33 million Series B in Tiny Health, taking the Austin gut-test maker's total raised to $46 million. Its founder calls the kit a wellness test. What the money backs is a cash-pay sales business.
The Investor · Invest desk
What happened
- Powered by Tiny, the arm that sells tests through healthcare providers and other companies, grew fourfold last year.
- Tiny Health started out focused on infant testing, but adults have since become its larger testing segment, according to Sew Hoy.
- Sew Hoy did not disclose revenue or the valuation, saying only that the valuation was "much higher" than at the Series A.
- Insurance does not cover the tests, which can identify microbes in a stool sample but cannot establish what caused a person's symptoms.
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Why it matters
- constraint With no insurer paying, Tiny Health can grow only as fast as consumers and partner companies will pay cash for a wellness report.
- decision Investors accepted a valuation disclosed only as "much higher" against revenue the company has not published. That price will face outside scrutiny at the next raise.
- exposure The fastest-growing line runs through partners such as Superpower. As that line grows, more of the demand depends on other companies keeping the test inside their own services.
Cheryl Sew Hoy incorporated Tiny Health in Austin a week after her son's birth in 2020 [18]. She had watched her daughter, born by C-section, develop eczema, allergies and food sensitivities [20]. "I learned that you can course-correct if you focus on the early life of the baby. If they're missing certain beneficial bacteria, it can really cause a lot of issues for the infant," she said [12]. The product she sells makes a narrower claim than that. "We are a wellness test," Sew Hoy said. "We're not a diagnostic ... It's very actionable, very evidence-backed." [10]
The Series B is $33 million of the $46 million Tiny Health has raised, about 72% [1], and close to four times the $8.5 million Series A of late 2023 [2]. The first outside money was a $4.5 million seed in 2021 [2]. Before that, Sew Hoy put $50,000 of her own into an initial study [16]. B Capital's Nick Whitehead joins the board [4], and Spero Ventures, The Venture City and Overwater Ventures put money in again [3]. By Sew Hoy's account, revenue has more than doubled every year [5].
Crunchbase News framed the round as money to explore what gut data can reveal about future health [19]. The facts allow a few readings. One is that investors are buying a data set. The tests use shotgun metagenomic sequencing, which Sew Hoy said gives a broader view of the organisms in a sample than tests that look for a limited set of microbes [15]. Another has them buying a testing business whose fastest-growing line is business-to-business, with partners including Superpower [13]. The Tiny Plus subscription, a baseline test plus a retest [14], supports a third, in which the product is a consumer subscription.
I think the second reading fits the evidence best. The one segment-level growth figure Sew Hoy gave is the partner channel's [6], and infants, the customers the prevention account starts with, are no longer the larger testing segment [9]. The counter-case is that the samples accumulate. A company sequencing microbial DNA from infancy onward could end up with a record worth more than the tests that paid for it, and B Capital may have priced the round on that.
This view is wrong if Tiny Health seeks diagnostic status or insurance coverage for any of its tests. A company that expects its data to predict disease would want someone to pay for the prediction. As sold, a report names the microbes detected and suggests steps such as dietary changes, with links to research [17]. It cannot establish what caused a person's symptoms [11].
What to watch
- Whether Tiny Health publishes revenue or a valuation at its next round. Either figure would let the claim of more-than-doubling each year be checked against the price.
- How concentrated Powered by Tiny is: whether a handful of partners such as Superpower account for most of its volume.
- Whether infant testing regains ground on the adult segment, the part of the business the founder's prevention account depends on.