From left: Endeavor Vision’s Sven Lingjaerde; Jessica Zeaske of Lemhi Ventures; Kimberly Campbell of Mosaic Health Solutions and Lisa Suennen of Venture Valkyrie at Health 2.0
Panelists discussing digital health investment at the Health 2.0 conference this week took a skeptical view of direct-to-consumer wellness companies, highlighted priorities for three investment firms and identified areas of interest for future investment.
The panel, moderated by Lisa Suennen of Venture Valkyrie, included three investors: Jessica Zeaske of Lemhi Ventures, Endeavour Vision‘s Sven Lingjaerde and Kimberly Campbell of corporate venture investor Mosaic Health Solutions.
A Silicon Valley Bank report published this month showed venture investment in consumer digital health has declined to $2 billion since its peak level of $2.7 billion in 2015. Panelists took a bearish view of companies supporting many aspects of the direct to consumer wellness market. But yoga apps took the brunt of the criticism.
“Free yoga applications are amusing but I wouldn’t invest in them,” said Lingjaerde dryly. He expressed doubt that wellness could be profitable.
Zeaske added to the reality check for entrepreneurs by decrying the penchant of digital health startups to liken themselves to successful technology companies such as Facebook, Uber or LinkedIn.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
“I would prefer [startups] to not say, ‘We are going to be the blank of healthcare,'” said Zeaske.”Y0u have not yet earned the right to say that.”
Business-to-business and business-to-business-to-consumer models have proved more popular among investors, particularly big data analytics paired with machine learning or artificial intelligence. Zeaske and Campbell noted that Health Catalyst and WellTok had done the best job of working intelligently with providers to adopt their technology platforms in gradual steps.
Suennen referenced the Silicon Valley Bank report again when she noted that 40 percent of digital health investment came from strategics. She noted that taking investment from corporate investors used to be the kiss of death for startups. The attraction of corporate VCs to startups has had an impact on how startups work with them — investors are treated more as colleagues and that’s a change, Zeaske observed.
Asked to highlight their investment preferences and where they see opportunities, Campbell called attention to digital therapies in behavioral health and making consumer engagements more personalized.
Precision medicine and medical grade sensors are areas of interest for Lingjaerde’s Swiss firm. He identified making clinical trials more efficient as one subsector in which it would like to invest in the near future.
Given that the U.S. government is the largest payer, Zeaske noted that her firm was following the money to determine who can change affordability and access.
Mosaic Health Solutions also has a health services fund. Campbell said it has invested in companies such as FastMed — an urgent care business — and Axispoint Health, a population health management business.
“Part of our strategy is learning through these services what we need to be pushing to our partners,” Campbell said.
Photo: Stephanie Baum
