Valspring Capital Leads Growth Investment Round for Phoenix, the Premier Digital Health Clinic in Canada
Canada may be marginally larger than the U.S. by landmass (1.1x to be exact), but when it comes to primary care access, the gap is staggering. With 83% fewer primary care physicians, one in five Canadians today are without a designated primary care physician. A provider shortage naturally leads to an issue with prescription access — no visit, no prescription. No prescription means untreated conditions and unintended consequences that may materially impact quality of life. All the while, digital health innovation in Canada lags significantly behind the U.S., opening a lane for innovative methods of distribution.
Phoenix's Cofounders and Co-CEOs Kevin Bache and Gavin Thompson personally experienced accessibility issues in Canada, catalyzing them to build a solution for others. Gavin applied for a designated primary care physician in 2012 and again in 2022. As many have experienced, after 10 years of waiting, Gavin finally received an email from the government — the email informed him that he is still on the waitlist for a provider.
Kevin and Gavin decided to harness their complementary backgrounds in marketing and software engineering and kickstarted Phoenix out of Y Combinator in 2021. Kevin and Gavin are more than just accomplished founders with impressive resumes — they possess a rare combination of skills to actualize their ideas. Both founders are versatile engineers with the ability to build and iterate quickly, turning rough ideas into functional software and pivoting when met with challenges. When the Canada Post was down recently, they integrated with new carriers overnight, ensuring customers did not miss deliveries despite the national disruption to supply chain. At the same time, they also have marketing experience within healthcare, including the founding of a company focused on medical information management, MediStream Health Media. We see their strong design sensibility and intuitive feel for marketing combined with their engineering capabilities as the perfect storm for standing up a digital solution servicing this patient access issue. Today, Kevin and Gavin have largely bootstrapped Phoenix into the leading digital health clinic built for medication access in Canada.
Valspring Capital is excited to lead Phoenix’s growth investment round. Together, we're excited to unlock the full potential of a virtual health clinic in Canada in this next stage of growth.
Phoenix provides asynchronous prescribing and delivery of lifestyle medications treating erectile dysfunction, hair loss, and weight loss. To begin, the initial consultation starts with a questionnaire, which is then asynchronously reviewed by a provider. Upon approval, medications are dispensed from the company's vertically integrated warehouse pharmacy for quick two-day shipping with discrete packaging. A centralized platform for customers provides access and communication with providers and pharmacists for any potential prescription-related questions or follow-ups.
Benefits of the Phoenix model are three-fold:
Streamlined communication between the patient and physician allows for more reviews of patient surveys in the same unit of time, solving bottleneck issues associated with accessibility,
Vertical integration of fulfillment and delivery allows customers even in rural areas to receive medications within two days following approval, and
Stronger margin and advertising efficiency given Canadian market dynamics result in sustainable growth.
While the likes of Hims & Hers and Ro have crowded the U.S. market, Canada lacks a major player in the pharmacy delivery sector, offering a rare opportunity for a strategically positioned company to establish market leadership. Phoenix can secure brand loyalty and scalability while shaping the market landscape in their favor.
At the same time, Kevin and Gavin have been intentional about branding, building distinct marketing channels for different customer groups — rather than taking a one-size-fits-all approach. This segmentation allows them to target the right audiences with precision, optimizing for value against customer acquisition cost while keeping marketing spend in check. On the operations side, they’ve maintained discipline where others have stumbled, running a lean supply chain and fostering strong manufacturer relationships—critical advantages in a category where inefficiencies can quickly erode margins.
Notably, there are also meaningful advantages to scaling a virtual pharmacy in Canada vs in the U.S.:
Single payer system drives down complexity. Canada’s healthcare system is publicly funded at the provincial level, covering most medically necessary and life-saving procedures. However, a growing private-pay market exists for treatments outside of universal coverage. This includes lifestyle and elective medical treatments that significantly improve quality of life but may not meet public payer criteria for full coverage. This submarket is a natural fit for Phoenix’s model.
Manufacturer drug prices are lower. Canada's Patented Medicine Prices Review Board (PMPRB) regulates drug prices to prevent excessive pricing at the manufacturer, and although lifestyle drugs do not fall under this jurisdiction, this regulation sets the market benchmark lower for all drugs. Phoenix benefits from this regulation as the manufacturer is unable to apply a similar premium as in the U.S., leading to lower drug costs for Phoenix. Provincial drug regulations and bulk purchasing strategies also often negotiate lower drug prices - this centralized negotiation system creates an environment where drugs can be procured at more consistent and lower prices than in the fragmented U.S. healthcare system.
Lower operating costs. Compared to the U.S., Canada has a slimmer supply chain. There are fewer intermediaries like pharmacy benefit managers (PBMs) and other brokers taking cuts along the way, reducing the overall costs of acquiring medications. Similarly, the same logic applies across buckets of operating expense spend.
High-value marketing for every dollar spent. Canadians consume some of the same media as the U.S., yet the market dynamics are vastly different — traditional marketing channels in Canada operate at up to a ~100% discount. Similar marketing discounts apply across digital marketing channels.
The Canadian pharmacy fulfillment and delivery market is an exceptional investment opportunity. With a $49B pharmaceuticals market, a critical shortage of primary care physicians induced by a vast geography, and relative drug cost and operational discounts compared to the U.S., Canada is ideal for digital health innovation. Simultaneously, there is an absence of an incumbent in the virtual pharmacy space, and Phoenix is well-positioned to capture significant market share. Kevin and Gavin have carved out a strong market position, aligning branding and marketing in a way that will preserve differentiation in the space across target audiences.
We are excited to partner with Kevin and Gavin and the entire Phoenix team in their next stage of growth, where they've already established themselves as the market leader in a high value-add yet early industry in Canada. Kevin and Gavin are exceptional partners, committed to working tirelessly to expand their vision across Canada - a vision we're proud to get behind.
