Using Virtual Reality to Solve Real Problems

Sway Ventures Investment in AppliedVR

The ideal outcome for any new technology is that it will make our lives better.  While we could debate all day whether the end result of a new technology is actually beneficial for society and if the implications of second order effects are positive or negative, all entrepreneurs we encounter start their companies with the belief that their technology will make the world a better place in some way or another.  Whether it’s convenience, productivity, entertainment, or a number of other reasons, tech has always had the potential to make an enormous positive impact on our lives. While most companies eventually fall short of this ideal for one reason or another, there are others that are able to stay the course and truly impact millions of lives for the better.  We believe one such company is AppliedVR, and we are excited to announce our recent investment in the company.

AppliedVR is tackling a number of today’s most prevalent health challenges by leveraging the unique attributes of immersive technology to drive positive behavioral change.   Through building its VR platform, initially focused on healthcare, AppliedVR is essentially creating the first non-narcotic, “VR pharmacy.” This VR Pharmacy provides doctors with the ability to prescribe non-invasive, drugless treatments to their patients, thereby providing an alternative to today’s most common pain relievers (e.g. opioids).  And because the company can leverage consumer data, biofeedback, EMR data, etc., AppliedVR can continually improve the effectiveness of the content, as well as customize and optimize the right content for individual patients.

While it has been evident that VR has the capability to generate powerful emotional responses, there are still a lot of questions and unknowns about the best uses for the technology.  Although consumer adoption of VR has underperformed, we have been fascinated by the potential use cases in the enterprise. For a while now, we have been searching for innovative companies leveraging this amazing technology for applications other than simply entertainment.

A little over a year ago, I heard David Sackman speak at USC about using VR to reduce pain, treat PTSD, and alter human moods and behavior.  I nearly fell out of my chair. He had given a similar TED talk; the only difference was the company he helped start, based on this idea, was beginning to gain traction.  At that time, David had convinced Matthew Stoudt, who had built a very successful media business and sold it to VeriFone in 2014, to join and take over as CEO; and the company had just been accepted into Techstars’ new healthcare accelerator in LA.  It was soon after that speech, and right at the beginning of the accelerator program, that we got to meet the team face-to-face for the very first time.  Needless to say, the discussion was the first of many.

Mark Suster has a well-known blog post about investing in lines, not dots.  In short, Suster argues that the more interactions an entrepreneur has with an investor, the more confident the investor is when making a decision to fund. This is a perfect example of why that is so true. When we first met Matt (CEO) and Josh (President), they had just recently joined the company.  AppliedVR had just been accepted into Techstars and the team had just started working with Cedars-Sinai.  Over the last year or so of getting to know Matt and the team, it became evident this group could execute.  Every single time we talked with them they had signed a new major customer, inked a new partnership, or released a new study.

Every. Single. Time.

Not only is AppliedVR now working with multiple departments within Cedars-Sinai, other AppliedVR strategic partners include a number of leading children’s hospitals, medical centers, and clinics.  We were impressed with Matt and Josh from the first time we met them, but it’s been the progression and momentum with which they have built this business over the last year that gave us such conviction that this team will be able to build a market defining company.

But it wasn’t just the team that had us excited, it was also some of the larger trends the AppliedVR team is taking advantage of.  For one, healthcare incentives are changing.

The recent switch to value-based reimbursement models have turned the traditional healthcare reimbursement methods on their heads. This change has caused providers to re-tool the way they bill for care. Instead of a provider being paid by the number of visits and tests they order (fee-for-service), payments are now based on the value of care they deliver (value-based care).  The pay-for-performance model offers financial incentives to providers such as physicians, hospitals, medical groups, and others to improve quality and efficiency.

So why should that matter to a VR company?  AppliedVR is proving, via clinical trials, that the use of VR can drastically improve a patient’s experience.  Whether its due to pain reduction, stress and anxiety relief, non-opioid treatments that minimize side effects, or just pure entertainment, patients have encountered and reported much better experiences and results when VR is used during their visit.  These results allow hospitals and clinics to capture more value in the new pay system as well as reduce costs because the price of a headset and software is minuscule compared to the expense of keeping a patient in the hospital for an extra day or two.

All patients show some level of anxiety before a surgical procedure. VR has consistently reduced preoperative anxiety to a point where patients almost forget they are having a procedure. Patient satisfaction scores have significantly increased since implementing VR in the surgical center. 
— Ray Raven, MD (Orthopedics), Buena Vista Surgery Center

And then there is the significant challenge our nation is facing with opioid addiction.  Drug overdose is the leading cause of accidental death in the US, and opioid addiction is by far the leading driver of this epidemic.  In 2015, there were 20,101 overdose deaths related to prescription pain relievers, and 12,990 overdose deaths related to heroin1.  And there is a direct correlation between overdoes and prescriptions.  From 2008 to 2010, prescriptions for pain relievers rose 4x and so did the overdose death rate2; not to mention the increase in rehabilitation admissions.  Talk to any surgeon or doctor and they will tell you how severe the problem has become.  It’s gotten to the point that legislation at the state and federal level is seeking ways to curb opioid prescriptions while providers are keen to find alternatives to such medication that alleviates patient anxiety and chronic pain symptoms.

Virtual reality could very well be that alternative.  VR is beginning to draw more and more attention for its ability to relieve patients’ stress, anxiety, and pain before and after a procedure. Clinical findings from Cedars-Sinai and AppliedVR have shown that VR results in a 25% reduction in pain, in many cases obviating the need for narcotics, and a 60% reduction in stress and anxiety.  AppliedVR has numerous partners and case studies, as well a whole host of articles that are easily found with a simple Google search.

While there are over two decades of research supporting the benefits of VR in reducing pain, there are a number of other potential use cases for VR in a clinical context.  Medical researchers have effectively used immersive virtual reality as an analgesic, anxiety reducer, and distraction intervention for patients undergoing painful and tedious medical treatments such as chemotherapy or burn wound care. AppliedVR already has plans to expand its library of content to address other medical issues such as depression, obesity, addiction, and autism.  There is testing currently underway that may help soldiers deal with PTSD, ease the intensity of child birth for soon-to-be-mothers, and help patients deal with paranoia, phobias, and psychiatric disorders.  Children’s hospitals are adopting AppliedVR’s platform at an impressive rate to simply help make kids’ hospital stays more enjoyable.

If you would like a better idea of what AppliedVR is doing you can check out this video that explains in more detail as well as this Webby award winning piece from Bloomberg.

This is a company that not only should, but needs to exist.  We are just beginning to scratch the surface of what we can do with VR in healthcare, and AppliedVR is leading that charge.

  1. Rudd RA, Seth P, David F, Scholl L. Increases in Drug and Opioid-Involved Overdose Deaths — United States, 2010–2015. MMWR Morb Mortal Wkly Rep 2016;65:1445–1452.

  2. Paulozzi MD, Jones PharmD, Mack PhD, Rudd MSPH. Vital Signs: Overdoses of Prescription Opioid Pain Relievers – United State, 1999-2008. Division of Unintentional Injury Prevention, National Center for Injury Prevention and Control, Center for Disease Control and Prevention. 2011:60:5.