Smartphone-based Lab Analyzer Startup Cue Raises $7.5 Million Series A


San Diego, Calif.-based digital health startup Cue has raised a $7.5 million Series A led by Sherpa Ventures. An interesting mix of secondary investors, including CEO Marc Benioff, former Obama campaign manager Jim Messina, and Hollywood A-lister Leonardo DiCaprio, filled out the round. The new funds bring Cue’s total raised to $9.5 million after a $2 million seed round provided by hardware startup incubator Highway1.

Cue has developed a DIY blood, saliva, and nasal fluid analyzer that has the potential to process hundreds of diagnostic tests in a person’s home, that would otherwise required a trip to the doctors office. The company modeled its analysis after the ELISA test, a diagnostic test that is frequently used in hospital labs. Cue differentiates itself from ELISA by being much cheaper, and much faster. Cue takes three to five minutes to process a sample, as compared to ELISA which can take several hours in some cases.

The Cue analyzer is a cartridge driven system, meaning that users collect a sample in a disposable cartridge that is then inserted into the analyzer and processed. The analyzer will retail for $199, but this is not how Cue sees itself making money. Instead, Cue will monetize on the cartridges, which are extremely cheap to manufacture. Each cartridge will vary in price, depending on the type of test it runs, but at a minimum the cartridges will sell for $4 each. Co-founder Ayub Khattak explains, “The business model is a razor-and-blade model. We don’t plan on making a profit on the razor.” At launch, Cue plans to offer cartridges that test for flu, Vitamin D, testosterone, inflammation, and a test to support fertility tracking. Cue says that additional test cartridges will be rolled out in the future.

The company will use the funds to ramp up manufacturing. Apple’s manufacturing partner PCH International is an early investor in Cue, through its hardware incubator Highway1, and will support the company as its ramps up production. Cue is not FDA approved to market its device in the US, but expects to receive clearance by the end of 2015, after which it will begin selling units.

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