This originally appeared on NVCA’s website on March 8, 2017
MENLO PARK, CA – The National Venture Capital Association (NVCA) today honored leaders of the venture capital industry at the annual NVCA Leadership Gala for their significant contributions to advance innovation, strengthen the industry and promote entrepreneurship. In addition to the Lifetime Achievement in Venture Capital Award, Outstanding Service Award and American Spirit Award, NVCA added three new categories to the lineup this year, including the Rising Star Award, the Excellence in Healthcare Innovation Award and the Venture Firm of the Year Award.
The 2017 award recipients and winners include:
Lifetime Achievement in Venture Capital – Bill Draper, General Partner at Draper Richards
Outstanding Service Award – Ross Jaffe MD, Managing Director at Versant Ventures
American Spirit Award – Ray Leach, CEO at JumpStart Inc.
Rising Star Award – Kristina Shen, Vice President at Bessemer Venture Partners
Excellence in Healthcare Innovation – Annie Lamont, Managing Partner at Oak HC/FT
Venture Firm of the Year – Emergence Capital
About the Awards
Lifetime Achievement in Venture Capital Award
The Lifetime Achievement in Venture Capital Award was created to recognize venture professionals who have dedicated their professional lives to creating and building successful and highly competitive venture firms as well as portfolio companies that have made a significant contribution to the growth and success of the U.S. economy. Recipients of the Lifetime Achievement Award were instrumental in the formation and growth of the venture capital industry and have consistently set high performance standards for the entire industry.
Previous recipients: Chuck Newhall, Mike Moritz, Mark Heesen, Arthur Rock, Sam Colella, Felda Hardymon, James Blair, Brook Byers, Jean Deleage, Anthony Evnin, Grant Heidrich, Jim Swartz, Bill Hambrecht, Sandy Robertson, Thomas Weisel, Edward Glassmeyer, Peter Crisp, Henry McCance, Paul Wythes, Lionel Pincus, Pitch Johnson, Richard Kramlich, Stanley Golder, Burton McMurtry, Reid Dennis, Peter Brooke, Thomas Perkins, Stanley Golder and David Morgenthaler.
Outstanding Service Award
The Outstanding Service Award was created to recognize the exceptional service of an NVCA Director or NVCA member who has committed an extraordinary amount of time, resources and dedication to Association efforts that in turn benefits the entire venture industry. The dedication has raised the visibility of the industry to key legislators and regulators and helped to educate them regarding the pivotal role of venture capital to this economy.
Previous recipients: Diana Frazier, Josh Green, Kate Mitchell, Steve Frederick, Ted Schlein, Warburg Pincus, Jack Lasersohn, Sarah Reed, John Martinson, Robert Pavey, Rodney Goldstein, E. Roe Stamps, M. Kathleen Behrens, Steven Lazarus, Harry T. Rein, Patricia Cloherty, John Doerr and Christopher Brody.
American Spirit Award
The American Spirit Award was created to recognize NVCA members who have shown philanthropic leadership by applying business skills, knowledge, expertise and resources to make an outstanding contribution to society.
Previous recipients: Jeff Fagnan, Robin Richards Donohoe, William Sahlman, Peter Bancroft, Chuck Newhall, Joe Aragona, Ewing Marion Kauffman Foundation, John Doerr, Alan Patricof, William Bowes, Peter Wendell, Floyd Kvamme, William Draper III, Martin Koldyke and Gib Myers.
Rising Star Award
The Rising Star Award was created to recognize the next generation of venture capital professionals who are rising through ranks and establishing themselves as future standard bearers of the industry. Recipients of the award have demonstrated a mastery of venture capital investing gleaned through a relatively short amount of time in the industry and are widely recognized by their peers and others as emerging leaders of the venture capital industry.
Previous Recipients: NA
Excellence in Healthcare Innovation Award
For over three decades, venture capital has been at the forefront of some of the greatest advancements in medicine, pushing the boundaries of medical innovation and spurring the creation of the biotechnology and medical device industries. The Excellence in Healthcare Innovation Award was created to recognize those who have demonstrated a clear commitment to the advancement of healthcare innovation through their investment in and support of groundbreaking medical companies that are working on treatments and cures for the most deadly and costly diseases.
Venture Firm of the Year Award
The Venture Firm of the Year Award was created to recognize venture capital firms for their significant contributions to advance the entrepreneurial ecosystem and generate returns for their investors. Firms receiving the award are recognized for strong fund performance and high exit multiples for recent exits.
WALTHAM, Mass. & BRANFORD, Conn.–(BUSINESS WIRE)–Thermo Fisher Scientific Inc., the world leader in serving science, today announced that it has acquired Core Informatics, which provides a leading cloud-based platform supporting scientific data management. Core’s offerings will significantly enhance Thermo Fisher’s existing informatics solutions and complement its cloud platform, which supports the company’s genetic analysis, qPCR and proteomics systems.
Core’s capabilities include laboratory information management systems (LIMS), electronic laboratory notebook (ELN) technologies and scientific data management solutions (SDMS). The business also offers an Application Marketplace to speed deployment and increase value for customers across a broad range of industries and scientific workflows. Core Informatics’ state-of-the-art laboratory data-management solutions are used by leading biopharma, genomics and other scientific and industrial organizations.
“The scientific community is rapidly adopting cloud-based laboratory and scientific data management capabilities,” said Thomas Loewald, senior vice president and chief commercial officer, Thermo Fisher Scientific. “Integrating the leading technologies of Core Informatics is part of our strategy to set the standard for digital science solutions, from life sciences discovery to applied markets and manufacturing.”
“We are thrilled to join the Thermo Fisher Scientific team to help accelerate the future of the digital lab,” said Josh Geballe, chief executive officer, Core Informatics. “We are excited to become part of the world leader in serving science and look forward to the additional benefits this will bring to our innovative clients and amazing team.”
About Core Informatics
Core Informatics partners with customers in biopharma, genomics, and other industries to deliver lab informatics solutions to derive more value and insight from their scientific data. Core Informatics provides the scalable and extensible Platform for Science that enables customers to quickly and easily build workflows to meet their specific needs and add capabilities as they grow. Based in Branford, Connecticut, Core Informatics has been recognized numerous times as one of the fastest growing private companies in the United States and as one of Connecticut’s best places to work. For more information, please visit http://www.coreinformatics.com
About Thermo Fisher Scientific
Thermo Fisher Scientific Inc. is the world leader in serving science, with revenues of $18 billion and more than 55,000 employees globally. Our mission is to enable our customers to make the world healthier, cleaner and safer. We help our customers accelerate life sciences research, solve complex analytical challenges, improve patient diagnostics and increase laboratory productivity. Through our premier brands – Thermo Scientific, Applied Biosystems, Invitrogen, Fisher Scientific and Unity Lab Services – we offer an unmatched combination of innovative technologies, purchasing convenience and comprehensive support. For more information, please visit www.thermofisher.com.
One company’s managers think repeal would raise its health-care costs by hundreds of millions.
America’s CEOs might not admit it in public, but the Affordable Care Act—aka ObamaCare—has been good for business. Company benefits managers have watched as the double-digit premium increases under President George W. Bush slowed to a crawl. Venture funding has flooded into health care, boosting startups and stimulating innovation. This is the progress President Obama is trying to preserve as he meets Wednesday with Democrats on Capitol Hill in a strategy session about how to protect the health law.
To take a single benchmark, look at families who receive insurance coverage through an employer. Between 2001 and 2008, their average premium jumped nearly 80%, according to annual survey data from the Kaiser Family Foundation and the Health Research and Educational Trust. Under President Obama, the increase was only 36%. This represents real money: If the Bush-era rate of inflation had continued through 2016, each of these families would be spending about $5,000 more on annual premiums. For employers, the savings open the door to hiring more workers or raising wages.
At the same time, investment in medicine has boomed. Between 2011 and 2015, venture funding for health care—including biotechnology and medical devices—totaled approximately $62 billion, according to figures from PitchBook. In the four years before the Affordable Care Act, the total was $47 billion. New companies are working to improve everything from primary care, to home palliative care, to the management of mental health. These innovations are now beginning to realize cost savings.
The Republican plan to repeal and replace the Affordable Care Act threatens to reignite health-care inflation. First, this approach produces significant uncertainty in the market. The GOP has promised immediate repeal, but the talk of what would replace the health law—and when—is vague. “I don’t want to set a time limit that this has to get done by this certain date,” Rep. Kevin McCarthy, the majority leader, said in late November.
It is easy to repeal ObamaCare’s subsidies and the mandate to buy insurance, since that can be done with only 51 Senate votes using the “reconciliation” procedure. But enacting a replacement is harder, maybe impossible, since it would require 60 Senate votes to overcome a filibuster. Insurance companies hate uncertainty and respond by raising rates to hedge their risk.
A second problem is “cost shifting.” If Republicans repeal and replace the Affordable Care Act, millions of Americans will probably lose their insurance. The replacement proposal offered by House Speaker Paul Ryan would lead to four million fewer insured people by 2026, according to a review by the Center for Health and Economy. Nine million could lose coverage under the replacement plan offered by Sen. Richard Burr, Sen. Orrin Hatch and Rep. Fred Upton, according to scholars from Rand Corp.
The bulk of these newly uninsured would be low-income Americans who can’t afford private coverage despite the tax credits built into Republican plans. But such people will still be treated when they get sick. Though they cannot pay for it, they will still receive care at hospitals, urgent-care outlets and doctors’ offices. These costs will be rolled into the line item “uncompensated care”—which is ultimately paid for by higher prices on everyone else.
The Affordable Care Act has helped minimize this cost shifting. Specifically, the law’s expansion of Medicaid cut hospitals’ uncompensated care by roughly a third from 2013 to 2014, according to a study in Health Affairs. At the University of Pennsylvania Health System, bad debt—the accounting term for bills that are written off when patients can’t pay them—decreased from 6.1% of revenue in 2014 to 3.9% last year. Taken nationally, a drop that size is worth nearly $25 billion a year.
The GOP’s plans will reverse these incentives. Republicans want to send Medicaid back to the states using block grants. More important, they want Washington’s contribution to Medicaid to grow more slowly than the actual costs. A 2014 analysis by the Bipartisan Policy Center estimated that Rep. Ryan’s plans to block-grant Medicaid would reduce federal funding for the program by $160 billion in 2022.
State legislators are likely to respond in two ways. They can tighten Medicaid eligibility to reduce the number of recipients, which will increase the ranks of the uninsured. Or they can cut the rates that Medicaid pays to hospitals and physicians, who would make up the difference by increasing prices on everyone else.
Critics of the Affordable Care Act argue that when previously uninsured people gain coverage through Medicaid, they tend to use expensive emergency-room services. But people who have just gotten coverage can’t be expected to become sophisticated health-care consumers overnight. The use of the ER suggests they have unmet medical needs. Over time they can be educated to develop standard relationships with physicians. Even factoring in this greater use of ERs, however, the per person costs of Medicaid have decreased since 2010 after adjusting for inflation.
Businesses know all this. In response to the GOP’s call to “repeal and replace” ObamaCare, one Fortune 100 company with hundreds of thousands of employees is developing two HR budgets. The first reflects the status quo. The second factors in the higher prices Americans will face if more people become uninsured. Although these estimates aren’t final, the company thinks its health-care costs could rise by tens of millions of dollars in a single year if the Affordable Care Act is repealed and replaced.
President Obama’s health law really has been good for business. Republicans’ plan to dismantle it will take the country back to an era of high health-care inflation. If only CEOs would say as much before it is too late.
Ms. Lamont is a managing partner of Oak HC/FT, a venture fund investing in health care and financial services. Dr. Emanuel is vice provost for global initiatives, as well as chairman of the Department of Medical Ethics and Health Policy, at the University of Pennsylvania.
This article original appeared in MedCity News by Stephanie Baum on November 11, 2016.
If you were to ask a healthcare investor what their investment strategy is, it is likely the product of some brilliant foresight, a little luck, and some lessons learned from bad experiences or near misses.
In a series of phone and email interviews, we picked the brains of health IT investors at four firms. We asked them what they learned from early investments and how those lessons and insights informed their strategy going forward. One theme that threads its way through the investment narrative of these companies is that technology is all well and good, but you need a service to support it as well.
Cotiviti (originally iHealth) and athenahealth were two of the firm’s first investments made in the space, Lamont said in an email.
“They were very much about fixing broken processes through software, services, and data. That’s been our approach – addressing a broken system and improving it through the powerful combination of software, data, and services. That’s particularly the case when behavior change is an important part of what needs to happen to improve healthcare and materially bend the cost/quality curve. Appropriately, Aspire Health, Quartet Health, VillageMD and Axial Healthcare all have service as a component.”
Were there any subsectors of health tech that you have invested in that you would not do again? Why?
The provider world. Consider two perspectives: It’s difficult to sell into providers, and it’s also hard to be a provider in an environment where reimbursements are going to come under pressure. Other than inpatient psych, which has massive scarcity and unending demand, we worry about reimbursement pressure in the near future.
In a value-based reimbursement environment, we think very differently about primary care physicians. Two decades ago there was a rush to build physician practice management (PPMs) roll ups. Mostly they were specialty plays, and the idea was leverage, but also IT and infrastructure enabled you to run businesses more efficiently and profitably. The reality was, we didn’t have the systems to manage them so the model broke down.
Fast-forward 20 years and, while IT systems are still imperfect, it makes tremendous sense to aggregate primary care physicians, empower them with information and systems, and support and leverage that all to improve quality and reduce downstream costs. Older PPM models focused on leveraging up pricing power. Now, primary care is about reducing overall cost. Two very different times, places and opportunities.
Kurtzman said the firm’s early experiences reinforced the importance of a strong management team, which goes for all industries.
“A great product with a weak management team nearly always fails, while a great management team with an average product can become a huge success.”
Looking back on your health IT investments, were there any that prompted you to rethink or tweak your investment strategy?
Safeguard’s capital deployment strategy has always been focused on growing markets and exciting products. While these remain important factors, several companies have shown how critical it is for an IT product to fit into a user’s workflow and for the product to connect seamlessly to existing systems. Both of these elements, particularly workflow, now play central roles in the way healthcare technology teams assess potential opportunities.
Were there any subsectors of health tech that you have invested in that you would not do again? Why?
In recent years, Safeguard has distanced itself from revenue models dependent on advertising dollars from pharmaceutical brands, because brand advertising can be fickle, leaving an uncertain financial forecast.
“Health Dialog was my most important investment and it dates back to 1999. We were doing population health before it became sexy,” Donohue said in a phone interview.
Health Dialog based its approach on research from Dartmouth, Donohue said. Based on geography, the company could predict the likelihood that patients would have a specific procedure.
For example, populations in Santa Barbara with a herniated disc would have surgery more frequently than a similar group of patients in New York. The company combined population health and data analytics with a healthcare engagement and literacy component. Their technology-enabled services helped identify people in the population making major medical decisions, helped them make more informed decisions, (which often led to less invasive procedures), reduced costs significantly and produced better outcomes.
British private insurer BUPA, an early investor in the business acquired Health Dialog in 2007 for $775 million and then Rite Aid acquired Health Dialog two years ago.
A positive lesson Donohue said he learned is the need to not lose focus on the patient.
“Most companies focus on the arms race between payers and providers but the patient is a powerful source and engaging them in healthcare is a critical lesson. Generally speaking, companies with a genuine mission and culture of supporting the patient end up creating better results…financial and clinical.”
The same focus on patients — in fact, the needs of specific patient populations — becomes paramount for companies engaged in remotely monitoring them through technology.
“It’s shocking to me how many deals that get funded with technology or services that are not likely to capture the sick, chronically ill, noncompliant patient population, but resonate more with the world of quantified self. When it comes to remote monitoring, technology needs to be passive to best capture the most costly patient population.”
Accolade was an early healthcare investment for Comcast, which the firm made in 2010. The move was a turning point because Accolade focused on employer wellness, an area that had not previously been of interest to the firm, Yang said.
“It was my first or second investment,” he recalled in a phone interview. “It was groundbreaking, novel and risky. We did it for a couple of different reasons and it has informed our strategy.”
First, Comcast was in the process of becoming a customer as it had embarked on a pilot with Accolade. Yang said early pilot data affirmed this model of employee engagement could work in affecting healthcare utilization and Comcast employees loved it. Second, investing in Accolade offered him a different perspective than other investors in health tech.
“A self-funded employer is an interesting channel with which to deploy innovative health tech and health services. Everyone in the health tech and digital health space was focused on direct to consumer or selling into insurers or providers. Very few entrepreneurs were thinking about employers as a channel back in 2009-2010 in start-up land. Accolade was positioned to be the general contractor of healthcare programs for employee populations and I was going to be exposed to a whole host of downstream products and services as deal flow.”
“What we learned from the wearables space was competition accelerates…and some of these markets are winner-take-all. That has helped inform our investment strategy.”
He added, “When you are making a bet into a hardware vertical, you better pick the right one. One tends to dominate the category and the spoils don’t go as much to the number three or number four player.”
Annie Lamont has been working in the venture capital world for about 35 years, with the past 30 as a general partner.
So she’s been involved in plenty of venture deals and realized many exits. As such, she’s experienced the ups and downs of a fluctuating market.
Now as managing partner of the growth equity investor Oak HC/FT, she’s developed her opinions on where VC is headed, especially within the firm’s core focus areas of healthcare and fintech.
In brief, Lamont has outlined three areas, which she calls “the Three Manias”:
Early 1990s: Biotech Mania. IPO market frothy and public market stable, with 35 IPOs completed in 1991.
1998-2001: Dotcom Mania. Frothy private and public markets. Internet companies Amazon, eBay and Priceline founded.
Today: Stay Private Mania. IPO market anemic, although public market is frothy.
So I reached out to Lamont to talk about the state of VC and the current exit environment.
She and Oak HC/FT have been busy, to say the least.
The Greenwich, Connecticut, firm, which is led by Lamont and General Partners Andrew Adams and Patricia Kemp, has invested in more than a dozen companies in the past two years. And it has boosted its team, most recently adding two venture partners: Ezekiel Emanuel, focused on healthcare, and Michael Heller, focused on fintech.
Oak HC/FT, which is investing from a $500 million fund raised in 2014, in June led a $50 million Series B investment in US HealthVest, which develops behavioral health facilities nationwide. Also participating were current investors Polaris Partners, F-Prime Capital Partners and Dr. Richard A.Kresch.
In April, the firm led a Series C round for Trov, the Danville, California, provider of on-demand insurance services via mobile phone. Other investors in the $25.5 million round include Australian insurer Suncorp Group, insurance technology provider Guidewire and fintech-focused venture firm Anthemis Group.
In addition, Lamont herself has stayed active investing and speaking. In June, she participated in a panel on women’s entrepreneurial leadership at the seventh Global Entrepreneurial Summit at Stanford University. The panel was moderated by U.S. Secretary of Commerce Penny Pritzker.
Q: I read about your involvement in the GES. What are your thoughts on women in VC?
A: In terms of the present and future, I am seeing female expansion at every level of VC and entrepreneurial activity.
There are significant players like Kleiner Perkins Caufield & Byers being dominated by awesome women with Mary Meeker, Beth Seidelberg and Lynne Chou, and Canaan Partners with Wende Hutton and other female partners.
Women, now more than ever, have become mainstream in some of the best venture brands in the business.
Q: So many smaller venture funds are emerging and accelerators are coming into existence, many of which have female advisers. Is that where you are seeing growth for women in VC?
A: Yes. Small funds and accelerators are creating more opportunities for women to get in the door, which we are also seeing.
However, they still remain a much smaller fraction than their male entrepreneur counterparts. But at the end of the day, the odds of seeing a female CEO at a company is 5x higher than a decade ago, and that is progress.
Q: You wrote about mentoring after you participated in the GES. Whom did you look up to and perhaps use as a mentor when you came into VC in 1982?
A: I found qualities I admired in many venture capitalists I worked with early on and still to this day. However, one stands out the most to me. Jerry Gallagher [a general partner at Oak Investment Partners, who died in 2014 at age 73] was an exceptional venture capitalist and human being. He taught me to never compromise on people [and] my values and to always maintain a long-term outlook.
He had the single best track record in retail VC of anyone in the country and he did it in the most modest and deliberate way. He personified the word “character.” When dealing with him, an entrepreneur would always know what he/she would get: a thoughtful response supported by the facts and fair treatment.
These are the qualities that we strive to emulate every day, at every meeting, with every investor and entrepreneur at Oak HC/FT.
Q: At Oak HC/FT, are you seeing pricing return to normal levels?
A: We’re still seeing great companies getting founded and at high valuations. The good companies are still getting funding at more reasonable valuations. The poor companies, which could raise money a year ago, now, I don’t know, probably not.
Part of the problem with VC is that we’ve been very focused on valuations. We’re starting to see a normalization.
Q: What types of company trends are you seeing?
A: In healthcare services, it’s about delivery of care. The trend is in consumerism and how patients are being managed.
Look at our investment in Hometeam in New York. It’s about connecting seniors and providing home-care services for older adults. It’s more about keeping people out of the hospital.
Q: What are you seeing in fintech?
A: A lot of focus is on payments and data, as well as compliance.
Insurance is a growing area. Look at our investment in Trov, which provides on-demand micro-insurance. It’s an interesting and innovative approach for consumers, like Millennials, to jump on, as opposed to traditional insurance-sales models.
Q: In regard your Three Manias, do you see startups raising capital today exiting on the public market?
A: I don’t see a mania for the next three years. There will come a time when there’s a backlog of companies from being created now that will go public. But historically, 70 percent of companies are bought via strategic acquisition.
Still, good companies will always go public, and you’re seeing that now.
Q: What are your thoughts on the current IPO market, particularly for life sciences?
A: As I am no longer actively involved in biotech, I can’t intelligently comment on that space other than to say that as long as big pharma continues to buy promising companies at exceptional valuations, you will have a robust but perhaps more selective IPO and public market.
In the coming years, I believe there will be a number of great tech-enabled and healthcare-services companies emerging as excellent targets for strategics, but also good candidates for the public market because of their ability to scale.
Action Item: To read a blog post from Annie Lamont about women in venture capital, go to http://bit.ly/29DmpzH