Traditional venture capital investment has to change. Or at least go back to the way it was in the 70’s and 80’s. That was the perspective of panel members at the Nashville Health Care Council and Nashville Capital Network panel discussion on “NewApproaches to Health Care Venture Capital.” During the forum at the Hermitage Hotel top health care investors debated the need to reform the way VCs invest in companies.
Epiphany Health Ventures prefers to call themselves an “innovation fund,” with less diversification and a more strategic focus. Co-founder Duncan Dashiff noted they are constantly asking how they “can add value at the portfolio level.” They focus on innovation and the disruptive technologies that will help drive better outcomes.
Dr. Tom Hawes of Chicago’s Sandbox Industries agreed. He is focused on utilizing smaller funds, which have proven to be more successful, and attaching more resources to investments in order to add value.
When asked how health reform is impacting venture capital investments, Rob Coppedge of Portland, Oregon-based Cambia Health Solutions compared it to dealing with too many tourists at the beach. “We are waiting for the froth to die down.” “What we want to invest in is not impacted by reform.” Coppedge and Joe Sowell of HCA both noted that it is best to not bet on a company dependent on one model. Instead focus on companies that broadly improve quality and lower costs.
In response to a question from a Vanderbilt graduate student about investing and growing companies in Nashville, Sowell notedthat Nashville is often referred to as the “Silicon Valley of health care.” “Nashville has the managerial expertise which creates a good platform to vet the quality of an idea in the health care space…Nashville is a good place for companies to seek investment, advice and counsel,” said Sowell who manages the Health Insight Fund for HCA.
During the program, the Council and NCN shared results of a newly-released venture capital report, pointing to more than $1.4 billion in venture capital invested in Nashville companies over the past decade. Health care led the investment with nearly $1 billion channeled to Nashville companies since 2002. For the full report, please visit www.healthcarecouncil.com.