From left: Gavin Teo, Anna Haghgooie, Cyril Philip, and Lisa Maki
There is no question that the number of corporate venture capital firms is growing. There were more than 320 of these strategic investors in 2015 and they accounted for 17 percent of all deals last year. A MedCity INVEST panel illustrated how entrepreneurs can work with corporate investors to strengthen their businesses and still preserve their vision and direction.
Karen Griffith Gryga of DreamIt Ventures moderated a panel, which included Gavin Teo of Comcast Ventures; Anna Haghgooie of Sandbox Industries; Cyril Philip at Providence Health’s venture arm, Providence Ventures; and Lisa Maki, CEO and founder of PokitDok.
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Know who you’re dealing with
Gryga noted that the most frequent mistake she sees startups make is not doing their research to learn what the priorities are for each corporate investor they approach, how they work with entrepreneurs and their track record.
Comcast, for example, has made healthcare investments that have focused on health IT and tech-enabled services, Teo said. It invests in early and late stage companies from Series A to Series D. It’s interested in technology that could help employers reduce their healthcare costs. Among the areas of healthcare that interest them are primary care delivery, virtual care, behavioral and mental health, population health.
Providence Health Ventures is looking for healthcare problem solvers that can do what everybody else wants to do: improve outcomes and reduce costs, particularly for chronic conditions. Philip said, “We created a venture fund to be a beacon for startups of how to sell into provider system and help them navigate.”
Specifically it’s interested in patient relationship management solution enabling provider systems to track interactions with patients beyond the clinic. Practice management technology that can help practices run more efficiently. Discharge management software that can support reduced re-admissions is also an area of interest for its fund.
Sandbox is interested in startups helping payers with the shift to the consumerization of healthcare and the mechanics of executing that. It’s also interested in specialty pharmacy and episodic care, among other areas, Haghgooie said.
Balance need to collaborate with preserving your vision
Haghgooie emphasized the importance of vision and leadership within an entrepreneur’s company. “As much as these big companies have figured out, they are looking to you to help solve a problem, because if they knew how to do it, they would be doing it themselves. They are looking at startups to lead.”
She added, “So often we see strategies and vision get changed based on what the incumbent wants and it’s counterproductive sometimes fitting into an old system
and an old way of doing things…There is a tendency to want to appease to get funding, but if you have shared vision and a future that you can keep pointing partners back to, it is a really important thing to work thru that. Corporate investors have a tendency to dabble in peaks and troughs.”
Maki, whose company received strategic investment from McKesson Ventures and Cambia Health Solutions, agreed. “You have to choose your strategic partners carefully. You can reach agreements to work on projects together, they can open up networks for you and make introductions. But we cannot enter into a partnership that would cause us to show preference for a strategic’s company or a health system.”
Understand the power dynamics of the investor’s company
Haghgooie observed that through personal experience she learned the importance of understanding who will and won’t drive execution. Sometimes it’s a simple matter of just asking.
But the power dynamic also applies to corporate investors who want to work with entrepreneurs. As Maki noted, although it agreed to give a board seat to one corporate investor, it made two more observers. They had access to the same information as board members but were not decision makers. She wanted to maintain a balance.
“As an entrepreneur, you don’t depend on any one thing. Strategics are not responsible for your success. They are there to help,” Maki said.
