Where We Are Investing Now: Biosciences

 Photo by  Samuel Zeller  on  Unsplash

Photo by Samuel Zeller on Unsplash

Health is a remarkable area for early-stage investment. It shows more activity, more exits, more corporate involvement, and more overall value over the past five years than any other segment. However, it is also an extremely crowded area; the number of active health investors has more than doubled to more than 1500. There has also been an explosion of health and pharma related accelerators, with more than 1500 active last year.

So, becoming active in early-stage health investing is a daunting prospect. How can any new fund entrant be of unique and useful service?

In our case, the answer has been not to change the landscape; we can’t do that. Rather, we are asking a question others aren’t, and therefore believe we can achieve a different set of answers than other funds.

The overwhelming focus for health funds today is on what we call the Medical Industrial Complex: doctors' offices, hospitals, clinics, insurance providers, pharma companies, and drug chains - all the essential components of health as it is practiced today. This is sensible. The Medical Industrial Complex is where the patients are, where medical devices can see the greatest use, where billions of dollars flow.

Because of the lure of this huge, obvious and lucrative market, many startups have focused their tech and time and attention on establishing positions in the medical industrial complex. All that is great and natural. That is what often happens in the early stage in a strong segment.

But we have decided to focus purely on the person. The consumer. We believe that as new science emerges across bio, genetics, analytics, VR and AI, the individual experience of health will be transformed. As in the Renaissance, when the focus shifted from God to human, resulting in an artistic, scientific and quality of life revolution in Europe, we see health shifting from the god-like medical establishment to the individual.

Increasingly, illness will become an outlier. People will spend their time and attention on staying healthy or getting healthier, being happy or getting happier, keeping pain and anxiety at bay and even pursuing joy. These small triumphs of experience are what we call Delightful Moments. And we believe a new set of Technological Vectors of Happiness will propel these opportunities from the realm of sci-fi toward common individual reality.

And so, in 2018, our fund will focus on bio-based technologies that, within a two-year time frame, have the power to, at least initially, empower an individual’s capacity to impact his or her own health, as well as startups whose products directly increase joy, fulfillment and independence for the individual customer.

Specifically, we will focus on:

  • Consumer Oriented Diagnostics. How sensors, smart phones, AI, the cloud and other technologies can help individuals know the state of their personal biology and what they might do to optimize it or ameliorate any problems.
  • Genetics and Genomics aimed at individuals directly or via their employers or other key organizations. The cost of gene sequencing has plummeted. The ambient knowledge of the genome has soared. We don’t think gene testing and response is yet ready for people to self-manage, but we do believe it will come into people’s lives via their employers, insurers and others who recognize that keeping people from getting sick is better economics than trying to beat back illness.
  • AI in Healthcare. With its density of data, broad impact across every society, dramatic consequences and enormous costs, health is the ideal arena for AI. And we don’t just mean machine learning, as useful as that is. Health may usher in great deep learning and neural network solutions that can show the way toward future AIs far more powerful and useful than today’s.
  • Regenerative Medicine. If a part wears out in the car you fix or replace it. Now, that is becoming quite possible for human bodies, as well. We see wise interventions in human biology as a frontier for progress with the potential to remake medical experience for people at every stage of life.
  • Brain-Machine Interface Technologies. Increasingly, we can see into the brain and understand what we are looking at. In tandem, computing and AIs can direct that brain activity toward the appropriate body systems to impact behavior or biological systems. Still often seen as pure science-fiction, the body-brain barrier is being breached now on labs and will, we feel, soon produce practical products.
  • Bio-printing. The greatest use case of 3D printing may not be in factories, but in printing biological materials. Already ears are being printed. Organs may not be far behind.
  • VR/AR Applications in Rehabilitation and Therapy. VR can reduce pain without opiates. It can generate positive mood or moderate negative feelings. While VR/AR may have vast potential in entertainment, it is in the management of the extremes of human feeling that it may find its greatest application.

We couldn’t be more excited about this focus on biosciences as chosen by the individual. We have added domain expertise in physiology, biology, bioinformatics and VR to our team so we can dig deep here.

The word revolution gets tossed around a lot in tech, to the point where its meaning has been blunted. But this area, we feel, is the real revolutionary deal. Medicine, health care, epidemiology, and most importantly the way we experience the interplay between our inner systems and the outside world are all about to be remade. The power in that shift will move forcefully to the individual.

By Managing Partner Mike Edelhart