This week, Andreessen Horowitz said it’s launching a fund dedicated to investments in bioinformatics and “beyond the pill” technology. The venture capital firm had already gotten its feet wet with investments in these areas, but a dedicated fund is something new and indicates an interest in ramping up its strategy. With its fund, the firm could make a big impact. Here are some insights on some challenges and opportunities in these areas and some companies the firm should consider.
First of all, it’s worth noting some of the health and life science IT companies that Andreessen Horowitz have invested in so far. It’s only a handful to date:
SolveBio, a technology company that provides tools to organize genomic data for users to develop genomic applications.
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Other investments include Benchling, which develops collaborative tools for life science research, Glow, an ovulation tracking app developer, and Omada Health.
It also invested in Massive Health, a company founded in 2010 that helped diabetics access health information using their smartphones, which Jawbone acquired in 2013.
Cybersecurity
It’s a huge area of opportunity given the need for payers and health systems to reassure their member and patients that they’re capable of protecting patient data from hackers and internally from snooping staff. Big data analysis is key to identifying sources of breaches easier and faster. Some of the startups that are doing some interesting work in this area include Haystack Informatics, Maize Analytics and Protenus.
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Clinical trials
The need to make clinical trials more efficient to conduct and less costly has been a motivating factor for several companies, particularly in digital health subsectors such as remote monitoring, big data analysis, and digitizing records. Science 37 takes aim at the recruitment process, but also addresses the need for remote monitoring. It created what it refers to as metasites to help researchers and would-be participants find each other. With an eye to the need for a digital approach to creating and transmitting documents combined with the reality that WiFi access can be inconsistent in some counties where clinical trials are held, CliniOps developed an approach designed to meet those challenges.
Research and development
Way before the clinical trials get underway, there is the challenge of finding appropriate drug candidates to match specific conditions. This is another area where entrepreneurs see ways to apply big data analysis to identify appropriate candidates efficiently. A few of the companies that have identified ways to do this are Atomwise, Numedii and Berg.
Neurologic music therapy
Music therapy is a fascinating area of innovation as research scientists identify ways to harness music to help people with a variety of neurologic conditions from pain to dementia. PureTech created a research platform to help scientists conduct studies on music therapy and the brain with an eye to the enormous potential in this area called The Sync Project. MedRhyhms developed a way to use music as a form of therapy for stroke patients.
At least one of the investors I contacted about Andreessen Horowitz’s new fund was skeptical about another predominantly technology investor expanding into the health/life science IT market. He raised concerns that because it’s such a hot area for investment, too much “dumb money” is being allocated to companies by investment firms lacking a depth of experience in these areas to differentiate between companies that don’t have what it takes to succeed and those that do.
Lisa Suennen, a managing partner at Venture Valkyrie Consulting and blog author, offered some insights on what some of the challenges investment firms moving into healthcare face.
“The challenge is that many of the maxims that work in the tech and consumer world don’t exactly fit the healthcare world, or at least not yet, meaning not in a typical fund’s investment horizon. Understanding the dynamics of how money flows through the system, how regulations impact innovation, how incentives are (not aligned) and what will align them and what it takes to get consumers to care about their health are extremely complex. The tech VCs who have best performed in the healthcare sector are those who have recognized the importance of integrating deep healthcare knowledge into their teams.”
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