WTM Bulletin #9: From Wall Street to Care Street. Latest musings on Health Care Venture Capital, Private Equity, and care delivery. Innovation. Transformation.
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6 topics = 3 headlines. 2 startup or VC/PE firm news. 1+ closing thoughts. Follow me on twitter @Mahek_MD
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HEADLINES
Healthcare startup Syapse has raised $35M. Syapse is a startup that aims to improve the way cancer patients undergo treatments and rehabilitation.
More:
- The startup raised a growth round led by Innovatus Capital Partners with participation from Ally Bridge Group, Merck Global Health Innovation Fund, Northpond Ventures, Revelation Alpine LLC, Safeguard Scientifics, and Social Capital.
- Syapse aims to improve the experience of cancer patients starting from the process of using therapeutical medicine up to the recovery process after going through surgery. The company believes that by using its data-first approach, it will be able to create experiences that will not only be better but will cost less than they do today.
- Syapse has worked with clients such as Pfizer, Amgen, Amita Health, Advent Health, etc.
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Sage closes $9M seed out to improve senior living facilities & reshape caregiving with data
Sage raises $9M seed round led by Goldcrest Capital to empower caregivers an operating system (OS) software + hardware to manage their health in senior care facilities! Merus Capital Distributed Ventures and ANIMO Ventures joined in as well.
Sage meets care delivery where it is and where it is going — something VERY FEW healthcare startups get right out of the gate. Most often fail to do that. Senior care facilities (SCFs) is where the care is at the moment (flying the airplane) as the macro trend moves it closer to at home (thus, remodeling the plane while it is in flight). One thing Sage does incredibly well is fitting into an existing healthcare system: call it workflow + site of care because as the macro trend of elder/senior/aging/silver care transitions to the home. We still need innovation at the facility level. Sage is well-positioned to be a great solution for both sites of care, giving it competitive advantage, trust, and additional value proposition!
#venturecapital #entrepreneurs #healthtech #startups #innovation #silvertech #eldercare #aging #healthcare
Cartography Biosciences raises $57M Series A funding round.
The investment was led by 8VC with participation from a16z, Wing VC, Catalio Capital Management, ARTIS Ventures, Alexandria Venture Investments, AME Cloud Ventures, the Cancer Research Institute, and Gaingels.
Cartography aims to diagnose and cure health issues through immunotherapy that relies on cell-by-cell analysis. Use of proceeds will be to bolster its efforts in cancer research. Cartography will conduct discovery programs that lead to learning about which are the most effective antigens, which can be used to cure numerous cancer variations.
This write up by a16z’s Jorge Conde is worth a read: Investing in Cartography Biosciences
https://a16z.com/2022/07/19/investing-in-cartography-biosciences/
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VENTURE CAPITAL / PRIVATE EQUITY
Life sciences VC aMoon raises $340 million for second fund
A favorite investor of mine, Dr. Yair Schindel, co founder of aMoon, a Venture Capital investing in life sciences and healthtech, based in Israel has announced an interim close of $340 million aMoon Growth II, with a final close of about $750 million at end of next year. This is very exciting to hear and see particularly given the headwinds life sciences and biotech has faced globally in the last 7–9 months.
LPs Credit Suisse provided $100 million to Growth II and Discount Capital committed to the fund as well. aMoon distinguishing advantages is its LP base which stems from the US, Europe, Israel, etc. and has made investments globally as it continues to deliver outsized returns to LPs.
aMoon also conveys a great deal of empathy within their team. Fun facts about Dr. Yair Schindel that helps shape the culture at aMoon:
- A former Israeli special forces medical officer
- Former CEO of Start-Up Nation Central
- Aims to establish an Israeli equivalent of the FDA
- Harvard Business School alumnus — which is how we first met
aMoon focuses on investments in the fields of digital health, medical equipment, and biopharmaceuticals. It has invested in the past in some of Israel’s leading digital health/life science companies including:
- Eleos Health integrates and automates the entire behavioral care workflow. Freeing clinicians from operational burdens, letting them focus on care itself. Raised $20 million Series A in April 2022 after $6 million seed.
- Seer (IPO Nasdaq), netting them a 15x return in less than a year. aMoon invested when Seer was valued at $228 million, and at the Nasdaq IPO, the company’s valuation topped $3.5 billion.
- SOPHiA Genetics: $110 million oversubscribed Series F led by aMoon, world’s largest Data-Driven Medicine community network through its universal and collaborative AI platform, SOPHiA Genetics supports healthcare professionals by translating multiple sources of complex medical data into valuable clinical insights. The SOPHiA Platform is used by over 1,000 healthcare institutions and has analyzed 600,000 genomic profiles; up to 17,000 new profiles a month. Uses of funds will be to continue penetrating US and Asia markets
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Spectrum Equity, a growth-equity investment company based in Boston, has closed its new fund valued at $2B.
The fund is officially named Spectrum Equity X, L.P. 3 things to note that are interesting about this most recent fund:
- The firm received funds from previous investors as well as first-time outside investors. Great to see new LPs join the growth equity game.
- Spectrum focuses on investing in internet-based companies that aim to disrupt a number of different verticals such as #education, #financial services, #healthcare, and #logistics.
- Founded in 1993, the company manages $8B in assets, while its average equity investment is $25M-$150M. This new funding allows them to use their balance sheet to find some gems amongst the growth equity reset.
CLOSING THOUGHTS
This week is the Supermarket Sweeps of Earnings, with 3 of my all-time favorite companies reporting. Alphabet $GOOGL, Microsoft $MSFT, and Amazon $AMZN
Google earnings were OK. Not really bad. Not great either. Increases in headcount — the executive term for employees — were +20.8% or 30k employees, yet all businesses + Other Bets except Google Search & Cloud are now ex-growth. YouTube is seeing the tidal wave that is TikTok. YouTube shorts continue to be popular with monetization strategy playing out for Shorts and YouTube more broadly in Q3, Q4. Most shocking was Play Store, YouTube subscriptions & Google hardware (Nest, Watch, Pixel, etc.) has stopped growing. EBIT was flat.
Update: CEO Sundar Pichai announced Simplicity Sprint in all-hands memo, which will solicit ideas from its more than 174,000 employees on where to focus and improve efficiency.
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Microsoft $MSFT earnings delivered across the board, with products (Office Suite, Windows, LinkedIn, etc.) that have many years of growth at scale left. Azure, their Cloud offering is up +40%, Dynamics 365 +31%, LinkedIn at $13.8 billion annualized revenues, up +26%. Gaming is weak (-4%) but Microsoft has a great franchise with XBox, HoloLens, online gaming trend, etc. Net income & EPS remain flat. Like most technology, they spent a lot in 2020–2021 like every tech, costs now are being brought in to navigate ‘uncertainty’…
Here was the impressive fact: LinkedIn launched in 2003, and did $243 million in revenue in 2010. It went public in 2011, when revenues grew to $522 million. Last twelve months, it did $13.8 billion in revenue. Remember, Microsoft $MSFT acquired the business for $26.2 billion in 2016, which is less than 2x current revenue. This was due to the fact that senior executives had options that were underwater (check out the chart) — so Microsoft needed to make them whole by paying the % premium. The trailing 6 months before Microsoft bought LinkedIn had significant decline (examine chart). The art of Investment Banking + Advisory plays out here if you look at the terms of the deal. Fortunately in the years to follow, Satya and Co. know how to run a business with an acquired asset. So considering Microsoft paid now 2X 2022 earnings is extremely impressive for Microsoft.
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Amazon, becoming ‘the Everything Store’. With the One Medical acquisition, this places $AMZN further & further away from generating positive Free Cash Flow (FCF) and being a sustainable business not funded by constant share issuance. Rolling out primary care clinics aggressively will take cash. It is likely they will issue shares or use debt with leverage. But other synergies are the most exciting. Because of all the health technology companies today, Amazon is positioning to become vertically integrated, like that of Tesla, to have a competitive advantage. Here are just a few possibilities that excite me:
Amazon 3.0 = One Medical + Amazon Care + Amazon.com + Amazon Web Services (AWS) cloud solutions/interoperability for back end + Whole Foods Market (nutrition, food as medicine) + wearable (Halo data) + Pill Pack (Amazon Pharmacy). They definitely Know The Customer 360 degrees.
They now are more vertically #integrated healthcare machine than most of the traditional players. Amazon has drugs, distribution, demand, diet, care delivery, data, and willingness to deliver delight. Amazon can now be interoperable, run AI/ML on the data it has, generate recommendations, insights, and create value like no other business can. All while focusing and OBSESSING on YOU — -the CUSTOMER.
The TRILLION DOLLAR question remains: will Amazon + One Medical make the health care experience more accessible, affordable, and even enjoyable for patients, providers, and payers.
In terms of more from the earnings: Amazon Web Services lost revenue (+33% vs +40% at $MSFT & +35% $GOOGL) & margins are down, but that was expected. US retail beat + EBIT beat expectations. Q3 revenue guide was okay, but EBIT guidance was below consensus. I’m personally not a fan of issuing guidance because I think it has been abused for its intended purposes.
Disclaimer: The information presented here does not serve as investment advice. This is for informational purposes only.
Author biography:
As a former Citigroup investment banker and economist turn Medical Doctor, entrepreneur, consultant, and investor, I see health care evolve and transform through a very unique lens.
Sitting at the intersection of health, technology, and business with functional roles as an executive in strategy, partnerships, and innovation, I’m eager to share my weekly findings with you, my growing worldwide audience.
Please subscribe and feel free to leave a comment below. I sit at the intersection of Wall Street. Tech. Medicine. I’m an MD with Buy-side, Sell-side, & Bedside Manner. Alumni and faculty networks from Harvard, Cornell, Baylor College of Medicine, and Rice. I’m the world’s only Doctor to work with business icons Michael Porter, Robert Kaplan, and Clay Christensen. You can find me on twitter @Mahek_MD .
