Cris De Luca

The (Healthcare) Ground Beneath Our Feet… This year it is likely that over $10 billion will be invested in the digital health sector – a robust amount, no doubt, but inconsequential when compared to the amount of capital tied up in healthcare real estate assets, which is estimated to be $1.2 trillion by Jones Lang Lasalle. Of that amount, approximately $790 billion is in the hospital sector while the remaining $490 billion is in medical office assets. It is estimated that there are 48.6k facilities with 3.4 billion square feet of healthcare real estate, 42% of which are owned by REITs and another 33% held by other private investment vehicles. Much of the digital health investment is meant to make the physical healthcare infrastructure more productive: greater operating efficiencies, greater patient throughput, more relevant personalized care models with better outcomes. As the healthcare system is being pushed to be more distributed to lower cost sites of care, accelerated now by the rapid proliferation of automation and AI capabilities, the potential impact on healthcare infrastructure assets will be profound. Thoughts on what that might look like... https://lnkd.in/eTfAdUbS #digitalhealth Flare Capital Partners

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Anne Wojcicki, CEO of 23andMe, has announced plans to take the genetic testing company private. This strategic move aims to provide more flexibility in navigating regulatory challenges and to accelerate growth opportunities. The decision follows a trend of health tech companies seeking private ownership to focus on long-term objectives. Wojcicki highlighted the importance of this shift to maintain the company's commitment to innovation and customer-centric services. Taking 23andMe private reflects a bold step towards enhancing its position in the rapidly evolving genomics industry. Read more about this exciting development here: https://lnkd.in/gdrC3a64 #genomics #IPO #privatisation #23andMe

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Incredibly excited to share our updated Healthcare AI thesis. This is not a market map – in 4,000 words, we dive deeply into the research, products, business models, and market entry points that are reimagining healthcare with AI. More specifically, we cover: • Translating AI research into real-world products • Mapping modalities (software, copilots, agents, services, diagnostics, therapeutics) to problems in healthcare • Designing AI business models that unlock billion-dollar markets • Closing current gaps in healthcare AI infrastructure • Distinguishing AI platforms from point solutions Let us know what you think ⤵️

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Hot take on a lot of early-stage digital health companies out there: You're not a tech company. Most tech-enabled care companies I've seen over the past two years are only tech-enabled in the sense that they use telehealth as their delivery mechanism for care. There are exceptions to this, of course - companies who build computer vision and applied AI tools to better the doctor-patient experience, companies who build tooling around risk scoring and stratification to enable more personalized medicine, companies who build truly novel intakes to better route patients to the appropriate care, etc. These companies have real technology chops and, if they sell it right to the market, can get credit for this from investors. But if you're truly a telehealth provider, you need to realize now that the goal post has shifted dramatically from 2021 and you're going to be valued at maturity at something like 3x EBITDA. That's profit. Not revenue. Throw a revenue multiple out the window. That's not the world we live in if you're a virtual doctor's office. Think of how that impacts venture math. If you're raising a seed round at $15M post-money (or $12M pre-money), it means you'll have to generate something like $150-200M in annual EBITDA to be a fund returner for your seed investors. Maybe even more with dilution, since telehealth businesses are not traditionally capital efficient and will likely need to raise material additional capital to reach that scale. You need to be ridiculously profitable (probably on $800M-$1B in annual revenue since you're likely going to be a 40% gross margin business). Here's the good news: you can set yourself up well (and probably be a contrarian founder relative to your peers), by talking about EBITDA growth and how you can grow into a fund-returning outcome based on realistic mature market comps. This will stand out for the investors you're pitching, even at the early stage. This is how you can beat the malaise of the tech-enabled care market. Focus on the right metrics and the right type of growth. You don't have to have all the answers (no founder does), but you need to make sure the ship is headed in the right direction. A focus on profitability for "tech-enabled care" (*ahem* telehealth) businesses is a good first step.

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Some VC investors believe that brick and mortar - referring to a physical presence of some kind - should be avoided at all costs. Yet, the track record of clinic and hybrid care businesses in health care indicates otherwise. ==> One Medical (sold for $3.9 billion to Amazon), Oak Street (bought by CVS for $10.6 billion), Lifestance (IPO at $7.5 billion market cap), and PE-backed Premise Health (acquired by OMERS Private Equity for $1.1 billion) If a clinic is indicated as the optimal way to deliver care for that patient population, there are creative ways to build and operate them. Full article below with advice and strategies on how to build and operate hybrid clinics from my teammate Anarghya Vardhana from Maveron, Amir Dan Rubin from OneMedical Group, Steven Eidelman from Modern Animal and more!

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In our latest publication in Health, Management, Policy, and Innovation – "Why AI Is Good for Our Health but May Hurt Our Wallets," we examine how current regulatory frameworks, reimbursement structures, and business models for AI in healthcare are decoupled, creating an environment in which AI may significantly increase costs without necessarily improving outcomes. We recommend three interconnected reforms to unlock the full potential of healthcare AI: (1) Rigorous pre- and post-deployment evaluation to verify proposed clinical value, (2) Development of assessment standards through shared guidelines, and (3) Strategic alignment of AI deployment modalities with sustainable business models – "modality-business model-market" fit 👉 https://lnkd.in/d8NiczyM Sneha Shah Jain, MD, MBA, Clinical Professor and Kevin Schulman Professor of Medicine at Stanford University, Nigam Shah, Chief Data Scientist, Michael Pfeffer, Chief Information and Digital Officer, and Linda Hoff Chief Financial Officer at Stanford Health Care

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Excited to announce Frist Cressey Ventures' investment in Qualified Health and privileged to partner w/ SignalFire, Healthier Capital, Town Hall Ventures and others!   Healthcare costs are increasing at a faster rate than ever before, with the US spending nearly twice as other wealthy countries and still ranking bottom in outcomes. It's a story you've all heard - - US healthcare is known for astronomical inefficiencies, waste, workforce supply constraints, fragmented access, appalling patient experiences, and driving patients and businesses into debt.   Yes these problems present opportunities. But opportunities are limited to the system's appetite for change, desire and incentive to try something new and the innovation available. At FCV we believe we've hit the trifecta with Generative AI. Generative AI has given us truly transformational tools in the toolkit and the healthcare ecosystem is demanding to absorb its benefits. This perfect collision of supply and demand means healthcare is poised for big change.   Generative AI is everywhere, it's buzzy, it dangles hope and opportunity. But many things need to be true for the Gen AI transformation in healthcare to take hold, such as but not limited to:   💡 Patient lives and data need to remain safe: We believe in a highly regulated and human life-touching sector such as healthcare we must ensure Gen AI can drive to unrivalled savings and improvements in the quality of care WHILE not putting patient lives or data at risk.   💡 Systems need to own their utilization of Gen AI: We believe systems will use some hybrid of external partners and homegrown solutions but importantly will want full control of data provisioning and utilization as well as the ability to solve an unlimited number of nuanced issues and not cookie cutter algorithms.   💡 Costs need to be looked at on an enterprise level: We believe the speed of innovation in Gen AI means costs will continue decreasing dramatically but at an enterprise level this will still not be a small detail. Systems will want the ability to understand costs and delegate as needed for the outcomes desired at the organizational level.   Enter Qualified.   We knew when we met Justin Norden, MD, MBA, MPhil and team we were standing in front of changemakers. These individuals have lived and breathed the true application and implementation of Generative AI far before we were asking ChatGPT to write our emails. In fact, if you’ve ever driven in a Waymo you’ve benefited from past products this team has built.   Qualified Health is on a mission to enforce governance in Gen AI, allow systems to rapidly build for their needs, monitor and make decisions for all GenAI (homegrown and external) and accelerate the value the sector can glean from these new technologies.   Huge shout out to William T., Tommaso Auerbach and Jamie Kuntz for their hard work!

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Hot off the pre-print server – an important publication authored by the Atropos Health team exploring the performance of LLMs in answering real-world clinical questions. LLMs excel at summarizing and contextualizing existing literature, but cannot generate de novo medical evidence today. The results of the study highlight performance gains attributable to injecting novel, relevant, and up-to-date medical evidence into LLM-powered clinical decision support systems. Brigham Hyde Nigam Shah Saurabh Gombar Read the study here: https://lnkd.in/ecuU25Pq

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According to the latest report from Rock Health, digital health funding in Q1 2024 totaled $2.7B across 133 deals, with an average deal size of $20.6M. It doesn’t break out device-related investments, but most medtech founders I meet these days are being forced to chase tiny rounds made up of endless little checks, consuming valuable energy and slowing their progress. The benign neglect of this next generation of diagnostic and therapeutic devices is counterproductive and surprising. Given the crowded virtual care market, for example, I’d expect more such companies would be exploring medtech partnerships, investments or acquisitions that'd enable them to back integrate into delivering sharper, and more differentiated, care and treatment. This is exactly what Maverix Medical is doing from the other direction: Reshaping the entire spectrum of lung cancer care by integrating more advanced + effective approaches to screening and diagnosis, treatment and therapeutics, and even palliative care…And putting it all to work through an innovative provider network. One notable investor exception is Y Combinator partner Surbhi Sarna who’s been backing great teams like Selera Medical (YC W24) doing foundational work on ambitious medical devices. Without more support from investors like her, we’re going to increasingly find ourselves stuck with the incremental portfolio improvements from the incumbents, and that’s just not nearly enough.

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I’m optimistic about the potential of generative AI to reduce provider burnout and improve provider-patient interactions. However, that optimism is tempered by the data that indicates the technology is not quite ready yet. Bright Ventures is interested in digital health founders who understand the realities of provider-patient interactions, and the role technology can play in strengthening clinical outcomes. Which founders and teams are getting this right? Tag them in the comments below.

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#Longevity Tech is on the rise ✌️ -Endeavor BioMedicines raised $135M at a $795M valuation in April 2024. -Humanaut Health secured an $8.7M Seed round, valued at $52M in May. -Superpower raised $4M, reaching a $24M valuation in May as well. These are just 3 of the 90+ #longevity startups highlighted in Dealroom.co's latest report (Link in the comments). In this newsletter, I dive into the Longevity Technology Market and the emerging trends shaping the future of health! 👉 https://lnkd.in/e3EZrAPH #Longevity #HealthTech #StartupFunding #Innovation

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Forget about flashy revenue projections or $100B market size, it’s all about the go to market strategy. Early stage healthcare investors need to understand how a company navigates the 0 to 1 phase of the commercialization journey. Otherwise, 0% of a $100B market...is still worth zero dollars. Here are some questions we at The Healthcare Syndicate like to ask founders: (h/t to Omar M. Khateeb for the excellent video on early market adopters) 1️⃣ Capturing 1% of the market? Why not 15%? Capturing 15% of the market, not just 1%, is critical for crossing the chasm from early adopters to the mainstream. Investors should evaluate the founder's ambition to capture a significant part of the market, and ask how they plan to get from early adopters --> mass market. 2️⃣ How will you [the founder] lead sales? In the early stages, emotional appeal and vision drive sales to market innovators. A corporate sales hire might scale later, but a founder’s passion resonates best with first movers. 3️⃣ Are you leveraging your early adopters properly? Innovators are essential for early traction, but they’re not the best advocates for the mainstream market. Startups must nurture innovators into credible key opinion leaders (KOLs) to gain mass-market acceptance. For more insights, check out the full article here: https://lnkd.in/gyfzfxjv #healthcareinnovation #venturecapital #angelinvesting

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I’ve had the chance to go deep with a number of digital health alum, healthcare mentors and #corporate innovation partners over the past few days. A few themes to share:   1. Digital will change healthcare. Period. How is hard. But it will happen and the best are continuing to push ahead. 2. What keeps companies in the S&P 500 for 50 years or more? Partnerships and innovation. This is why large systems must practice the hard art of both partnership and partnership towards innovation. For startups, partnership reps may be more important than brand. 3. There is a difference between needs and behaviors that startups need to understand, especially in Healthcare where incentives, process, practices are complex. Finding who pays early is not only essential but existential. 4. Don’t optimize for valuation, optimize for value. Over the long-run, this is what will matter. In Healthcare, today value will have to tie to ROI. Pharma, providers, payors are under pressure. Your solution needs to be must-have and drive ROI.   MC Healthcare was launched over 5 years ago to accelerate industry/startup intelligence and collaboration and commercial partnerships for digital health startups and industry (payors, providers, pharma). Calling startups to apply. Want to be a partner to find and work with the best? DM me directly.

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Presenting at the Senate as part of the Coalition for Health AI (CHAI) "Day on the Hill" wasn't on my 2024 bingo card, but I'm feeling energized by the bipartisan discussions on healthcare AI. The numbers tell a compelling story: while nearly 2,000 healthcare AI startups have received funding over the last two decades, only 1 in 20 provider-facing companies reach late-stage maturity. Beyond natural market dynamics, two critical barriers are holding back AI's full potential in healthcare: unsustainable payment models and inadequate evaluation infrastructure – only 5% of research studies on LLMs in medicine utilize real patient care data, and studies advancing our understanding of performance beyond medical licensing exam benchmarks remain anemic at best. At CHAI, we're advocating for essential foundations: • Rigorous technical model performance evaluations • Comprehensive bias assessments across diverse patient populations • Thorough pre-deployment simulations and prospective studies • Robust ongoing local monitoring The path forward demands strong reporting infrastructure, advanced healthcare AI benchmarks, and meaningful public-private partnerships to drive real-world AI deployment in healthcare. Stay tuned for CHAI's upcoming initiatives in 2025 as we expand our engagements with the startup and investment ecosystem. https://lnkd.in/enw-GQcA

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💡 When we started Caresyntax over a decade ago, AI wasn’t the hot topic it is today. But even back then, we believed in its transformative potential. AI can be just a buzzword, or a powerful tool to drive measurable change in patient care. Fast forward to now, AI-focused healthcare companies now command 2-5x higher valuations than their non-AI counterparts, with some reaching EV/ARR multiples of 30-50x. These numbers show that beyond the hype, there are signals of the industry’s interest in embracing AI-driven solutions that deliver results. These innovations matter because healthcare’s $1 trillion administrative burden and growing labor shortages demand smarter, scalable solutions. Early benchmarks show that these AI-driven models are scaling 2-3x faster than traditional SaaS, with sales cycles shrinking to less than 6 months, compared to the typical 12-18 months in healthcare. But let’s not forget: AI is only as valuable as the outcomes it delivers. Whether it’s automating medical scribing, enabling back-office efficiency, or delivering real-time surgical insights, the goal remains the same: empowering healthcare teams and enhancing patient care. After all, it’s not about having AI in your name; it’s about the results you deliver. 🌐 The digital age is here - let’s make it count! #AIinHealthcare #HealthcareInnovation #FutureOfHealth #DataDrivenCare

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🌍 October Spotlight: Major HealthTech & Biotech Investments Across Regions In October, we’ve seen significant investments in HealthTech and Biotech globally, with innovative startups securing funding to advance critical research and therapies. Here’s a look at some standout deals across Europe, the Middle East, and the United States: Europe 1. AviadoBio (UK) 💰 Investment: $30M upfront, potential for up to $2.18B in milestone payments 🤝 Lead Investor: Astellas (Japan) 📈 Description: AviadoBio is pioneering gene therapies for neurodegenerative disorders, including treatments for ALS. (Source: Fierce Biotech) 2. CSPC Pharmaceutical Group & AstraZeneca (UK) 💰 Investment: $100M upfront, with potential for up to $1.92B 📈 Description: This partnership aims to develop a new preclinical lipid-lowering therapy to enhance cardiovascular health. (Source: Labiotech) Middle East Investment data in HealthTech and Biotech from the Middle East remains limited, but the region is increasingly focusing on AI-driven diagnostics and medical technology, supported by public and private funding. We can expect future updates here as investments grow. United States 1. Aliada Therapeutics 💰 Investment: $1.4B acquisition by AbbVie (Source: Labiotech) 📈 Description: Aliada’s focus is on antibodies targeting Alzheimer’s disease, promising new treatments for a complex pathology. 2. EvolveImmune Therapeutics 💰 Investment: $65M upfront, with potential for up to $1.4B in performance payments 🤝 Lead Investor: AbbVie 📈 Description: This collaboration focuses on innovative cancer therapies, with a particular emphasis on immuno-oncology. (Source: Fierce Biotech) 3. Dewpoint Therapeutics & Bayer (Germany) 💰 Investment: $424M towards developing a cardiovascular disease program 📈 Description: This partnership aims to offer regenerative solutions for cardiac tissue repair. (Source: Fierce Biotech) These strategic investments underscore a continued interest in cutting-edge innovation in health, oncology, and beyond. The future of global health technology is promising, driven by cross-border partnerships and groundbreaking R&D.

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Someone broke down the estimated costs of a $15 Sweetgreen salad. We need these cost graphics for digital health to help future founders. Especially for tech enabled cos, the greatest cost is labor. Much of the "value created" is in curation and matching, which means the gross margins are reliant on labor arbitrage. Pay someone $X, but get paid $X+Y% per visit. The challenge with healthcare is that you often have to pick one of two business models: 1. specialized, low volume, high cost, low gross margin % 2. generalized, high volume, low cost, high gross margin % I'd argue founders should focus on gross dollars over the lifetime of the customer (like Jeff Bezos said) instead of gross margin %'s, but we'll leave that for another time. The challenge is that many tech enabled digital health cos have high cost of goods sold (labor) and moderately high product, design, and engineering budgets. We must build differentiated solutions for patients, clinicians, and clients to be out incumbents, however, we're realizing that companies are ultimately valued on the discounted value of future cash flows. And the high SG&A costs at most organizations might be inbalanced to the unit economics of the business. I'm not sure the math pencils out for everyone unfortunately. But I'm just a guy on the internet, would love to hear the thoughts from those smarter than I (you!). Comment below. --- p.s. I have no idea the accuracy of the graphic and not an investor in Sweetgreen. Cheers. Credit: David Crowther

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Awesome report from Rock Health (in the comments) about H124 digital health funding. 📈 Despite broader economic challenges, the digital health sector, including mental health, has shown resilience, raising $5.7B across 266 deals. There is a strong Series A pipeline, tapering off of unlabeled funding rounds and 3 public exits in Q2 2024 indicating a revival in the exit market and a return to more sustainable funding patterns​. Key insights about the mental health market: 🧠 Mental health continues to be the leading clinical indication in digital health funding, securing $682 million in H1 2024. This consistent top ranking highlights the ongoing investor interest and the market's recognition of the critical need for mental health solutions. 🤖 The focus on mental health is driven by a combination of increased awareness, the rising demand for accessible mental health services, and the integration of tech solutions...🙄 In fact, AI has become a significant factor in digital health investments, with 34% of the total sector funding going to AI-startups. This trend is also reflected in mental health, where AI is being utilised to enhance diagnosis, personalise treatment plans, and provide scalable, efficient care solutions. Let's go!

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As I wrote earlier, Venture Builder is an attractive new tool for early-stage investment in deeptech startups. Investments in the Venture Company Initiate, which specializes in healthcare, attracted $45 million, a vivid example. If you are considering investing in healthcare startups and would like to learn more about investing in Venture Builder, please email me.

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