Uber + healthcare. Canada digital health. Excessive subscriptions.
VC State Of Mind
We had the opportunity to sit down with Annie Lamont and Andrew Wallace of Oak HC/FT and chat about digital health trends. The full interview is full of candid responses, and covers everything from regulation, to areas of opportunity vs. hype, to the potential for AI.
Below are some excerpts:
What’s an area of digital health you think is over heated?
Andrew Adams: I would say the employer-facing segment is one where there’s been a lot of investment activity. It’s really forced us to continue targeting the platforms that can scale to large companies as opposed to point solutions. Because there’s been so much investment, the large enterprises and large employers have been overwhelmed. I think what this will cause is consolidation at a high level, but also a need for these point solutions to plug into these platforms to gain scale.
Are there any common pitfalls you see digital health entrepreneurs fall into?
Annie Lamont: Well there are so many! The first question we ask is “who’s paying and why?” and it’s amazing how often people haven’t really thought that through. The consumer is not paying except for a rare case — 23andMe is probably the only major successful company there, maybe Headspace. So knowing who’s paying is incredibly important. And when it comes to a point solution or creating apps, it’s very hard for a provider system to deal with lots of little vendors.
Andrew Adams: I would add to remember it’s a regulated market. That’s something that has to be respected and appreciated as the businesses scale.
Annie Lamont: The Uber/Silicon Valley view that you ask for forgiveness and not permission, not going to fly.
Is there a company not in your portfolio that you really admire or think is approaching digital health in a smart way?
Andrew Adams: Flatiron [Health] is doing a lot of very interesting things and it has a fantastic leader/CEO in Nat [Turner] who’s someone we admire. It’s in a category of great interest to us — oncology — and we think they’re doing smart things.
Annie Lamont: [On Flatiron not being in the portfolio, and taking money from corporates] And that was just a valuation question. Bringing two corporations in, GE and Roche, just became a matter of valuation.
It’s not just Oak HC/FT looking at AI in healthcare – last quarter, new deals in the space hit a record high. In the past I’ve talked about some of the reasons behind the AI hype in healthcare including new massive real-time data streams that require sophisticated analysis tools and many healthcare processes being mostly pattern matching. But the hype continues, and we analyzed what areas of AI in healthcare are overcrowded and what’s still nascent. See the research here (for expert research clients only).