Backing the Future of Healthcare Information Technology
We are pleased to announce the launch of Health Catalyst Capital Fund I, a $100+ million venture capital fund through which we seek investments in high-growth healthcare information technology and tech-enabled service companies that improve clinical value and reduce costs.
HCC was founded by experienced healthcare operators and investors with first-hand conviction that healthcare offers significant opportunities for both robust financial gain and meaningful social impact through investment in companies focused on improving patient access and outcomes, and lowering costs. Over the course of the next decade, digital health products have the opportunity to make a meaningful dent in the over $1.3 trillion in annual excess spending in the healthcare markets (1). With legacy and largely outdated IT still powering most healthcare systems and products today, employers, consumers, insurers and governments are seeking much more effective solutions.
In our opinion, the way each of us interacts with the healthcare system will be drastically different in the not so distant future, based on exciting new technologies we see. From finding the right doctor, to receiving a referral to the appropriate specialist, managing chronic conditions, and determining the best drug or therapy for you, new software and services are already starting to disrupt traditional workflows and significantly improve clinical value. We believe the time is right for companies to capitalize on opportunities to leverage technology to transform healthcare processes. Just as the development of the web led to the creation of generational companies such as Google, Amazon, and Facebook, we believe that the coming of age of digital health will have a similar impact in driving the creation of powerful healthcare IT enterprises in future years.
While the opportunities and problems in healthcare are widespread and well known, the degree of difficulty to achieve business success is less widely understood. Entrepreneurs we work with are routinely shocked by sales cycles with payers and providers that can take over 18 months, and by customers who choose to partner with less effective technologies for obscure reasons. We have faced similar challenges before in this industry, and have come to believe there is a fundamental difference in the way scalable healthcare technology companies are built. We structured our fund to meet the specific needs of these healthcare startups.
Our team has multiple decades of experience in the healthcare industry, and has written software code, built and sold startups, and taken companies public. HCC also has an established bench of advisors with deep expertise and wisdom that comes from their collective 200-plus years of experience, including CEOs, CFO, and other C-suite level executives from industry-leading and entrepreneurial healthcare companies. We leverage this collective network to help our portfolio companies reduce customer sales cycles, accelerate revenue growth, recruit key personnel, and benefit from strategic insights.
We are proud to have started to deploy our strategy and already be invested in three companies in this fund: PierianDx, ReferWell, and BetterDoctor. Our pipeline of potential investments includes scores of others we are monitoring to determine if and when they meet our stringent criteria. Healthcare is only at the beginning of what we believe will be one of the most exciting and transformative periods in history across any industry. We would like to thank our Limited Partners for their trust. We could not be more enthusiastic about playing a role in financing the creation of this new future in healthcare.
(1) HCC estimate based on the product of annual US GDP (Reference Year 2015) and the difference between health spend in the US at 18% of GDP and the second highest percentage spend in the OECD at 11% of GDP.