James Jiang

Can Reciprocal Insurance Exchanges (RIE) change the game for insurtech valuations? Clearcover recently launched an RIE—a move that largely went unnoticed but shouldn’t be overlooked. For insurtechs frustrated with the MGA model, this should be a big deal. While reciprocals are an old concept, they’re making a comeback for good reason. Unlike the carrier/MGA model, the Attorney-in-Fact (AIF) in a reciprocal isn’t exposed to balance sheet risk, which investors like and reward with higher valuations. Think of a reciprocal like a mutual fund—owned by policyholders but managed by an AIF, which oversees operations in exchange for a percentage of the premiums. (Read Sean Harper's post at Kin Insurance) This model has proven to be successful, with over 60 reciprocal exchanges in the U.S., including top carriers such as Farmers Insurance, USAA, Erie Insurance Group (Market Cap of $21B), and PURE Insurance (acquired by Tokio Marine Group for $3B). The surplus and capital of these exchanges are generally contributed by policyholders, which helps align their interests with those managing the risk. Insurtechs like Kin Insurance and Branch have already embraced this model, and I believe more insurtechs should take note. Reciprocals could be a key strategy to unlocking higher valuations and sustainable growth. 👏 Congrats to Clearcover and Kyle Nakatsuji on the launch!

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One of my proudest moments as an investor occurred today as Alaffia Health announced its series A because it shows how the Aperture® Venture Capital vision of multi-level, multi-generational #impactinvesting is succeeding in the marketplace. Here’s the model in its most basic form : ✅As diverse fund managers with meaningful capital to allocate, we are changing the VC landscape every day just by doing our day jobs. ✅As Black/Brown investors with ~40 years experience collectively, Aperture GPs have access to talent /excellence that others do not, so our portfolio *organically* is more inclusive by race, gender and geography even while optimizing for financial outcomes (all about the alpha). ✅Our most successful portco’s are using financial #innovation to solve market problems that impact underrepresented demographics and underserved communities. Alaffia Health is a shining example of the impact portion of our overall fund thesis, and we couldn’t be prouder of TJ Ademiluyi and Adun Akanni, MPH, PMP - the dynamic brother-sister founder duo whose vision we have steadfastly supported on their journey. Congratulations to TJ and Adun from William Crowder and myself, as well as the whole Aperture team- Marjorie King Philip McKenzie Yves Louis-Jacques Tanvi Lal Michelle Dhansinghani Lisha Bell Katie Kelly Amy Chung Cindy Chong, CFA Brian Fernandes-Halloran Monroe France Jayden Pantel Darren Herman Evan Wladis Neal Triplett Thomas Scriven Peter Ammon Irina Bit-Babik Tim Milanich Rob Rahbari

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Kettleborough VC has been active for ~6 years, invested in ~30 companies, gone through ~80 funding rounds, witnessed ~12 exits including ~4 instances of partial principal erosion, seen ~4 seed to $100M journeys, tracking ~29% XIRR across the portfolio. A couple of IPOs from the portfolio surely seem very much in line ahead.

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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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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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Excited to partner with Antonio, James, and the XP Health team. The need for vision care and benefits in the United States is substantial. More than 200M U.S. adults (79%) use a form of vision correction. 2 out of every 3 U.S. adults have some type of vision care coverage, even those with 20/20 vision. Vision benefits are considered table stakes for employers, who are generally not likely to sacrifice this coverage even during economic uncertainty. Yet, it dominated by 2-3 outsized legacy vendors and encumbered with horrible customer experience and exorbitant out-of-pocket costs for consumers. XP Health is revolutionizing the experience of eyecare across eye exams and eyewear shipping, through a digitally native product that significantly enhances customer satisfaction through personalized care and reduces out-of-pocket costs. Read the full TechCrunch article: https://lnkd.in/ggVicTHm QED Investors Amias Frank Shruti Adams Laura Ashley Rachel Nigel

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As the year comes to a close, it’s time to revisit my 2024 InsurTech predictions and evaluate how accurate they turned out... or where they missed the mark! Prediction 1: a surge in M&A activity through brokers 🔴⚪⚪ I predicted a long-awaited wave of mergers and acquisitions in the brokerage space, driven by the maturing InsurTech sector and declining investments. This prediction was mostly off the mark. There were a few exceptions, such as Allianz Direct’s acquisition of Luko (a French home InsurTech), Friday - a motor and home InsurTech from Baloise - and iptiQ, SwissRe’s embedded insurance division. Despite these examples, the much-anticipated wave of M&A activity failed to materialize. However, the conditions for future consolidation remain strong. Many InsurTech startups are reaching a critical juncture: either they’ve achieved profitability by growing, cutting costs or scaling back hiring, or they’ll need to explore mergers as an alternative to shutting down (as long as funding remains out of reach). Prediction 2: The takeoff of parametric insurance ⚪🟠⚪ I hypothesized that parametric insurance—long discussed in InsurTech circles—might finally gain traction. This prediction is a mixed bag. While there’s evidence of growth, it’s difficult to claim that parametric insurance has achieved the scale I envisioned. On the startup front, there was notable investment activity, with several companies securing initial or follow-on funding. However, details about their actual business performance and scale remain scarce, leaving the overall momentum unclear. On the corporate side, initiatives like the creation of dedicated parametric insurance teams at Munich Re and Gallagher Re are promising. These efforts largely focused on weather risks, though I predicted that diversity in business lines could be a catalyst for parametric solutions. Prediction 3: innovation driven by data ⚪⚪🟢 I anticipated the emergence of “tech-enabled MGAs” capable of identifying, accessing, and extracting value from new data sources to better understand, measure, and price risks. This prediction largely came true, fueled by the growing focus on emerging risks. Whether considering climate change, digital assets like crypto, fertility concerns, or AI-related risks, the challenge is the same: limited knowledge of these risks. Unlocking and interpreting new data sources is essential to improving risk understanding, enabling insurers and reinsurers to underwrite these risks effectively. The investment trends support this narrative. By mid-December 2024, 27% of all announced funding rounds were for startups focused on innovative risk assessment and data utilization. This is a notable increase compared to previous years, where the figure hovered around 15%. Beyond the numbers, the diversity of initiatives stood out. And areas such as climate-related threats, carbon credits and cyber risks emerged as particularly active themes. #insurance #insurtech #venturecapital

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I read the most exhaustive InsurTech report for you. Here are my takeaways. 👇 This FTPartners report provides valuable insights into the $635m invested in InsurTech startups in Q1 2024, spread across 69 fundraising rounds. 1/ InsurTech investments dropped 45% from a year before though the deal count has been rather flat for several quarters and is even 17% higher than over the same period of time last year (page 9). 2/ The average size of deals is rather flat from Seed to Series B while it is down once again at later stages (p12) and the drop in funding is highly related to the scarcity of Series B rounds and later (p13). 3/ In that background Seed rounds (below $2m) accounted for slightly more than a quarter of all rounds announced in Q1 2024. (p14) 4/ It's interesting to note that the two biggest rounds announced in Q1 2024 were in Europe and that 3 European InsurTech players are among the Top 5 biggest rounds of the quarter ! (p16) 5/ The drop in investment is global but the drop is more dramatic in the US which accounted for 70% of all money invested in InsurTech back in 2021 while it was only 50% in Q1 2024. Over that period of time, Europe has increased its stake from 17% to 32% of all money invested in InsurTech worldwide. (p18) 6/ Note that several public InsurTech have recovered from their IPO and their market cap is even higher ! (p24) 7/ Corporates VC reduced significantly their investment activity and were part of 1/3 of all deals announced while the average is 44% over the last five years ! (p28) #insurance #insurtech #venturecapital 

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US healthcare system Providence has split off its investment arm, Providence Ventures, to create an independent VC firm, Allumia Ventures. #venturecapital #veteranventures

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This post is interesting for new VC investors and it is also interesting for founders. As a startup founder seeking investors, it's important to consider whether the investor is a first-time funder or a long-time funder and which fund vintage they are currently managing. This understanding helps you gauge their deployment cycle and investment strategy. However, in reality, your options may be limited, and you might not always have the luxury of choice. Here are the key points to keep in mind: 1. Investor Experience: Distinguish between first-time funders and long-time funders. Experienced funders might offer more stability and resources. 2. Fund Vintage: Know the year of the fund (e.g., Fund I, Fund II) to understand where they are in their deployment cycle. Early funds may be more risk-averse or have specific criteria for investments. 3. Deployment Cycle: Understanding the fund’s stage can help you tailor your pitch to align with their current investment focus and timeline. Although understanding fund vintage and investor experience is a good practice, it can be somewhat theoretical. Choosing the ideal investor also depends on various other factors, such as their focus, the level and area of support they offer, and their communication and management style with their portfolios. Ultimately, the most important thing is to secure customers and generate revenue, with or without their help.

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This week Mikal Ventures brings you a 4-week breakdown of the US capital market with an emphasis on the Mikal verticals. Over the 4-week period ending December 9, just under 590 new companies were added, resulting in 101,195 companies included in the US Health Tech, Med Tech, Fin Tech, AI Tech, and Ed Tech verticals. We continue to see a slowdown in overall activity in all verticals. US AI Tech again saw the greatest percentage growth in new companies at 12%, vs. the vertical average of 6% for the period. AI Tech also led the group in transactions and news articles. US Med Tech led in SEC Filings. Mikal Ventures publishes these stats on a rolling 4-week basis to provide a perspective on how the verticals and new startups move through time. We hope you find them informative and thought-provoking. VC Investors are always adjusting their "Play Book" with a variety of options for investing. Mikal Ventures is one of those alternatives, offering curated solutions to real world problems. Reach out if you have questions on how we can be of assistance and bookmark https://mikalventures.com/ for additional insights and information.

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This week Mikal Ventures brings you a 4-week breakdown of the non-US capital market with an emphasis on the Mikal verticals. Over the 4-week period ending July 22, 1,681 new companies were added, with over 104,500 companies included in the non-US Health Tech, Med Tech, Fin Tech, AI Tech, and Ed Tech verticals. The non-US AI Tech saw the greatest percentage growth in new companies for the period at 26%, vs. the vertical average of 16% for the period. That vertical also led the group in transactions and news articles. The non-US Med Tech vertical led in SEC Filings. Mikal Ventures publishes these stats on a rolling 4-week basis to provide a perspective on how the verticals and new startups move through time. We hope you find them informative and thought-provoking. VC Investors are always adjusting their "Play Book" with a variety of options for investing. Mikal Ventures is one of those alternatives, offering curated solutions to real world problems. Reach out if you have questions on how we can be of assistance and bookmark https://mikalventures.com/ for additional insights and information.

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THIS WEEK on the Digital Health Heavyweights Podcast I sit down with Chris Fisher Let's jump in, shall we? 👇 Chris tells me about his 3x3x3 challenge. How can someone use this? Well, Brokers can use this 3x3x3 challenge to cut through the noise. & Vendors can use this to prove they can be compelling in 3 minutes. The truth is that if the broker/benefit/employer is bored in the first 3 minutes, it's NOT going to be better in a half hour. Doesn't really make sense to have a 30-60 minute meeting with someone you'll NEVER do business with. No? Chris shares how his community has grown larger than he could have imagined. We cover a lot of ground, What's common misconceptions people have about Broker Consultants? 1. People don't necessarily understand these Benefits consultants are VERY smart. 🧠 They built an incredible program, this requires them to be smart, and good at their jobs. Treat them as such. For example don't overspend time explaining why a common disease is bad. Yes Cancer is bad, Yes, diabetes is bad. Don't over explain, let's get to why you're here. 2. They're super busy.⌚⏲⌛⏳ Respect their time. Can you ask for less time? Typical meeting goes for 30 minutes, what if you asked for 15? 3. They don't expect perfection from their vendors, but they expect responsiveness. If something goes wrong, communicate, and work quickly to fix it. Chris Fisher, founder of BenefitsAlly shares journey into the healthcare industry, the inspiration behind Benefits Ally, and the innovative 'three by three by three' challenge designed to help benefit professionals quickly understand various solutions. The conversation delves into the importance of responsiveness, execution, and reputation in the benefits industry, as well as an inside view of broker consultants. Chris also discusses the future vision for Benefits Ally, industry trends, and personal wellness practices. Comment if you've used the 3x3x3 challenge!! Tune In 🔈🔉🔊 ▶ https://lnkd.in/dJw-qRVh

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💰🎓VALUATION CAP💰🎓 Setting a valuation cap in fundraising is crucial as it limits the maximum valuation at which a SAFE (Simple Agreement for Future Equity) converts to equity. This helps founders manage equity dilution and provides investors with a clear understanding of their potential ownership percentage, ensuring informed decision-making during fundraising rounds. Source: Peter Walker Great post! #valuationcap #investors #founders #raisingcapital #safes #fundraising #womenshealth #femhealth #medtech

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TL;DR I run into all types of interesting phenomenon when puling together diligence materials. Some good, some not so good. In this case, private insurers involved in the government’s Medicare Advantage program made hundreds of thousands of questionable diagnoses that triggered extra taxpayer-funded payments from 2018 to 2021, according to a Wall Street Journal analysis of billions of Medicare records found. The questionable diagnoses included some for potentially deadly illnesses, such as AIDS, for which patients received no subsequent care, and for conditions people couldn’t possibly have, the analysis showed. Often, neither the patients nor their doctors had any idea. Medicare Advantage, the $450-billion-a-year system in which private insurers oversee Medicare benefits, grew out of the idea that the private sector could provide healthcare more economically. It has swelled over the last two decades to cover more than half of the 67 million seniors and disabled people on Medicare. Instead of saving taxpayers money, Medicare Advantage has added tens of billions of dollars in costs, researchers and some government officials have said. One reason is that insurers can add diagnoses to ones that patients’ own doctors submit. Medicare gave insurers that option so they could catch conditions that doctors neglected to record. The insurers make new diagnoses after reviewing medical charts, sometimes using artificial intelligence, and sending nurses to visit patients in their homes. They pay doctors for access to patient records, and reward patients who agree to home visits with gift cards and other financial benefits. I imagine it would be quite disconcerting to look at my chart online to discover that I have HIV and cataracts for which I am receiving no additional treatments. Medicare is a $450b/yr system, this is to be expected. All the more baffling why both sides of the political aisle are clamoring to be the first to express their strong belief that these types of entitlement programs shouldn't be touched, ever. We can do better.

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I recently saw this metric from Carta’s 1Q24 VC Fund Report, which is very concerning. DPI... is nowhere to be found in earlier vintages that probably should start showing DPI. Funding early-stage projects is great, but ultimately, these venture dollars need to exit their investments and pay back their limited partners. That’s where the metric Distributed to Paid-In Capital (DPI) comes in. While managing a fund, we get interim measures during the life of the fund (e.g. IRR, MOIC), but ultimately, “you can’t eat IRR.” If you want to build a lasting venture capital organization, you need to start showing DPI for your fund. Keep in mind that this is traditional VC data from Carta, and is not strictly crypto venture. Crypto venture tends to get liquidity earlier (tokens) and things tend to go parabolic sooner (faster, more unicorns) - but I’d wager that the data here is somewhat similar for Crypto VCs… Not as much DPI as there should be from these earlier vintages. Read the full article, as well as a recap of all the crypto fundraising rounds for August, here: https://lnkd.in/g3eVJ-iF

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A new era of deep tech has emerged. First time funds will raise “unheard of” amounts of capital to fuel next gen deep tech startups - producing outsized, superior returns for LP’s compared to the rest. Prudent investors will act on this data and shift investment strategy as LP’s or risk being left behind savvy wealth managers and CIO’s / FO’s who saw this trend begin 4 years ago.

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Abby Levy talks about venture's role in US healthcare and what we can expect to see as technology impacts the space on TFR. Check out the rest of the conversation with Abby & Alan Patricof of Primetime Partners on Episode 433.

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