Why Grand Ventures Believes in the Future of Healthcare
Our mission at Grand Ventures is to back the most promising entrepreneurs with innovative technologies that make the world a better place. Healthcare is an obvious place to look…not only is it a giant market where trillions of dollars are spent, but also something that impacts and improves every life in the world.
It should come as no surprise that healthcare is one of the largest industries in America. In fact, in 2020, total healthcare spend accounted for roughly 20% of US GDP or $4.1 trillion dollars. For reference, healthcare spend accounted for roughly 5% of US GDP in 1960. While venture healthcare investments in the US and Europe have dropped from their 2021 peak of over $86B (30% YoY growth), they still remain strong and active with roughly $35B invested in the first half of 2022.
Within healthcare, the biggest and fastest growing segment is Health Tech. The Health Tech market size was over $195 billion in 2021 and is poised to grow at a CAGR of more than 16% from 2022 to 2030. As of Q3’22, roughly $11B was poured in by VCs into the healthtech sector.
Health Tech is an exciting sector of healthcare that is rapidly evolving and growing. It is a broad term that encompasses a variety of sub sectors including:
- Digital Health
- Health information technology
- Health analytics
Each of these sub sectors has the potential to revolutionize healthcare and improve patient outcomes. Grand Ventures is committed to continuing investing in these sectors, and we believe they have the potential to provide significant benefits to patients, healthcare providers, and investors.
Why do We at Grand Ventures Invest in Healthcare and, More Specifically, Health Tech?
Recession Proof
Healthcare as a sector has always been a recessionary resistant industry. Investors look to the sector as a place to put money in times of uncertainty as there is less volatility and the huge role the government/regulations have in the area. Regardless of macro-economic conditions, consumers and businesses will continue to spend on Healthcare as it is a necessity for everyday life.
Business Model
Grand Ventures focuses on B2B healthcare IT and Digital Health businesses as they tend to have better margins, lower CAC, and are less capital intensive than other healthcare sectors. Our focus remains in the B2B healthtech space as we believe, especially for healthcare, it is easier to sell to large business enterprises than directly to one off customers.
Additionally, B2B healthcare IT/Digital health companies are more than likely providing a service to help improve the business through their technological enhancements to legacy systems. These enhancements will better the operations to run more efficiently and in doing so will increase revenue while reducing costs. This cost cutting measure, especially in an economic downturn, will make business executives more likely to stay on as clients and reduce churn to the company as they are improving the operational aspect.
Lastly, and most important, the B2B healthcare space and enhancements will benefit the end user/human by making their lives better/easier and helping improve the healthcare system. A win-win in an investor and business viewpoint.
Aging baby boomer population and greater technological advancements
The US population has continued to grow and age as the baby boomer generation has grown older. People ages 65 and older represented 16% of the population in the year 2019 but are expected to grow to 21.6% of the population by 2040. As the population continues to age, there will be a greater need and spend in the US healthcare system to care for everyone in a more efficient manner. This growing need will spur greater innovation and growth to better equip the industry to handle the increased demand. Grand Ventures’ view is that the aging population, as well as the post-pandemic world, will act as catalysts to the industry accelerating emerging technologies and opportunities in the healthcare sector.
We are not new to this space. One of our first health tech investments that Grand Ventures made was in TimeDoc Health. TimeDoc was founded in 2016 and is based in Chicago, IL. TimeDoc is a leader in virtual care management for healthcare organizations. Their solution combines a care management SaaS platform with digital nursing services to engage, monitor, and coordinate care for chronically-ill patients.
Grand Ventures decided to invest in the company in 2018 due to several factors, including a unique product that combines tech and services to a relatively new market that is large and growing. When we invested in TimeDoc, there were new CCM codes to support the aging population, which helped establish a new category. This new category paired with their technology established TimeDoc as a leader in the market, a perfect combination that Grand Ventures looks to invest in. On top of being a category king, TimeDoc’s strong team with deep domain expertise, increasing traction with product market fit and fast and capital efficient growth made it an easy decision for Grand Ventures to invest.The compounding complexity of healthcare is a perfect “challenge” for the rapid innovation in AI, ML, advanced robotics, sensors, and wearable technology. To read more about the TimeDoc story and the investment look at the blog here that partner Tim Streit wrote back in March 2022 after TimeDoc’s successful Series B raise.
How Grand Ventures Can Help
Grand Ventures supports the success of its portfolio companies by providing unwavering, hands-on support, as well as access to an unmatched network. Our team has complementary skills and extended operational and investing experience throughout the Health Tech industry. In 2023, we’re excited to continue making $1–2 Million investments in Seed to Series A companies. Are you a startup or an investor or incubator interested in partnering with us? Please do not hesitate to reach out to us at info@grandvcp.com. If you’re another VC that loves healthtech, we’d love to compare notes and collaborate. Please let us know here.
Sources:
https://www.svb.com/trends-insights/reports/healthcare-investments-and-exits/q1-2022-annual
https://www.medicaldevice-network.com/comment/venture-capital-healthtech-funding/
