Profiles of Top Healthcare VCs: Raising the Bar in Digital Health
Over the past few years, the healthcare tech sector has experienced dramatic change. The global pandemic has been a launch pad for innovative solutions and the digitization of the healthcare industry.
From Tonic Health, a real-time mobile patient intake and contactless check-in platform, to Eden Health, which keeps people productive and healthy with personalized, full-spectrum primary care and mental healthcare navigation, innovative healthcare startup technologies are knocking on every door.
Great news if you have a novel service model that will push the boundaries of delivering healthcare. But it won’t be a cakewalk as healthcare startups face unique challenges – from regulations and data protection to trials and testing…which often means getting the idea beyond the concept phase boils down to your ability to secure high-quality funding.
Thankfully healthcare VCs can play a crucial role in funding and supporting startups that are driving change and creating new opportunities. But who’s who, and where do you have the best chances? Fear not, because I will pull back the curtain on the A-list of healthcare VCs leading the way in investment in this article.
Three unique things make this article a thoughtful and informative piece that is unparalleled in its insights:
- 1. Turnkey’s CEO, Sterling Lanier, has rolled up his shelves and went through his memory bank to create the list. Sterling has direct partnerships and understands top venture capital firms and their investing strategies from years of interacting with the VC community. I’ve drawn on his professional background and deep knowledge of the industry.
- 2. TurnKey’s client portfolio includes nine healthcare tech companies that have secured over $511 million in funding, including: Cohere Health, Eden Health, Hanua Health, IScribeHealt, MiResource, Tonic Health, Turquoise Health, Upliv Health, and Welkin Health.
- 3. I’ve completed several weeks of extensive research and analysis of the VCs’ past investments, notable achievements, and current focus areas. Let’s dive in and see who has earned a spot on Sterling’s top healthcare VCs list.
Top 10 Healthcare VCs
Healthcare VCs are crucial in funding and supporting startups that aim to drive change and innovation in the healthcare industry. Here is Sterling’s list of Best 10 healthcare VCs and their selection criteria:
Andreessen Horowitz
Andreessen Horowitz is a venture capital firm that invests in all stages of a company’s growth, from seed stage to IPO. They focus on innovative healthcare startups that have the potential to transform the industry. They emphasize the importance of technology and innovative business models to drive healthcare innovation.
Typical Stages:
- Early-stage to growth-stage companies
- Series A to IPO investments
Program Terms:
- Investment size: 00,000 to 00 million+
- Long-term investment horizon
- Active role in company operation and development
- Access to Andreessen Horowitz’s network of experts, entrepreneurs, and partners
Notable Program Companies:
- Omada Health: A healthcare technology company that provides a digital therapeutics program for the management of chronic diseases, such as diabetes and hypertension
- BioAge Labs: A biotechnology company focused on developing therapies that target aging to improve healthspan and lifespan
- Elation Health: A healthcare technology company that provides electronic health records (EHR) and care coordination services for primary care physicians
General Catalyst
General Catalyst is a venture capital firm that seeks to invest in seed, early-stage, and growth-stage technology startups. They offer mentorship, advice, and resources to help founders scale their companies. The firm was founded in 2000 and is headquartered in Cambridge, Massachusetts, with additional offices in New York City, Palo Alto, and San Francisco.
Typical Stages:
- Seed startups
- Early-stage and growth-stage startups
Program Terms:
General Catalyst invests in companies across several sectors, including consumer and retail, healthcare, energy, and technology. The firm typically invests between million and 0 million in its portfolio companies, taking minority or majority stakes in those companies.
Notable Program Companies:
General Catalyst has invested in several notable companies over the years, including:
- Airbnb
- Stripe
- Gusto
- ClassPass
- Livongo
- Warby Parker
- BigCommerce
Bessemer Ventures
Bessemer Venture Partners is a global venture capital firm that invests in various industries, including healthcare. They invest in startups that can deliver innovative solutions to healthcare challenges, such as those related to diagnostics, therapeutics, and medical devices. They emphasize the importance of the team and seek out companies with an experienced and dedicated team.
Typical Stages:
- Early-stage to growth-stage investments
- Series A to IPO investments
Program Terms:
- Investment size: Up to $25 million, with potential for follow-on funding
- Flexible investment structures
- Active role in company operation and development
- Access to Bessemer’s network of experts, entrepreneurs, and investors
Notable Program Companies:
- Capsule: A digital pharmacy that delivers medication to patients’ doors
- Qventus: A healthcare operations platform that uses AI to improve patient flow and reduce costs
- Bright Health: A health insurance company that provides both individual and family plans with personalized healthcare services
Khosla Ventures
Khosla Ventures is a venture capital firm that invests in early-stage and growth-stage companies tackling big healthcare challenges. They look for startups developing innovative technologies and business models to improve the quality of care, increase access, and reduce costs.
Typical Stages:
- Early-stage to growth-stage companies
- Seed to Series C investments
Program Terms:
- Investment size: Up to 5 million
- Flexible investment structures
- Active role in company development and operations
- Access to Khosla Ventures’ network of experts, entrepreneurs, and investors
Notable Program Companies:
- Ginger: A digital mental health service that provides on-demand access to behavioral health coaching and therapy
- Oscar Health: A health insurance company that provides personalized and technology-driven solutions for individuals and families
- HeartFlow: A medical technology company that leverages AI and 3D imaging for improved coronary artery disease diagnosis
Venrock
Ventrock is a venture capital firm that invests in early-stage and growth-stage companies across a range of industries, including healthcare. They look for startups that are developing innovative solutions to healthcare challenges, such as those related to therapeutics, medical devices, and digital health. They emphasize the team’s importance, the business model’s strength, and the potential for significant market impact.
Typical Stages:
- Early-stage to growth-stage investments
- Seed to Series C investments
Program Terms:
- Investment size: Up to $25 million
- Flexible investment structures
- Active role in company development and operations
- Access to Venrock’s network of experts, entrepreneurs, and investors
Notable Program Companies:
- Illumina: A biotechnology company that provides tools and services for genetic sequencing and analysis
- Castlight Health: A healthcare technology company that provides a platform for health benefits and navigation
- 10x Genomics: A biotechnology company that develops and markets genomic analysis products
Define Ventures
Define Ventures is a venture capital firm that invests in early-stage healthcare companies focusing on digital health and medical technologies. The firm was founded in 2018 and is headquartered in San Francisco, California. Define Ventures works closely with its portfolio companies to navigate the complexities of the healthcare industry and provide guidance on growing and scaling their businesses. They have a deep network of healthcare industry experts and investors to help their portfolio companies succeed.
Typical Stages:
- Early-stage startups
- Pre-revenue or limited revenue
Program Terms:
Define Ventures invests in healthcare companies across multiple sub-sectors, including digital health, genomics, and medical devices. The firm typically invests between $500,000 and $3 million in its portfolio companies and actively supports those companies as they grow.
Notable Program Companies:
- Suki.AI
- Kaia Health
- Evidation Health
- Sano Intelligence
- Forest Devices
- Onc.AI
Providence Ventures
Providence Ventures leverages the deep healthcare industry expertise of its parent company, Providence St. Joseph Health, to support its portfolio companies in scaling their businesses and achieving their goals. The firm also fosters collaboration between its portfolio companies and Providence St. Joseph Health’s clinical teams to develop and implement innovations that improve patient outcomes.
Typical Stages:
- Primarily invests in early to growth-stage companies.
- The firm looks for companies that align with its mission of improving healthcare delivery, with a focus on digital innovation, data analytics, and population health management.
Program Terms:
- Providence Ventures invests in healthcare companies across multiple sectors, including information technology, medical devices, and healthcare services.
- The firm typically invests between $5 million and $30 million in its portfolio companies and takes an active role in supporting those companies, providing guidance on strategy and operations.
Notable Program Companies:
- Wildflower Health
- Xealth
- Trilliant Health
- Bright.md
- Twistle
- Syapse
- Omada Health
7wire Ventures
7wire Ventures is a venture capital firm focused on investing in innovative healthcare solutions. They specialize in early-stage investments and have a selection process based on three main criteria: the size and potential of the market, the strength of the team, and the ability to generate revenue. They look for startups that have the potential to disrupt the industry and improve care delivery.
Typical Stages:
- Early-stage companies
- Seed stage to Series A
Program Terms:
- Investment size: million to $5 million
- 7- to 10-year investment horizon
- Active role in company development and operations
- Access to 7wire’s deep industry expertise and network
Notable Program Companies:
- Aledade: A value-based healthcare network that helps primary care physicians deliver high-quality, cost-effective care to patients
- Akili Interactive: A digital therapeutics company that develops video games to treat cognitive disorders, such as ADHD and autism
- Apervita: A cloud-based platform for value-based healthcare that connects payers, providers, and patients to improve outcomes and reduce costs
Maverick Ventures
Maverick Ventures is known for its focus on innovation and disruption, leading the way in emerging technologies and investing in unicorns that are transforming their respective industries. The firm has a deep network of industry experts, entrepreneurs, and investors that it leverages to support its portfolio companies in building successful businesses.
Typical Stages:
- Maverick Ventures invests primarily in early-stage companies with innovative technologies and visionary founders.
- The firm generally focuses on investing in startups in their early stages of development, from the seed stage to Series A.
Program Terms:
- Maverick Ventures invests in companies across various sectors, including technology, healthcare, and consumer products.
- The firm typically invests between $500,000 and $5 million in its portfolio companies and takes an active role in supporting those companies, providing guidance on strategy, recruiting, and operations.
Notable Program Companies:
- Alto Pharmacy
- Chime
- Cruise
- Flexport
- Robinhood
- ZocDoc
- Xnor.ai
GV (Google Ventures)
GV (formerly known as Google Ventures) is a venture capital firm that invests in a range of industries, including healthcare. They are interested in startups that are using technology to transform healthcare delivery, improve patient outcomes, and reduce costs. They invest in early-stage and growth-stage companies.
Typical Stages:
- Seed and early-stage companies
- Growth-stage investments
Program Terms:
- Investment size: Up to $500 million in total funding
- Long-term investment horizon
- Active role in company operation and development
- Access to GV’s extensive network and resources
Notable Program Companies:
- 23andMe: A biotechnology company that provides genetic testing and analysis services to consumers
- Doctor on Demand: A telemedicine company that provides virtual consultation with doctors and mental health professionals
- Oscar Health: A health insurance company that provides a range of insurance plans for individuals and businesses
Take a Deeper Dive Into TurnKey's Offshore Software Development Services and Discover How We Can Help Your Health Startup Grow.
After seeing the list, your brain might be screaming, “Show me the money!” but hold on to your horses. Now that you know “the who,” let’s talk about “the how,” starting with VC selection criteria.
Healthcare VCs Selection Criteria for Startups
Healthcare VCs have a rigorous process for choosing the startups they fund.
They are interested in three kinds of innovations that:
- Change the way consumers buy and use healthcare
- Uses technology for new products, treatments or improved care
- Generates new business models, particularly the integration of healthcare activities and organizations
When considering potential investments, they analyze many metrics that take into account the market demand, competition, and the potential for growth and success, including:
- Size and addressable market: Healthcare VCs will want to see a significant, growing, and sustainable market opportunity for the startup's product or service.
- Management team: The VCs will evaluate the experience and track record of the startup's leadership team to determine if it can execute its business plan.
- Product-market fit: Healthcare VCs will assess how well the startup's product or service meets a real need in the market and if there is a demand for it.
- Innovation and differentiation: The VCs want to see that the company is solving a unique problem in a novel way that offers advantages over competitors' solutions.
- Revenue and profitability: The healthcare VCs will want to see clear potential for the startup to generate revenue and achieve profitability in the long term.
Expert Tip: If this list is similar to the one you already Googled, check out this fantastic panel discussion from the Health and Bio Summit I discovered while researching. It’s well worth the watch! Then rejoin me for the five critical things to prepare BEFORE approaching VCs.
By considering these criteria, healthcare startups can evaluate which healthcare VCs best suit their needs and increase their chances of securing funding and support.
Since you have read this far, I thought I would throw in this checklist to get you started in evaluating healthcare VCs as potential investors:
- Size and addressable market: Does the VC focus on healthcare investments with large, growing, and sustainable market opportunities?
- Experience and expertise: Does the VC have experience in healthcare investing and deep industry expertise to provide value to the startup beyond just funding?
- Investment stage: Does the VC invest in early-stage, growth-stage, or both types of companies?
- Product-market fit: How does the VC evaluate startups with innovative solutions to ensure they meet a real need in the market?
- Innovation and differentiation: Does this VC look for startups that solve unique problems in novel ways that offer an advantage over competitors' solutions?
- Revenue and profitability potential: Will the VC want to see clear potential for the startup to generate revenue and achieve long-term profitability?
- Management team: How does the VC evaluate the startup's leadership team to determine if it has the necessary experience, industry knowledge, and track record to execute its business plan?
- Duration of the investment: Is the VC willing to invest a sufficient amount of time and resources into the startup over the long term to help ensure its success?
- Values and mission alignment: Does the VC align with the startup's values and mission, and do they share a vision for the future of healthcare?
Knowing where to apply is only half the battle. As the competition is fierce, preparation is the key to securing funding. You definitely don’t want to show up to this gunfight with a knife. Here are the five critical things healthcare startups need to prepare before applying for funding resources:
5 Critical Things Startups Need to Prepare BEFORE Approaching VCs
- Build a strong team: The VC will look at the startup's team to determine if they have the necessary experience, skills, and expertise to execute the business plan. Ensure the team is strong and can overcome any challenges in the industry. At TurnKey, we understand the essential role that hiring the right team plays in the success of a startup. As the leading offshoring software development company, we know the importance of taking the time and care necessary to build a team that fits each company’s unique culture and requirements. Our years of experience working with startups have given us an insider's understanding of the nuances and challenges involved in hiring top talent. We know how to source the best candidates from a variety of channels, screen and assess them, and match them with the right startup. Our expertise allows us to work quickly and efficiently, ensuring that our clients have access to the best talent on the market.
- Research VC firms: Research potential VC firms that are active in the healthcare industry and align with the startup's values, mission, and goals. Look at the portfolio of startups they have already invested in and determine if a good fit exists between the startup and the VC.
- Create a strong pitch: Develop a pitch that effectively communicates the startup's value proposition, target market, differentiation, and long-term goals. The pitch should be concise, clear, and compelling, highlighting the team's experience and progress to date.
- Prepare financials: Prepare financial projections and a detailed budget that will demonstrate the startup's ability to generate revenue and achieve profitability in the long term. This will be an essential part of the pitch that the VC will consider before deciding to invest.
- Develop a proof of concept: A proof of concept will demonstrate that the startup's idea is practical and that there is demand for the product or service. Developing a prototype or testing the market can increase the company's chances of securing funding.
By now, you have likely spotted the reoccurring theme (ok, I’ve been relentlessly hammering you over the head) that a strong team is the key to securing funding successfully. This is even more important in 2023, as VC funding for early-stage startups has decreased, and investors are now putting their money into more established, working businesses.
However, with the ongoing short supply of tech talent, the harsh reality is that many tech startups’ dreams have died because VCs didn’t think their tech team had what it takes. So here are some ways to deal with the tech talent hurdle to keep your dreams off life support:
How VCs Help Startups Choose the Right Development Team
A professional development team is critical for the success of any startup, particularly those operating in the tech industry. These teams are responsible for developing and managing the company’s technological infrastructure, including digital tools, software, and other technical solutions. A strong development team can create cutting-edge products or software that sets your business apart from its competitors. At the same time, the wrong development partner could lead to mediocre products and missed milestones.
This is where VC firms come in. In addition to funding, many venture capital firms offer mentorship, strategic guidance and access to industry connections that can provide valuable support to young startups. Qualified VC firms have exposure to various software development partners like TurnKey across a range of industries and verticals. With their deep knowledge of both the software development process and the tech industry, VCs can serve as trusted advisors to startups looking for the perfect development partner.
At TurnKey, we partner with top healthcare VCs to help startups hire software developers offshore and find the perfect team for their needs. Since we have a robust screening process for every candidate, we hire only the top 3% of talent in Eastern Europe and Latin America.
Why Offshoring is a Great Option for Health Startups
Offshore software development has become an increasingly popular option for startups in the healthcare industry. By transferring work to a team outside of their home country, health startups can benefit from reduced labor costs and access to a broader pool of talent. Offshore software development teams can be beneficial for health startups in several ways:
Cost savings
Offshoring can be a cost-effective way for health startups to access skilled resources. By outsourcing work to a team in a country with a lower cost of living, startups can save money on labor and infrastructure costs.
Access to talent
Offshoring also gives health startups access to a larger pool of talent. By tapping into a global talent pool, startups can find skilled professionals with diverse backgrounds and expertise to support their development and operations.
Increased productivity and efficiency
Offshoring can help health startups improve productivity and efficiency. By delegating tasks to a dedicated offshore team, startups can free up their local team to focus on core business activities and accelerate their growth plans.
Helping Health Startups Find the Perfect Offshore Team
TurnKey is a leading offshore software development company specializing in helping startups find the perfect dedicated development team to support their business needs. Here are some of the ways that TurnKey can help health startups:
Increased funding opportunities
As previously mentioned, a strong team is essential to securing funding. So once TurnKey starts working with a startup and establishes their dedicated development team, they can confidently tick off this box for VCs. This has been a game changer for many clients, including MiResource, which provides search directories that help people find the right mental health care.
Being able to hire high quality engineering talent quickly is a game changer for any early stage startup. TurnKey has made that possible for us and we are proud that it is one of our company’s strengths.
Access to a large pool of pre-vetted talent
TurnKey maintains an extensive network of experienced professionals from various countries with different skill sets. Startups can select from a pre-vetted pool of candidates to find the perfect team that best suits their needs.
Streamlined recruitment process
TurnKey’s custom recruiting is optimized to ensure that startups can quickly find and onboard their offshore team saving $63K on retention per year. From sourcing talent to conducting interviews and managing payroll and HR support, TurnKey streamlines the entire recruitment process.
Seamless integration
TurnKey works closely with startups to ensure that the offshore team is seamlessly integrated into their existing operations. The team works hard to understand startups’ unique needs and requirements to provide tailored solutions.
Offshoring can be an excellent option for health startups looking to reduce costs, access a wider talent pool and increase efficiency. By partnering with TurnKey, startups can find the perfect offshore team and benefit from skilled professionals without the burden of high labor and infrastructure costs.
Have an Idea for a Great Digital Healthcare Startup and Looking for a Perfect Team? TurnKey Has What You Need!
The investment size varies depending on the digital health VC firm and the startup stage. However, typically these firms invest anywhere from 00,000 to 00 million and more.
These top digital health VCs offer more than just financial support. They provide access to their network of experts and resources to help these startups improve their operations, development, and bottom line. They may also provide guidance on strategy and business planning.
Several notable healthcare startups have received investment and support from these top digital health VCs, including:
- Omada Health, which received support from Andreessen Horowitz and provides a digital therapeutics program to manage chronic diseases
- Capsule, which received support from Bessemer Venture Partners and is a digital pharmacy that delivers medication to patients' doors
- 23andMe, which received support from New Enterprise Associates (NEA), is a biotechnology and personalized genomics company providing consumer DNA testing.
These are just a few examples of the many successful healthcare startups that have been able to thrive with the support of these top digital health VCs.
TurnKey Staffing provides information for general guidance only and does not offer legal, tax, or accounting advice. We encourage you to consult with professional advisors before making any decision or taking any action that may affect your business or legal rights.
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