How do you introduce your fund? What is your elevator pitch?
New Dimensions Health Fund (NDHF) is raising a $1 billion fund that makes controlled investments of $100-400 million (half of the investment comes through the fund as direct investments by our LP’s), in healthcare, IT and service companies. Our team is unique, as we all have both significant investment and global operating experience within the domain, and we take an active role in both optimising the existing operations and extending the business into new areas. We believe that much of the innovation in healthcare will be evolutionary, with existing companies working with their customers to innovate required changes in healthcare.
What kind of investment targets you seek?
HCIT and service companies with a strong product, customer and/or revenue foundation, that require capital to realise their high growth potential. We do acquisitions, growth capital, and spin outs or scaled startups, with large corporate and strategic partners. Geographically we are US based, but we look at investments in all the developed healthcare markets globally.
How can a company best approach you?
We will be launching our website shortly, as we anticipate the fund will be operational in the second half of 2019. In the interim, we are still executing investments and can be reached at Steven@yecies.org.
What do you see as digital healthcare’s biggest challenges looking into 2019?
The three biggest problems and challenges we see in digital healthcare are:
1) The lack of scale among most existing offerings. Most enterprises don’t have a process or capability to create standards to scale solutions across their enterprises. In the consumer and SMB markets scale is often hampered by a lack of differentiation, slow adoption rates, and a high degree of fragmentation.
2) Lack of data standards and technology platforms that minimize the cost and time required for integration and interoperability. There are thousands of digital health point solutions focused on a particular disease area or functional area that require too much effort to work together. As a result, the value to customers of whether they are enterprise, smaller practices, or consumers is not optimised. We want to create some of the platforms that can enable innovation to be unlocked at much lower costs.
3) While we are seeing some limited growth in better exits through acquisitions, the lack of a robust and viable public market for digital health companies is problematic. We have not seen an IPO in the US market three years. We need companies with good market traction that can demonstrate continued viable business models with reasonable growth rates.
What of those can be achieved or managed in 2019?
I think we will continue to see slow, steady progress, but I don’t see any market catalysts on the horizon that will have a major impact on these problems. A slowdown in the funding market will force consolidation in several sectors that can help accelerate movements to scale and standardization. Today it is too easy for many marginal companies to get funding and stay in business.
What is the biggest change in the investment climate in digital healthcare?
With reference to the problems I mentioned before, we are seeing others adopt the investment strategy that we are undertaking. We are seeing a handful of companies generate larger early stage investments so that they can manage the speed at which the problem scales and solve bigger problems in a more comprehensive manner. Larger investments will be a necessary, but insufficient, requirement for many successful startups and growth companies. Capital is not enough, you still have to have a compelling value proposition for the market and a team that is capable of carrying out a strong execution.
In the tech sector we are talking a lot about AI at the moment. What is your take on its role in healthcare?
We have already had AI in healthcare for 20-30 years. Some recent technology advances are expanding and accelerating what we can do in AI. The two areas I think you will see the fastest adoption of AI are first, on the administrative side of healthcare, and second, in underserved markets which I see as being a great open field of opportunities to deploy AI allowing greater low cost access to healthcare.
In most clinical areas there is still a substantial challenge for the right information at the right time. Too often AI efforts in areas where we have a lot of data simply confirms current practice. In other areas, we continue to be data starved and AI simply doesn’t have enough information to advance us very far. I think the progress in these areas will be much slower – we have already seen some spectacular failures here.
The interview has been originally published on the special issue of CoFounder.