Chris Thompson told a dozen venture investors three years ago that he did not want their money to expand his startup which helps people with addiction. Then, he destroyed the company’s sole source of revenue.
Sober Sidekick was a big risk, but it turned out that the decision was easy. Thompson was asked by venture capitalists to increase the amount his company earned from referring users to rehab centers. At the time, it was about $850,000 per year. Thompson, who built the social media platform as he recovered from addiction in a facility for sober living, was uncomfortable with how these rehabilitation centers made money. Thompson wanted to cut ties with these centers instead of strengthening them.
Thompson heard rumors about body brokering at the centers to which he referred customers. This is an illegal practice where centers pay people for checking into their facilities. He tried to vet centers carefully before accepting customers, but felt that it wasn’t sufficient, as users of the app gave the centers he partnered with bad reviews. He was spending most of his time monitoring the way they treated his members. Thompson was most disenchanted by the way these centers made money: they paid out insurance for every person who walked in.
Thompson says, “I don’t think I want a customer who wins when my members relapse.” “It means that their business model is completely out of sync with the impact we wish to see in the global community.”
Thompson fired all rehab centers that he had worked with, and he parted ways from potential investors who, he says, “looked me like I was insane.” He then focused on figuring out a business model better aligned to the reason he founded Sober Sidekick: to help people become sober.
More than 500,000 people in the U.S.A., South Africa New Zealand, Canada, Australia, the U.K. and New Zealand have downloaded Sober Sidekick, up from 70,000 at the time he first spoke with venture capitalists. Around 40,000 of these people use the app every month.
Loosid, Everything AA and Loosid are two apps that help those who struggle with addiction.
Sober Sidekick is a free app that allows users to post photos and messages. They can also connect with other users for encouragement in seconds or minutes. There is a 24/7 Zoom connection to Alcoholics Anonymous meetings, and a button that connects users with local and online counsellors.
Jim Laing, who is 57 years old and works a rotating schedule at a chemical factory, used Sober Sidekick every day after he left his rehabilitation center last summer. He would chat with people from other time zones on the front porch of the recovery house he lived in after he finished work late at night. “I needed to have something available at midnight, when I got home after work,” he said. “Being able reach out to someone and talk about my day, what I felt, my temptations, or my triggers.”
Users must also self-report their last drinking or drugging day, which gives Sober Sidekick the data needed to predict relapses in real time. Thompson has used this data to create an algorithm that predicts with 93% accuracy when Sober Sidekick Users are likely to relapse in the next two weeks. If users are at high-risk of relapse, they can submit their data to health plans and be connected to resources or counselors that can help them avoid a relapse.
This dataset has proven to be incredibly valuable, and has prompted a change in Thompson’s business plan: At the end last year, Thompson began working directly with insurance companies, pitching the potential for savings (the average employee with substance abuse costs employers-sponsored insurance plans in the U.S. $15,640 in medical expenses annually, according research).
Empathy HealthTech, the parent company of Sober Sidekick, has signed a contract so far with AmeriHealth Caritas, a health plan. Thompson says that contracts with three other nationwide health plans as well as state Medicaid plans are in the final stages of being finalized. These plans will pay for the startup of each customer who uses Sober Sidekick on a monthly basis. These plans will also pay Sober Sidekick between 20% and 50% of the money they save by using Sober Sidekick. They calculate this by comparing their average costs for a member with addiction to the average cost for those users.
Thompson began to secure contracts and returned to fundraising. He collected $2.8 million from investors such as HealthX Ventures Nina Capital Ikigai Growth Partners and others. The investment valued Thompson’s business at $12,000,000 pre-money. Thompson bootstrapped his business for over three years and raised $2 million from the American Heart Association and Nina Capital to hire employees and grow.
Thompson began accepting money for the latest investment earlier this year, and within two months of the fundraising round being oversubscribed. Some of Sober Sidekick’s investors told Fortune that they were attracted to the way he wanted to grow the business and its potential to make a real impact.
Michael Brouthers, of Ikigai Growth Partners, says that Sober Sidekick is the best investment in his portfolio. Brouthers met Thompson at a business conference, heard his story of recovery from addiction and verbally committed to writing him a check the same day.
HealthX Ventures led the latest round. Thompson and Kristi Ebong met at a conference. Ebong had been interested in peer support models for several years before she met Thompson in early 2024. She asked Thompson for a few weeks to convince him that her firm was worth investing in and ended up winning the round.
Ebong states that there are predatory models. She adds that Sober Sidekick seemed like a “really apparent way” to help people get sober and make money at the same time.
Since his first fundraising attempt, Thompson has become more selective about the people he wants to work. He says that a few VCs he met three years ago have contacted him again now that Sober Sidekick is approaching half a million downloads, and has adopted a new model. But he didn’t respond.
Thompson says: “We make it very clear to every employee and investor that we will not sacrifice the people who we are working to serve for short-term profits.”
He believes that the big risk – staying true to his original mission by cutting off that initial revenue spigot – will propel the company into its new growth phase. Thompson says: “We are starting to realize that was the best decision we could have made.”