Eargo, the San Jose-based direct-to-consumer hearing solution developer and manufacturer of the Neo HiFi, announced the closing of a $71 million equity financing, led by new co-investors Gilde Healthcare and Longitude Capital, with existing investors New Enterprise Associates (NEA), the Charles and Helen Schwab Foundation, and Nan Fung Life Sciences, also participating in the round. Geoff Pardo of Gilde Healthcare and Juliet Tammenoms Bakker of Longitude Capital will join Eargo’s Board of Directors.
The financing reportedly provides Eargo with additional capital to expand commercialization during a period of accelerated consumer demand for its direct-to-consumer hearing loss solution, according to the company’s announcement. With Eargo’s “virtually invisible, rechargeable, completely-in-canal, FDA regulated, exempt Class I hearing aid, online hearing screening and telecare consultation and support, customers can learn about and purchase a highly advanced hearing solution from the comfort and safety of their homes.”
The company cites a survey conducted by The Hearing Review in May 2020 in which approximately 75% of audiology clinics in the US and Canada were actively accepting patient visits, and yet most of these clinics were seeing average revenue of less than 50% of pre-COVID-19 levels. Eargo says that, in contrast to the dynamics in traditional distribution channels, it has experienced significant revenue growth in 2020, with year-over-year growth accelerating in the first and second quarters of this year.
“We are pleased to close on this financing round, which provides us with significant capital to fund our growth,” said Eargo President and CEO Christian Gormsen in a press statement. “While our business was performing well before COVID-19, the pandemic accelerated consumer demand for our hearing loss solution. More consumers who are reluctant to purchase their hearing aids through the traditional brick and mortar clinics have recognized the benefits of our solution.”
Gilde Healthcare General Partner Geoff Pardo, said, “While it is estimated that approximately 43 million people in the US suffer from hearing loss, only approximately 27% own a hearing aid, largely due to the stigma and inconvenience of the traditional clinic-based model. Eargo has revolutionized the hearing loss solution, offering a highly advanced hearing solution available through a virtual clinic model. We’re excited to be a part of the Eargo team and their vision to transform this market, bringing it into the 21st century.”