Lottie 🚀

🚀 The Startup: Lottie

I'm a sucker for a health-tech startup (If you didn't know, I used to be a doctor, that's why)

Lottie is a UK-based marketplace that makes it easier to find the best care homes, home care and retirement living. Looking at their website, they aggregate care providers and provide transparency on the types of care available, including the pricing of that care. And in an industry that has traditionally been complex and pretty opaque, I think this is a huge achievement.

💰 Funding: To date Lottie has raised over £25m. Their Series A was backed by Accel and their pre-seed by the legendary Tom Blomfield, the former CEO of Monzo
🌍 Market: UK Elderly Care Market - Including care homes, home based care and retirement living
💡 USP: Their “concierge service” into finding elderly care in the UK (as mentioned by the founders here)

📈 The Market

The UK’s elderly care market is huge. When you add up residential and home care, it racks up around £30 billion in annual spending. This is certainly a large addressable market and from the outset is “VC backable”

Growth estimates put the market’s CAGR at 5-6%, but that might be on the low side. With the UK’s aging population expanding fast, demand for elderly care is only going up. In fact, the British Medical Association predicts that by 2040, one in four Brits will be over 65. More elderly folks = more demand for elderly care. Simple as that.

Here’s the thing about Lottie: it’s not a care provider.

It’s a marketplace that helps people FIND the best care. So, it’s not capturing the entire £30 billion market because the biggest costs lie in actually delivering the care itself. But then again, that’s like saying Uber isn’t part of the food industry because it doesn’t cook the meals. The real question for me is, how much value can Lottie extract from this market without directly providing care?

I believe Lottie's real competitors aren’t the care providers (though large enough care providers (e.g. Bupa) have their own directories), they're the other platforms that help people find care. It’s the same way Uber competes with Deliveroo, not McDonald’s. The battle isn’t about who provides the service, but who makes it easiest to access.

And the competition? It’s a crowded and messy field (i.e. fragmented):

• Government/council directories like: CQC’s own find a care home database,

• Care directories like: trustedcare and carehome.co.uk and Autumna

• Traditional brokers like Care Home Selection, offering a more hands-on old school approach

• Large care providers who have their own directories, as mentioned before, e.g. Bupa

At immediate glance, competitors lack Lottie’s: 1) friendly digital interfaces, 2) information transparency and a 3) “concierge” approach

🧐 Verdict: It’s certainly a large market with fragmentation, and there isn’t a single dominating competitor just yet. I believe Lottie have found their place, but I question how much value can they extract?

🔥 The Problem

An older government report flagged the care home industry as highly fragmented; and that still holds true today.

The result? Families searching for care face a maze of challenges:

• The process of finding care is often time-consuming, confusing, and emotionally stressful

• Poorly structured directories, unverified reviews, and complex pricing makes it hard to assess quality.

But as a marketplace it is only fair to assess what problems the “other side” (e.g. the providers of care) are facing as well.

From news headlines alone, it’s clear that staffing shortages and high turnover are the biggest headaches for care providers today. On top of that, rising operating costs, driven by wage inflation and soaring energy bills, are only making things tougher. It’s a perfect storm of financial and operational pressures.

But here’s the thing, Lottie isn’t tackling these issues head-on. Instead, it’s addressing a more nuanced but crucial challenge: funding pressures.

Many care homes depend on local authority-funded residents, but with tight council budgets, these placements come with lower fees than those paid by self-funding residents. To stay financially viable, care homes need to attract more private-paying residents.

But that isn’t easy, especially if you are a single or small elderly care operator.

🧐 Verdict: Yes, the problem is painful, and persistent for both sides of the market place, making it a high-value problem to solve.

💡 The Solution

For families, the solution is pretty clear:

Lottie helps families find and compare homes based on care quality, amenities, availability and cost, acting as an intermediary.

Looking at their marketplace you can see there’s truly transparent information sharing which is severely lacking from other players in the market

In a world of AI, Blockchain and “vanity startups”, its hard to see however what the true “disruptive technology” is. It’s certainly a cool marketplace with a very friendly UI. But this kind of dangerous thinking also classifies Airbnb as “not disruptive” 😂.

For care home providers Lottie helps care providers attract private-paying families, the ones actively searching for care, making it easier to fill beds/slots with higher-margin customers and improve overall profitability.

These benefits would come gradually when care providers create their own online profile that targets the right audience (private-paying families) who are browsing through Lottie. Lottie thinks providers can get up to 5x more referrals than normal. That sounds good.

Beyond that, Lottie also claims to bring operational efficiencies by reducing admin and inquiry handling. Families get the key details such as pricing, availability, care types, all upfront, cutting down on time-consuming back-and-forth communication. Plus, in an industry that’s still catching up digitally, I believe care providers can stay competitive by offering a online experience that aligns with how today’s families may want to search for care today

Now I also see signs of Lottie trying to be more of a “added solution” for care providers, with the introduction of their “Early Access” campaigns, CRM and “Lottie Media” arms. A natural expansion I would say, get your existing clients to spend more with you.

🧐 Verdict: The marketplace’s biggest strength is creating trust and ease of use for families. But for care providers? They will need to continually prove their value by attracting better customers and cross selling other solutions to stay to stay ahead.

💰 The Business Model

The marketplace is free for families to browse and use. And it’s also free for care providers to list. A great move in my opinion for market growth.

So Lottie’s primary earnings are enquiry or referral based: A fee per qualified enquiry or a fee for a referral of a new customer to their services.

As an example, let’s say:

“Care Home Manchester”, a premium care home in Manchester, wants to attract more private-paying residents but struggles to reach families searching online. They list their care home on Lottie’s platform, which provides visibility to thousands of families actively looking for care.

• If Lottie’s fee per enquiry is £30

• And “Care Home Manchester” receives 100 inquiries in a month

• Total earnings from that care home per month would be: 100 enquiries × £30 = £3,000

I think care homes would definitely pay this, considering private residents can spend a few thousands per week for care home residencies. In fact, I would assume I’m underestimating Lottie’s fee per enquiry… it must be higher than £30.

Now instead of charging per enquiry, Lottie also takes a one time fixed fee for referring a customer. For example, let’s say it’s £1,500 per new resident.

• “Care Home Manchester” receives 10 inquiries from Lottie. They don’t pay for any of these, which is a great incentive for providers

• 1 of those converts into a resident.

• “Care Home Manchester” pays Lottie £1,500 for that successful placement.

• If the resident pays £800 per week, the care home still makes £41,600 per year (£800 × 52), making the £1,500 fee a small acquisition cost (~3.6% of first-year revenue).

Obviously all these numbers are fun and games. But I won’t be surprised if the fixed fee is a lot higher that £1500, or even if it varies depending on the type of care or length of stay of a resident if it’s a care home

Now I also see other channels of revenue for Lottie such as

• Subscription SaaS: Care providers who pay for their CRM tool

• Pay for services: Care providers who pay for their marketing support when launching a provider (“Early Access” campaigns) or even building online presence “Lottie Media”

These seem interesting, but hidden under “Other Services” on the website top menu, making me think they aren’t that significant revenue channels for now.

🧐 Verdict: Good revenue streams, I’m just hoping enquiry or referral based fees are are as lucrative as I am imagining them

⚠️ The Challenges:

I think every thing sounds good so far, but there are certainly things I would be worried about.

Firstly, Market Challenges:

• Thousands of small care providers make scaling partnerships and onboarding very slow

• Slow adoption or slow belief of a digital-first solution to acquire customers by traditional operators could mean Lottie is banging their head against a wall

• Many care providers struggle with staffing, regulation, and rising costs. Marketing or finding new customers is often not their top priority

• Established directories and government resources (CQC) are already trusted by families

• The care market varies by region, and what works in London may not work in rural areas. Expanding into new locations will require new partnerships with care providers and potentially new sales channels

• Some care providers already have strong occupancy rates, reducing their need for Lottie

Secondly, Business Model Challenges:

• Winning care providers as customers can be costly, especially in a fragmented industry with many small players. Could this mean higher sales costs and longer deal cycles? And all for a “small” enquiry or referral fee? When does the fee start to pay off?

• Balancing quality vs. volume. Lottie needs to generate high-intent leads, not just traffic, to retain care providers on their platform. From a care provider point of view, how will this channel perform over others?

• Proving ROI. Care homes may hesitate to pay per inquiry or placement unless Lottie can demonstrate strong conversion rates from the get go. But as we all know marketplaces take time to work, and over time become less appealing (talk to the tenth Greek souvlaki guy in Shepherds Bush trying to get onto Uber Eats, its not fun)

Next, Customer Acquisition Challenges:

• Today, Google Ads seems like a sound acquisition channel for acquiring families searching for care. But care-related terms are typically expensive? How is this factored in to Lottie’s marketing strategy

• SEO also seems like a natural channel for family acquisition, but there are already so many top ranked competitors who have a strong content moat and brand recognition: CareHome.co.uk, TrustedCare, and Autumna

• Some self-funding families could still use word-of-mouth, GPs, or even social workers for recommendations, making a digital platform simply a “nice check” not a necessity to actually use

Finally, Regulatory challenges:

• The UK government is continuously pushing for greater transparency in care provider pricing and are also introducing price caps. If new regulations require all care homes to display fees openly, could Lottie’s unique value proposition weaken?

• Could councils introduce better digital services for care placement and funding? Highly improbable, but if it does happen, that’s true disruption

✅ My Final Take:

I actually think Lottie has a great business here. They are tackling a meaningful, high-stakes problem with a marketplace better than competitors. Their business model is strong and I think it will make some good revenue.

But the biggest challenge will be how they can expand fast and innovate in a market that is against them. In UK healthcare, you can’t ignore the regulatory and customer acquisition challenges. It’s one of the reasons why innovating in this sector is particularly difficult. (Unless they can pull off what Cera Care did, which I will review at a later date)

And I’ll always go back to this question: how much value of the elderly care market can you capture, without being a care provider itself?

Let me know your thoughts! 👇