Health insurance giant Cigna has launched a $250 million venture fund to invest in early-stage companies.
The new Cigna Ventures investment fund is centered across companies in three strategic areas: insights and analytics, digital health and retail, and care delivery and management, according to a news release.
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The Bloomfield, Conn.-based company has already dipped its toe in the venture investing pool with direct support of companies like diabetes management company Omada Heath and predictive analytics startup Prognos last year.
Cigna’s investments into home hospitalization company Contessa Health, kidney specialty care provider Cricket Health and telehealth startup MDLIVE, represent the first investments from the Cigna Ventures fund.
“We really feel that right now we think is the right time to partner with innovative companies to simplify the customer experience and provider greater value to our customers and clients,” Tom Richards, senior vice president and global lead, strategy and business development at Cigna said in a phone interview. “Cigna Ventures is a way for us to tap into innovation outside of Cigna’s four walls.”
According to Richards, Cigna’s activity in the VC space spans back five years and includes limited partnerships with firms like 7wire Ventures, Health Velocity Capital and Leavitt Equity Partners.
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Richards will lead investment efforts at Cigna Ventures along with a board of managers drawn from Cigna’s business development ranks, which will essentially act as managing partners for the fund.
The company’s move is part of a growing trend for of payers launching early-stage investment funds as a way to head off potential disruption from startups and new entrants to the healthcare market like the Amazon-Berkshire-JPMorgan joint health venture.
A general criticism of the large incumbents in the payer space is their inability to be nimble and quickly respond to changing market trends.
Major competitors of Cigna which have already launched their own venture arms include Humana, Kaiser Permanente and UnitedHealthGroup’s Optum division, which launched their own $250 million venture fund last year.
When asked to differentiate Cigna’s investment philosophy, Richards spoke about their strategy to partner with portfolio companies on efforts like customer pilot programs.
“From a health plan perspective, it gives us an opportunity to have great partners that we can work with in developing new innovative solutions for that market,” Prognos co-founder and CEO Sundeep Bhan told MedCity News in an interview last year.
Richards also said Cigna’s interest in retail innovation as mainly focused on simplifying the customer experience in the digital space, as opposed to the brick-and-mortar retail strategy pursued by some competitors.
Cigna, which ranks as one of the country’s largest insurance providers, has already made recent moves to diversify its business through a proposed $54 billion acquisition of pharmacy benefit management company Express Scripts.
Earlier this year shareholders voted to approve the purchase and the deal overcame a major barrier when activist investor Carl Icahn dropped his bid to sink the merger.
The deal is expected to close by the end of the year, subject to regulatory approval.
Update: The story has been updated with comment from Cigna’s Tom Richards
Photo: Getty Images, bob_bosewell
