Angel investing in healthcare continues to grow. But can it keep fitting in?

There’s no greater discussion in healthcare investing than how to better integrate all the different types of investors. Investors working together means more access to capital, more quality companies getting follow on funding, and a better payoff for everyone involved (especially that general public awaiting those next medical breakthroughs). We’ll tackle that issue head on at the MidAmerica Healthcare Venture Forum on March 10-11 in Chicago.

This post is sponsored by the MidAmerica Healthcare Venture Forum.

It was easy to get my head around the biotech buzz and the digital health marketing blitz that happened last month at the JP Morgan Healthcare Conference.

But here’s the question I heard most often (and gave me the most food for thought): “Can I meet more angels?”

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People were ravenous. From PR agencies on behalf of their clients to software platforms looking to be the new financial connectors to, of course, the entrepreneurs themselves.

Healthcare investing is transforming. Venture capital funds are re-emerging. Strategic investors and foundations are exponentially more influential. Crowdfunding and new online platforms are experimenting and getting better.

Yet, angels continue to play – or be courted to play – a bigger role in healthcare investing. People want everything from the Family Office angel who can play a role in a big A Round (with capital to come back later) to the traditional angel groups that have the sense and ability to syndicate with other angels for venture-sized investments. And here’s the best news: the number of early-stage funds continue to grow.

But as they grow one thing matters: can they play well with everyone else? Venture traditionally was quick to criticize the angels as unprofessional, giving bad early valuations or building poor deal structures that made follow-on funding difficult. However, today’s angels are savvier. They deserve more clout and a payoff not associated with angel investors of just a few years ago.

“Angels and VCs both are significant players and may co-invest when funding young companies,” says Don Ross, Managing Director of HealthTech Capital. “While Venture Capital invests about $30 billion annually, angel investors are not far behind with $25 billion. Still, their investment profiles – investment amount, company stage, and exit expectations—can be quite different.”

It’s a topic Ross will help us tackle at MedCity News’ MidAmerica Healthcare Venture Forum on March 10-11 in Chicago. To me, there’s no greater discussion to be had in healthcare investing than better integrating and syndicating all the different types of investors. Investors working together means more access to capital, more quality companies getting follow on funding, and a better payoff for everyone involved (especially that general public awaiting those next medical breakthroughs).

Ross will join me on stage with Jan Garfinkle from Arboretum Ventures in a discussion called “Angel & Venture Partnerships Done Right.” I hope to see you there.

For Ross, the keys to successful co-investment include “know your partner, understand each others’ interests, and follow best practices to build solid working relationships and good investment returns.”

There are other issues, too. Investors aren’t just dollars: they also deliver expertise, connections and prestige that can lead to more business or funding.

If they fit in we’ll all be better.

[Photo from Flickr user Adam_T4]

Chris Seper runs MedCityNews.com and contributes regularly to the site. He is the vice president of healthcare for Breaking Media, MedCity's corporate owners. Reach him at [email protected].

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