RISING STARS: Meet the 16 up-and-coming investors changing the face of healthcare in the US

Meet the 16 rising star investors in healthcare venture capital – Business Insider


Amazon Prime Day

NEA; Comcast Ventures; Tusk Ventures; Samantha Lee/Business Insider

This story is available exclusively to Business Insider subscribers.
Become an Insider and start reading now.

  • Healthcare startups have been among the hottest venture deals in Silicon Valley as the coronavirus pandemic catalyzed massive shifts in the historically slow-to-move industry.
  • Although many investors are still working remotely, young firm employees are typically tasked with meeting with founders and finding the companies that they think could become the next “unicorn.”
  • These 16 investors have already made names for themselves by investing in top healthcare startups like Ro and Modern Health.
  • Many of these rising star investors said it was important for those hoping to break into the industry to develop a specialty or expertise since healthcare is such a broad category of startups.
  • Visit Business Insider’s homepage for more stories.

Behind the healthcare startup boom rocking Silicon Valley are a handful of young investors responsible for unearthing promising investments for their venture firms.

The healthcare industry has progressed five years in just six months due to the massive behavioral shifts brought on by the coronavirus pandemic, many investors told Business Insider. Doctors, hospitals, and patients are having to navigate virtual appointments, at-home tests, or mail-delivery prescriptions for the first time as offices remain shuttered and wary patients avoid crowded waiting rooms.

Those changes have left an ample amount of room for startups, and the investors backing them, to fill the gaps. Telehealth startups had a record-breaking first half of the year, with 154 funding deals in the second quarter alone, according to CB Insights.

Overall, healthcare startups have accounted for some of the biggest venture deals, public debuts, and acquisitions during the pandemic, leaving investors with largely unanticipated returns on investment. Instead of waiting decades for the slow-to-move industry to make incremental changes, investors saw portfolio companies take off, seemingly overnight.

Companies like Modern Health, which provides benefits to patients through their employers, normally take months to sign new customers, but now were asked to bring on record numbers of customers as soon as possible.

“Our portfolio company Modern Health works with enterprises and the conversation has evolved from ‘let’s target a January go-live”‘ to ‘how quickly can we make this available to our employees?'” Kleiner Perkins principal Annie Case said of the mental health startup.

Case is among 16 young investors tasked with meeting and evaluating healthcare startups in Silicon Valley. The youngest employees at venture firms are typically its eyes and ears, relying on networking events and word of mouth to find the best entrepreneurs or companies to invest in. During the pandemic and largely working at home, that role has evolved into virtual coffee meetings, socially distant walks, and active group chats. The mission, however, remains the same: find the next big startup creating the future of healthcare before any other firm can.

Read more: The 22 billion-dollar startups to watch that are revolutionizing healthcare in 2020

“What happens at seed shapes the slope of a company’s growth curve for the next decade,” Inspired Capital principal Chris Brown said, referring to early funding rounds. “In most instances, companies at this stage start as controlled science experiments, slowly de-risking a hypothesis as they hunt for product-market fit in a journey that feels equal parts exciting and chaotic.”

Business Insider spoke with dozens of young investors shaping the future of healthcare by writing checks, supporting entrepreneurs, and pushing science forward during the coronavirus pandemic.

The finalists all had 5 years or less experience in venture capital, but many had careers in healthcare prior to making a late-career switch. All applicants had to invest in healthcare technology, which includes everything from therapeutics to medical devices. The below exchanges with the 16 finalists have been edited for length and clarity.

Meet the 16 rising star investors betting on the future of healthcare during the coronavirus pandemic.

Racquel Bracken, Venrock

Racquel Bracken
image

Venrock

What excited you about getting into venture capital?

Venture is the confluence of a few things that interest me. First, working with smart, driven entrepreneurs that think differently about a space or problem today that the rest of the world thinks is “impossible. Second, exposure to a wide breadth of innovation. And lastly, partnering with teams to solve really hard problems.

Why did you decide to join your firm?

The team. I have known Cami Samuels and Bryan Roberts for over a decade and they were 100% the reason I joined Venrock.

What are some of the biggest challenges facing the healthcare industry right now?

Operating safely during COVID, drug pricing, and the future of the ACA.

What areas or technologies are you currently most excited by?

New therapeutic modalities. I come from an oncology background and at Clovis, we were one of the first companies to fully embrace precision drugs in oncology. A number of other fields are going this way, including neurology and autoimmune disease. Novel therapeutic approaches in these diseases for specific subsets, usually those identified as most likely to respond, are where I think there is incredible promise.

What is your advice for young professionals hoping to break into healthcare venture investing?

The return curve on experiences early in your career is long. Work with great people and get as much experience from different angles as you can, which is easiest at a small company where you can wear a bunch of hats and also be part of impactful work.

Chris Brown, Inspired Capital

Chris Brown Inspired
image

Inspired Capital

What excited you about getting into venture capital?

The seed stage is the single most magical phase of company building. What happens at seed shapes the slope of a company’s growth curve for the next decade. In most instances, companies at this stage start as controlled science experiments, slowly de-risking a hypothesis as they hunt for product-market fit in a journey that feels equal parts exciting and chaotic.

What opportunities do you see for healthcare investors in the next 6-12 months?

I am just as curious as anyone else about what the next year looks like, especially given the ongoing pandemic and upcoming election. I don’t think any of us have a crystal ball. That said, I do believe that we are entering a time in healthcare where players across the value chain are more willing than ever to lean into innovative new products given the lessons learned from COVID-19.

What are some of the biggest challenges facing the healthcare industry right now?

Perhaps the largest thematic shift in the healthcare landscape is the transition from fee-for-service to value-based care. This market shift poses some significant operational challenges to both payers and providers. More often than not, we’re realizing that a successful shift to value-based care requires a complete rewiring of provider operations given that care delivery functions are not structured appropriately to collect the necessary data to move out of a fee for service environment.

Brendan Bulik-Sullivan, GV

Brendan Bulik-Sullivan GV
image

GV

What excited you about getting into venture capital?

The pace of scientific and clinical progress in biotechnology right now is amazing. It feels like what computer science must have been like in the late 20th century, or physics in the early 20th century. Biotech VCs have a front-row seat for all of this, and we can make sure that the best ideas have the capital and support required to make an impact.

Why did you decide to join your firm?

I have a somewhat unusual professional background for a biotech VC. My academic training is in statistical genetics and computational biology, and then I did applied machine learning research at a therapeutics startup. When I decided I wanted to try VC, I knew I would need to look for a firm that looked at investments through a particularly adventurous lens. GV fits the bill. We invest very broadly in life sciences. Everything from bread-and-butter small molecule and biologics companies to novel gene therapy delivery technologies, N-of-1 medicine, and machine learning-based diagnostics.

What areas or technologies are you currently most excited by?

I think that diagnostics for early detection of cancer are going to have a big impact. Cancer is often curable through surgery when detected early, but reliably catching tumors early enough, and distinguishing small malignant tumors from small benign tumors, is a difficult technical challenge. Screening mechanisms like colonoscopies have provided a lot of benefit in certain cancer types, but developing tests for the remaining types of cancer and tests that are more convenient for patients are the next frontiers.

Annie Case, Kleiner Perkins

Annie Case Kleiner Perkins
image

Kleiner Perkins

What drew you to healthcare investing?

Hot new apps may come and go, but healthcare is foundational. I was drawn to study health through biology and health policy in college and now invest in healthcare because it’s so intrinsically linked to improving lives.

What do you see accelerating in digital health or health tech as a direct result of the coronavirus pandemic and associated behavioral changes from stakeholders in the United States?

These are challenging times for everyone, so it should come as no surprise that we’ve seen a remarkable acceleration in the adoption of mental health solutions. This was a trend we were beginning to see pre-pandemic, but now payers and employers are scrambling to address the growing problem on behalf of their members and employees. Our portfolio company Modern Health works with enterprises and the conversation has evolved from “let’s target a January go-live” to “how quickly can we make this available to our employees?”

What areas or technologies are you currently most excited by?

I’ve been thinking a lot about ways to better support and provide leverage to physicians and other healthcare professionals. I want healthcare workers to be able to operate at the top of their licenses and maximize the time they spend with patients rather than on administrative tasks. One area I’m excited about here is in automating the documentation process for physicians. There’s an opportunity to give them ~30% of their time back and reduce the $4b+ we spend on mundane healthcare data entry in the US alone.

Morgan Cheatham, Bessemer Venture Partners

Morgan Cheatham Bessemer Venture Partners
image

Bessemer Venture Partners

What drew you to healthcare investing?

I have been excited by the intersection of healthcare and business from a young age and was accepted to Brown Medical School at age 17 and Harvard Business School at age 21. As an aspiring physician, I am pursuing a parallel career in care delivery and healthcare investing because I want to amplify the power of the 1:1 patient-provider relationship via the 1:N impact of venture capital. As the “atomic unit” of the industry, the patient-provider relationship offers the knowledge required to solve challenging problems in healthcare using first principles thinking.

What are some of the biggest challenges facing the healthcare industry right now?

Addressing the continued impact of systemic racism on healthcare delivery and equity is the most important issue facing the industry today. As we build solutions for ensuring equal access to high-quality care, we are faced with questions such as “Should insurance companies pay for food or housing?” and “Can barbers provide basic primary care education or services?” Companies and technologies that address these issues and answer these questions effectively will have the greatest impact on healthcare over the next several decades.

What areas or technologies are you currently most excited by?

The potential of patient and provider social media influencers has been vastly underestimated by the industry. As healthcare goes direct-to-consumer, we must adopt digital marketing strategies pioneered by the innovative apparel, food, and travel industries, each of which has strategically leveraged influencer and micro-influencer marketing to drive authentic, organic user engagement.

David Cheng, DCM

David Cheng DCM
image

DCM

What do you see accelerating in digital health or health tech as a direct result of the coronavirus pandemic and associated behavioral changes from stakeholders in the United States?

At-home fitness solutions and telemedicine are the two more obvious trends we’ve seen explode in our portfolio. Tempo and Musely have both seen explosive growth since the pandemic. The other more non-obvious behavioral change is demand from consumers for knowledge so they can take more agency with regards to their own health. This is a trend that we’re tracking closely as COVID-19 has reminded everyone that they need to take their health into their own hands.

What opportunities do you see for healthcare investors in the next 6-12 months?

We’re excited about companies that expand access to care for consumers and allow them to take control of their own healthcare decisions. This includes direct-to-consumer telemedicine and B2B solutions that allow healthcare practitioners to digitize their offerings.

What are some of the biggest challenges facing the healthcare industry right now?

Solutions need to not only work but also do no harm. Startups by nature must move quickly but this can’t come at the cost of causing harm to consumers.

What areas or technologies are you currently most excited by?

Cognitive Behavioral Therapy for addiction treatment

What is your advice for young professionals hoping to break into healthcare venture investing?

Read a lot of Pub-Med!

Dr. Brenton Fargnoli, AlleyCorp

Brenton Fargnoli AlleyCorp
image

AlleyCorp

What drew you to healthcare investing?

In caring for patients, it became clear that the current standard of care delivery is in dire need of a software update. It’s been inspiring to work with entrepreneurs taking on long-standing issues to remake the healthcare system, from the ground up knowing first-hand the impact it ultimately has for patients.

What opportunities do you see for healthcare investors in the next 6-12 months?

More traditional VCs are beginning to explore incubating companies, for good reason. The healthcare delivery landscape has fundamentally changed with the pandemic, significantly expanding the aperture of new, viable ideas. At the same time, there is a groundswell of exceptionally talented people eager and available to make an impact on healthcare. With company creation ultimately boiling down to ideas and people, the need and opportunity to build anew is as great as ever.

What areas or technologies are you currently most excited by?

While telemedicine has received much of the attention during the pandemic, I am particularly excited about digital therapeutics. Digital therapeutics that are both consumer and regulatory grade hold significant promise for effective, engaging, and accessible care, especially in behavioral health.

In addition to digital therapeutics, with the pandemic shining a light on the fragility of the fee-for-service system, there is now an accelerated drive toward value-based care both in terms of new care delivery models and technology to rein in high administrative costs.

Jared Friedman, Y Combinator

Jared Friedman YC
image

Y Combinator

What excited you about getting into venture capital?

I was starting my second company when I caught up with Sam Altman, who was the President of Y Combinator at that time. I had never intended to go into venture capital but Sam told me his vision of a Y Combinator that could be a multi-generational institution, like a great university. It was such a big vision that I felt compelled to help him execute it.

What do you see accelerating in digital health or health tech as a direct result of the coronavirus pandemic and associated behavioral changes from stakeholders in the United States?

Certainly, telemedicine is having its breakthrough moment – including all forms of remote care and remote patient monitoring. We’re also seeing a broad range of companies that can solve other immediate needs for health systems break through the normal slow sales cycles: for example, keeping information for medical staff up-to-date, hiring medical staff to match surging demand, and buying PPE and other medical supplies.

The FDA EUA process for COVID-related technologies has significantly reduced the regulatory barrier for certain companies, accelerating their timelines.

What are some of the biggest challenges facing the healthcare industry right now?

Broadly, stakeholder misalignment means that many technologies that are beneficial for society are nonetheless nonviable as a business. We’ve had too many companies with great products run up against unsolvable blockers with payers stalling on reimbursement, un-internalized externalities, and misaligned incentives throughout the healthcare system.

Zach Gonzales, Norwest Venture Partners

Zach Gonzales Norwest Venture Partners
image

Norwest Venture Partners.

What drew you to healthcare investing?

My mother was an ER nurse. My stepmother is a therapist. My aunt is a pediatrician. I grew up in awe of the medical community, of hospitals and physicians, and of the amazing things they could do. But I was awfully squeamish of blood and injury, so medical school was out of the question for me.

What are some of the biggest challenges facing the healthcare industry right now?

Incentive misalignment! There are absurd numbers of entrenched polemical relationships in the healthcare space, creating seemingly endless “zero-sum” games. Incentive misalignment creates lethargy and induces organizations to resist innovation, not seek it. This makes adoption in the healthcare space painfully slow which creates inherent difficulties for healthcare startups and the investors behind them. We need to do a better job aligning those incentives, and that needs to come both from the private sector and the federal government.

What areas or technologies are you currently most excited by?

I’m very excited by the recent break out of risk-based provider groups and conveners. Teeing off of the previous question, I strongly believe that aligning the incentives of physicians, health plans, and patients is the right way to advance patient care, particularly for high-risk and complex patients. Following the success of organizations like NaviHealth, Agilon, CareMore, and Oak Street Health, I think there is a bright future for companies that can enable providers with systems, technologies, and contracting schemas to streamline and improve patient care while reducing systemic cost.

Fatima Husain, Comcast Ventures

Fatima Husain Comcast
image

Comcast Ventures

What drew you to healthcare investing?

Healthcare is a fundamental human need. In a world where technology has infiltrated and improved, and in some cases created whole new industries, it is imperative that technology be leveraged to improve the healthcare industry. I’m excited by novel ways in which we can continue to digitize healthcare, increase access to healthcare, and improve outcomes for humans on this core need.

What do you see accelerating in digital health or health tech as a direct result of the coronavirus pandemic and associated behavioral changes from stakeholders in the United States?

I could say “telehealth will be the new norm” but we all already know that. What’s interesting is that we are now at a juncture where the public sector and regulatory bodies are acknowledging and changing litigations to improve and increase access to healthcare. I’m excited to see how health tech will continue to accelerate precision health and democratize access to healthcare for the underserved.

What opportunities do you see for healthcare investors in the next 6-12 months?

Repercussions of the pandemic on the mental health and wellbeing of the US population are going to be large-scale, silent (yet painful), and likely long-lasting. I’m hoping we will see opportunities that focus on quality mental health at scale.

What are some of the biggest challenges facing the healthcare industry right now?

Access to quality, timely, and affordable care at scale.

What areas or technologies are you currently most excited by?

Eldercare, mental health, access to healthcare for the masses.

Prateesh Maheshwari, Maverick Ventures

Prateesh Maheshwari Maverick Ventures
image

Maverick Ventures

What opportunities do you see for healthcare investors in the next 6-12 months?

I’ve found this to be the most intellectually interesting time to be an investor. Massive shifts are occurring in our healthcare system as core assumptions are challenged.

We’ve always defaulted to formal institutional settings, but now care is moving outside of the four walls and into the home, accelerated by technologies such as remote patient monitoring.

We’re already seeing a loosening of rules around telemedicine, which will catalyze more virtual care applications outside of urgent care and select conditions such as diabetes.

I think our society will recognize that we’ve historically underinvested in global public health and are unprepared for health crises like coronavirus. I anticipate investing behind secular winners such as diagnostics and virtual care offers one of the best opportunities across a 10-year horizon.

What areas or technologies are you currently most excited by?

I’m currently most excited about attacking the roughly $1 trillion going to healthcare administration. We’re beginning to see the application of robotic process automation in healthcare to drive down the time valuable human resources spend in administrative functions.

What is your advice for young professionals hoping to break into healthcare venture investing?

If you spend time operating prior to becoming a venture capitalist, you can go extremely deep in a sub-sector of healthcare, build out a network of future entrepreneurs, and earn the respect of the entrepreneurs you work with by empathizing with the messiness of building a big business.

Dr. Matt McAviney, NEA

Matt McAviney NEA
image

NEA

What excited you about getting into venture capital?

During my clinical training, it was bittersweet to experience the joy of making a challenging diagnosis, only for that emotion to quickly dissipate with the realization that there were few good treatment options available. These patient encounters were the impetus for my decision to focus my career path on helping to advance breakthrough therapeutics.

What do you see accelerating in digital health or health tech as a direct result of the coronavirus pandemic and associated behavioral changes from stakeholders in the United States?

Regardless of whether the coronavirus-induced migration to less dense living areas is transient or permanent, the trend toward reducing clinic visits for treatment is here to stay. New drug development technologies that offer more convenience, such as an at-home under the skin self-injection or oral tablet that provides similar levels of efficacy and safety, will gain more traction in our new world order.

What are some of the biggest challenges facing the healthcare industry right now?

The challenge of drug pricing and market access is not going away anytime soon. While neither presidential candidate is pushing an overtly progressive agenda on drug prices, this will continue to be a talking point for the foreseeable future. My hope is that the industry does a better job of tying price to innovation. Truly innovative products should be appropriately rewarded.

What is your advice for young professionals hoping to break into healthcare venture investing?

Start investing in companies, collectibles, anything that interests you. ‘What’ you invest in matters far less than ‘why’.

Yoni Rechtman, Tusk Venture Partners

Yoni Rechtman Tusk Ventures
image

Tusk Ventures

What drew you to healthcare investing?

In 2017, I started to see how the ACA was improving some issues on one hand while also creating the conditions for consumerized healthcare. As more people got pushed into high deductible plans, generally healthy people would be paying out of pocket anyway, so they would want to be treated as customers. That opened the door for a new crop of startups to build products and technology that bring those new patient experiences to market.

I was in the right place at the right time to see and understand Ro just when it was getting started at Tusk. I met Zachariah and we invested right as they were launching so I got to see firsthand how they grew from 10 people in an office to a $1.5 billion company in just a few years. The more I learned from them, the more obvious it became that this was the start of something really new and really big. So I kept doubling-down over and over, eventually going much deeper in the stack to the infrastructure layer.

What is your advice for young professionals hoping to break into healthcare venture investing?

If you want to get into healthcare investing, start by thinking about how deep you want to go and where. “Healthcare investing” can mean so many different things because “healthcare” is so massive. Unless you are comfortable becoming a pure healthcare specialist, you’re going to have to pick your spots. Figure out what’s most interesting to you and don’t lose sleep over not being able to do everything at once.

Brooke Richardson, TheVentureCity

Brooke Richardson TVC
image

TheVentureCity

What drew you to healthcare investing?

There were three main factors: the large market opportunity, brilliant minds behind the latest innovations, and the intrinsic value it brings to society. These are all things we saw when investing in WOOM and Tonic App, both founded by strong influential women who are changing the health-tech game.

What opportunities do you see for healthcare investors in the next 6-12 months?

Everything related to COVID-19 is urgent and important, but investors should be looking for what will be the trend in 5 years’ time, not just now. I would focus on those areas that COVID-19 has impacted the most and might ultimately change forever, such as in-home care. I also think that there was an existing trend that Covid-19 might have accelerated around healthy living and a shift of focus to preventative medicine. I am a strong believer in personalized medicine. I believe that more drugs will be developed to address each individual’s specific needs and that these drugs will spur consumer services that personalize and prevent leveraging DNA.

What are some of the biggest challenges facing the healthcare industry right now?

Access to healthcare is still a major problem, as well as the cost of services and oversaturated and under-qualified healthcare systems. Startups play a key role here in that they can and are creating more affordable digital consultations, at-home kits, and much more. These startups can move quicker than the larger incumbents and provide key movement in the industry.

Michael Rome, Foresite Capital

Michael Rome Foresite Capital
image

Foresite Capital

What drew you to healthcare investing?

Healthcare investing marries my two passions, biomedical science and investing. Although I am trained as a biochemist, I enjoy all aspects of the financial markets and follow great investors. I find the intersection of the two fields very exciting.

What opportunities do you see for healthcare investors in the next 6-12 months?

The biggest opportunities I see are for companies able to execute during the COVID-19 pandemic. Healthcare companies involved in novel technology development will be less hampered versus companies executing large multinational clinical trials. Also, the low-interest-rate environment we find ourselves in is advantageous for companies taking on riskier ideas, which helps enable new technology development.

What are some of the biggest challenges facing the healthcare industry right now?

The biggest challenge right now is finding a comprehensive solution to the coronavirus pandemic. The world is depending on our industry to provide rapid diagnostics and an effective vaccine in a short amount of time. Both of these are not easy. Many vaccines take decades of clinical development to arrive at a commercial product. The technology advancement we have seen in the last 6 months is impressive, but we still have a long way to go.

What areas or technologies are you currently most excited by?

I am most excited by novel platform technologies like bi-functional protein degraders, RNA modulation, and AI-enabled drug discovery. I think these 3 areas have the potential to rapidly accelerate and even replace conventional therapeutic modalities in the next 5 years.

Greg Yap, Menlo Ventures

Greg Yap
image

Menlo Ventures

What excited you about getting into venture capital?

My experience as a healthcare founder, CEO, and operator led me to venture. My goal every day is to be the investor and board member I would have wanted as an entrepreneur.

What do you see accelerating in digital health or health tech as a direct result of the coronavirus pandemic and associated behavioral changes from stakeholders in the United States?

Lack of data interoperability plagues healthcare. Patient medical information is trapped in silos despite massive investments in electronic medical records, which should make medical teams more efficient, but instead are the bane of physicians everywhere.

During COVID, data remains a bottleneck. Public health authorities can’t get testing data. Patient families can’t get medical information. Providers still often rely on faxes.

I believe new regulations and technologies will solve health data interoperability in 2021, and patients will be able to authorize third parties, including digital health providers, to access their medical data instantly and securely, through networks like Particle Health.

What are some of the biggest challenges facing the healthcare industry right now?

Science is complicated, but we desperately need to refocus COVID discussions of vaccines, treatment, and testing on data and medical expertise, not politics and rhetoric. And pharma and biotech companies must not squander the opportunity to add value to society through the pandemic. Pre-COVID, pharma earned a terrible reputation for profit over people, but the industry has a window to do what it does best, create amazing medicines, and really help people, I hope.

Close