TVP Newsletter — April 2020

It goes without saying that we are living in unprecedented times and each week brings new challenges and more uncertainty. While we’re focused on the outlook for our economy, most importantly we hope that all of you, your families and your colleagues are staying safe and healthy during this difficult period.

The current fallout could be far more widespread than the economic damage from either of the past two financial crises in the U.S. — the 2001 September 11th terrorist attacks or the 2008 financial crisis. While there are a lot of variables that we still don’t know enough about, it already seems clear that when this present health crisis ends (and it will), the world will not cleanly snap back into place. From remote work to Universal Basic Income, new bells will emerge that cannot be unrung.

One industry we are continuing to watch closely right now is healthcare. Our current healthcare system’s reliance on in-person visits for routine care — particularly when a quarter of the country does not have a primary care provider — has been particularly exposed as systemic risks and telemedicine is quickly emerging as a central player in the response to COVID-19.

Our health system is not designed to triage and treat a threat like COVID-19, and certainly not while maintaining social distancing. A rush to our hospitals and doctors’ offices — to treat both COVID and non-COVID related healthcare needs — will overwhelm a healthcare system that is already exhausting its providers and will increasingly spread the virus among those best suited to treat it: the healthcare professionals themselves.

We’ve long believed that telemedicine is one of the only viable solutions that can help course correct our broken healthcare system and COVID-19 is giving these companies an opportunity to show that to the world.

Startups are offering COVID screenings and helping otherwise healthy people address their routine healthcare concerns and fulfill prescriptions, ICUs are using remote monitoring to scale clinical care, and researchers are collaborating over modern platforms. Many of the biggest federal and state regulatory barriers to telemedicine’s broad adoption are being either removed or suspended and the CDC has called on medical providers to expand their use of telehealth services to help triage the sick from home.

Recent federal legislation requires insurers and government payors to make telemedicine more available, provides additional funding and grants for entities that improve patient access through telehealth, and allocates significant resources for hospitals to increase telemedicine capacity in the coming years. We’re especially proud of the work many of the companies in our portfolio have done so far to respond to the ongoing crisis:

Ro was quick to launch free nationwide COVID-19 screenings. Wheel is training licensed clinicians in telehealth and CDC-guided clinical protocols for COVID-19 to meet a growing demand and working with partners to provide at-home COVID-19 tests to healthcare workers. Boulder Care is providing COVID-19 screenings and OUD treatments to Alaskans via telemedicine, regardless of their ability to pay. Lemonade is donating unclaimed premiums to COVID-19 relief. Alma member Lisa Henshaw went on Cheddar to share tips on how to take care of your mental health while self-isolating.

In Case You Missed It

Boulder Care’s Medical Director Dr. Brandon Lynch came on the Firewall podcast to talk to Bradley about how telehealth is becoming a powerful tool during the pandemic. Brandon describes the precautions clinicians have to take, barriers for patients receiving care, and how vulnerable populations are disproportionately impacted by public health emergencies like COVID-19.

The Forecast

TVP predicts four things to look out for in the world of technology, politics, and regulation

• The anti-tech backlash will start to recede. When times are good, voters have the bandwidth to worry about issues like antitrust and privacy. In times of crisis, people are primarily focused on their own health, safety and paying the rent. Add in the diminished relevance and power of the progressive wing of the Democratic Party now that the primary is over and attention has shifted to the current crisis, and a lot of the energy spent attacking companies like Facebook, Google, Twitter, Apple and Amazon will be redirected elsewhere. There are also opportunities for tech companies to reestablish themselves as the saviors they came in as by providing solutions to our biggest needs right now: connection, telehealth, data, etc.
• Although we are seeing a shift in the power dynamic between founders and investors, we expect that trend to continue in favor of investors. We anticipate that another economic shock will occur in the venture ecosystem, stemming from either the impact of delinquent rent payments (beginning in May and/or June) or the emergence of another COVID-19 epicenter in the United States — likely in the Southeast, where states were slow to impose social distancing guidelines.
• This presents an opportunity for tech startups to do things that governments may not normally allow. Cities and states are facing historic budget deficits and far greater expenses and needs than ever. Anything that can produce new tax revenue (mobile sports betting or cannabis are good examples) will be accepted and adopted far more quickly than usual. Any startups that can meaningfully reduce government costs will gain traction quickly. And generally speaking, the balance between asking for permission and begging for forgiveness will shift back to a more permissive environment for startups.
• While there are a number of different variables that the markets are trying to digest, one thing we do know is that this is the first financial crisis that risks crippling the U.S. healthcare system — and that’s meaningfully different from anything we’ve faced before. That uncertainty, paired with the lag that private market valuations have relative to public markets, leads us to believe that the venture market will likely get worse before it gets better. We’re less optimistic than other investors about the possibility of a V-shaped recovery.

What We’re Talking About Here At Tusk

People stopped paying rent. Big changes are coming. A $200 million slap on the wrist. Heartcore’s consumer trends. Corona might finally kill COBOL. Developer-first fintech will win. Raising capital in a downturn. Is anyone using IBM’s blockchain? Longing for the Great Outdoors? Think Smaller. Finland’s millennial coronavirus prime minister. (Some) anxious people are staying calm during the pandemic.