(This story is from our new Health Tech newsletter. If you’d like to sign up, just click here.)
Create Health Ventures said Monday that it closed its first fund of $21 million to invest in health tech sold to health insurers and pharmaceutical companies. The digital health venture firm is looking to back startups led by founders with a healthcare background.
Emma CartmellHealthcare is very hard to break into, and it’s tough to teach founders who don’t come from healthcare backgrounds how complicated the field is when regulations change all the time, Emma Cartmell, co-founder and managing partner at Create Health, told Endpoints News in an interview. Meanwhile, many founders with healthcare backgrounds have had to deal with the problems that they want to solve firsthand, giving them a deeper understanding of the challenges.
“Healthcare isn’t suffering because we have a technical problem. Healthcare is not progressing as fast as it should because we have these very intricate workflow problems that still need to be solved. I don’t feel as though a brilliant technologist can come in and help fix that,” Cartmell said.
Plus, some VC firms already abide by an unspoken rule that their founders must come from healthcare, Cartmell said.
“You can see it in their picks completely,” she said. “We just decided after all these years, we should just say it out loud.”
Cartmell, a venture advisory partner to Morgan Stanley and a former executive at life sciences and health IT companies, launched the fund with co-founder Amit Aysola, a healthcare investor, after the pair met at a health tech conference and realized they had the same investment ideas. The pair is also looking for startups in non-coastal areas like the Midwest and the South, where there is less venture money.
Health insurers have seen record profits since the pandemic, Cartmell said. They’re looking for tech that helps patients more easily figure out where they’re supposed to get care; getting the wrong type of care in the wrong place could cost more for both patients and the insurance company, according to her chats with seven of the biggest public insurers, she said. Insurers are also looking for tech that can track patients’ health outcomes after an appointment, and track healthcare data in real time so they can remind people to get a vaccine, for example.
On the pharmaceutical side, Create Health wants to invest in tech that can recruit and retain patients in clinical trials, especially since there has been an increase in later-stage clinical trials, she said.
The firm has already invested in four startups that sell to payers — care coordination platform Watershed, caregiving tools startup Carallel, insurance enrollment aid Advocatia Solutions, Medicaid primary care startup Pair Team — and one that sells to pharmaceutical companies: clinical trial software startup nmible.