So just diving right in, can you briefly tell me about your background and what led you to your current role?
I began my career in corporate finance at GE Healthcare, spent some time abroad in rural India helping to build and scale an early-stage startup focused on the last mile delivery of healthcare. In early 2016, I had a unique opportunity to help start a healthcare-focused venture capital firm, Digitalis Ventures, where I am currently a partner.
We invest across 3 verticals: healthcare technology, health sciences, and pet care and animal health. I lead our healthcare technology practice group where we have a broad remit and invest in everything from consumer health to tech-enabled services. The majority of our investments are early-stage.
I love that. How did you decide on those categories for investment?
I think healthcare, and the digital health market in particular will have tailwinds for the foreseeable future. COVID-19, for obvious reasons, has accelerated much of this. Digital health has been around for more than a decade but COVID-19 created an acute need for digital technology to facilitate care which has resulted in widespread adoption by health systems, payors, providers, and patients and consumers as the use case for digital health has become clear.
You’re seeing the reinvention of healthcare models where you can drive down the cost of care, improve outcomes, and provide a better experience for patients and providers. These are often product-led experiences that are taking a page out of the consumer experience playbook and applying them to healthcare. When you have healthcare costs that are close to 20% of GDP in the US, double what other developed nations spend with similar outcomes, you have to ask the question — why are we spending so much more to provide care, yet our outcomes are not really demonstrably better than other countries who spend significantly less? This has led to a lot of innovation across the ecosystem in which, I believe, there are thousands of billion-dollar markets.
What is a standout thing that a founder can do before they pitch you?
Try to get a warm intro. That’s probably the most important thing, especially in this environment. I know it’s the most obvious advice, but I believe it to be true. From my experience, cold outreach just doesn’t have an effective hit rate, it’s a game of statistics. If you’re going to blindly reach out to 100 healthcare VCs, it says something about your ability to cultivate and curate a network, an absolutely critical skill for entrepreneurs.
There are many first-time founders with brilliant ideas that have never pitched to a VC. To those founders, I would say that getting out there and cultivating a network is a critical skill to prove to investors that you are able to build a network, which is as important for recruiting talent as it is fundraising. While technology is beginning to play a bigger role in connecting entrepreneurs with investors, VC is still very much a relationship driven industry.
That’s a good point. What about people from underrepresented or low-income backgrounds that don’t have that warm intro? How could they stand out?
I think what leads to successful outcomes doesn’t really change — the magnitude of the idea, business viability, an entrepreneur’s vision, timing, market opportunity, etc. The recipe to build a big business or to go from zero to 1…you still have to cultivate that network at some point during the entrepreneurial journey. Now, increasingly, there are more programs that help to foster these networks and are specifically designed for underrepresented founders, which I think is extremely important. If you know that you don’t have an established rolodex, seeking out these programs is a great first step. It takes one introduction that leads to three introductions that leads to five introductions.
When I meet a founder, I care about the idea, I care about how you are going to go build and scale the company, and I care about your ability to leverage your network to recruit talent. Are you inspirational? Are you visionary? I think the blocking and tackling often looks the same, but it’s true, one group just has a much bigger advantage.
I believe that collectively we have to make it easier as an industry to allow underrepresented founders to enter and succeed in venture. While we have seen some change in this regard over the past few years, barriers to entry are still there and we have a long way to go. I think that’s why MBA programs can be very helpful. It’s an open application process and once you’re in, you can use the program to expand your network, build a relevant skillset and get exposure to the industry through classes and experiential learning.
How has your perspective evolved since you first started in VC?
My perspective has evolved dramatically over the last six years. When you begin to unpack the many aspects of venture capital — the business of venture capital, industry and domain expertise, how to diligence investment opportunities at different stages, network development, how to be an effective board director, etc., it’s a very involved and dynamic industry. In most cases, as an early-stage investor, you’re betting on companies innovating in nascent markets and to the extent you’re leading deals, you’re actively supporting and guiding the CEO both in and out of the board room. What has changed most for me is that once you get over the steep learning curve, you come to appreciate that VC is an asset class like any other and our job, ultimately, is to drive a return across a portfolio of investments that will have winners and losers. At least for me, this has come with time and experience as we continue to think about how to evolve our own portfolio constructions models within the context of the current market.
On to my favorite question, do you have any hot takes on the industry?
In the current heated VC environment FOMO is pushing deals to get done quicker and faster, often without reasoning from first principles. While I think this strategy can certainly work for larger funds with significant AUM or even for smaller funds who employ more of an index strategy, I think the environment is forcing a lot of VCs to rethink the “traditional” portfolio construction model of larger positions in fewer companies where you have the benefit of a long due diligence period. We’re certainly seeing this with the restructuring announcements from major VC firms.
It will be very interesting to see how this all plays out in 2022. Most firms have recently raised “the largest fund ever” and maintain ample dry powder to deploy over the next few years in private markets. One view is that the “bubble” bursts, as it has in the past, and that may come in the form of a mild or moderate correction both in public and private markets. Another perspective is that COVID-19 has and will continue to force legacy incumbents to embrace technology to remain competitive and the cost and integration challenges to adopt this technology will perpetually decrease, only making it more viable and attractive.
