Health 2.0 caught up with some of our favorite investors who have a strong pulse on what’s happening in digital health care both past and present. We talked about company evaluation, unmet needs in health care, and their biggest surprises yet.
Lisa Suennen – GE Ventures
Bryan Roberts – Venrock
Rich Roth – Dignity Health
Brent Stackhouse – Mount Sinai Ventures
How has the investing landscape changed in the last two years?
ROBERTS: There have been short-term questions about how one builds large healthcare IT businesses, given there have been a lot of companies financed and there have not been a lot of large exits over the last six or seven years. But the real undercurrent of the last few years is that there has been an oversupply of capital, which remains true. So, while there are people wondering what it takes to build a large healthcare IT business – how long does it take, what customer set do I need, what’s the ROI, what’s the right background for the team – there’s still so much money available that funding remains overly robust.
What kinds of companies or technologies are you excited about at the moment?
ROTH: I’m excited that we’re starting to see companies focus more on improving the caregiver experience, because it is so critical to patient experience and outcomes. And given that clinician burnout is such a key issue, we really want to make sure we are improving the workforce. I’m also excited about technologies that improve efficiencies and reduce the overall cost of care in the acute setting, which is something that the digital world has historically left behind. As one example, machine learning technologies have great potential to reduce error rates, improve safety practices, and automate more routine tasks so our caregivers can spend more time with patients.
What non-traditional or quirky qualities catch your attention in a startup company?
ROBERTS: Pretty much all of my investments are in first time CEOs, which is not particularly what the venture capital playbook tells you to go do. But I find those people to be very hungry and largely underappreciated by the rest of the world. They’re also very willing to bash their head against a brick wall with me for a while, in order to try to succeed at something that is hard to do.
STACKHOUSE: If solid fundamentals, experienced leadership, strong unit economics, and reasonable valuations are quirky, then we love quirky.
What is the one investment trend you wish would go away?
SUENNEN: Ridiculously high valuations and ridiculously high amounts of investment capital per deal– no one will make money in these deals.
ROTH: Companies only focusing on commercial or direct-to-consumer avenues. There are real, under-addressed problems in the health care industry such as complex diseases, people on governmental assistance programs, and socioeconomic barriers to care, and it’s a shame to see companies that only focus on commercial products because we want to see their talent focused on more critical problems.
SUENNEN: How many tech people want to work their way into health care venture capital. When I started in health care venture in 1998 you couldn’t give it away. I wonder how long it will be before the cycle ends?
STACKHOUSE: The seemingly never ending wellspring of start-up companies. On the one hand it is exciting to see so much excitement and innovation in an industry that desperately needs it. However, it also seems as if when one start-up fails, three new ones solving the same problem pop up in its place. I’m continually surprised to meet founders that don’t know about their competition in the market.
What as a digital health community are we not talking about, but should?
ROTH: There is a giant health equity problem that we aren’t discussing enough. We are seeing significant differences in the quality of health and health care across different populations. An individual’s background and the neighborhood they live in determines a significant amount of their outcomes, and the digital health community doesn’t focus enough on that.
Lisa Suennen and Bryan Roberts will both be speaking at Health 2.0’s WinterTech event on January 10, 2018 in San Francisco where you can hear more from them and others on current investment trends, IPO, and the rise in consumer choices. Register today!
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