Key Takeaways
- • General Catalyst launched its $670 million Health Assurance Fund II in July 2022, roughly a year after closing its first $600 million health care fund, while many VCs pulled back from health investments in the first half of 2022.
- • Marc Harrison, M.D., president and CEO of Intermountain Healthcare, will run the firm's investment platform, joining Daryl Tol (former AdventHealth CEO, head of health assurance since June) and Stephen Klasko, M.D. (former Jefferson Health CEO, executive-in-residence since February).
- • Per CB Insights, VCs deployed $17.6 billion into digital health in the first half of 2022, a 40% decline year over year, and per Rock Health no digital health companies went public in the first six months of 2022 after 23 public market exits in 2021.
- • General Catalyst is focusing on health system partnerships, incubating startups directly with providers such as Jefferson Health, which backed patient engagement software company Tendo Systems as investor and first design customer.
- • Managing partner Hemant Taneja and Chris Bischoff, who oversees the firm's global health care strategy, argue the downturn will push companies toward discipline and core-business focus.
Summary
General Catalyst, a 22-year-old venture capital firm based in Cambridge, Massachusetts, has taken a contrarian position in health care investing in 2022. While many VCs pulled back in the first half of the year, particularly from digital health, the firm has increased its commitment. Roughly a year after closing its first $600 million health care fund, General Catalyst launched its $670 million Health Assurance Fund II, which focuses on health system partnerships, according to the original report.
The firm is also building out its leadership and advisory bench. Marc Harrison, M.D., president and CEO of Intermountain Healthcare, will run its investment platform. He joins Daryl Tol, former CEO of AdventHealth, who became head of health assurance in June, and Stephen Klasko, M.D., former Jefferson Health CEO, who was named executive-in-residence in February.
Managing partner Hemant Taneja told Forbes that the market downturn, which has led to layoffs and cutbacks at major technology companies, is encouraging companies to refocus on fundamentals and discipline. Chris Bischoff, managing director overseeing global health care strategy, sees opportunity in building companies that are more intentional and focused on closing gaps in care and on management teams concentrating on their core businesses.
The backdrop is a sharp slowdown in digital health. According to CB Insights, venture investment in digital health totaled $17.6 billion in the first half of 2022, a 40% decrease from the same period in 2021. A Rock Health report noted that digital health exit activity has nearly stopped, with no companies going public in the first six months of 2022 after 23 public market exits in 2021.
General Catalyst's digital health strategy aims to replicate the success of chronic disease management company Livongo, with a focus on underserved communities and conditions such as musculoskeletal disorders, clinical workflows, and data exchange infrastructure. The firm also partners directly with health systems: it incubated patient engagement software company Tendo Systems with Jefferson Health in Philadelphia, which served as both investor and first design customer. General Catalyst also has strategic partnerships with HCA Healthcare and Intermountain Healthcare.
The firm is also building out its leadership and advisory bench. Marc Harrison, M.D., president and CEO of Intermountain Healthcare, will run its investment platform. He joins Daryl Tol, former CEO of AdventHealth, who became head of health assurance in June, and Stephen Klasko, M.D., former Jefferson Health CEO, who was named executive-in-residence in February.
Managing partner Hemant Taneja told Forbes that the market downturn, which has led to layoffs and cutbacks at major technology companies, is encouraging companies to refocus on fundamentals and discipline. Chris Bischoff, managing director overseeing global health care strategy, sees opportunity in building companies that are more intentional and focused on closing gaps in care and on management teams concentrating on their core businesses.
The backdrop is a sharp slowdown in digital health. According to CB Insights, venture investment in digital health totaled $17.6 billion in the first half of 2022, a 40% decrease from the same period in 2021. A Rock Health report noted that digital health exit activity has nearly stopped, with no companies going public in the first six months of 2022 after 23 public market exits in 2021.
General Catalyst's digital health strategy aims to replicate the success of chronic disease management company Livongo, with a focus on underserved communities and conditions such as musculoskeletal disorders, clinical workflows, and data exchange infrastructure. The firm also partners directly with health systems: it incubated patient engagement software company Tendo Systems with Jefferson Health in Philadelphia, which served as both investor and first design customer. General Catalyst also has strategic partnerships with HCA Healthcare and Intermountain Healthcare.
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