There are few venture capital firms able to raise $700m for a debut growth fund and few stars able to lead such an entity and convince investors to commit.
In Joe Volpe, US-listed drugs group Merck, though has just such a person. He likes to “work hard and play hard” and even has the broken bones to show for it.
Since early last year, Volpe has been general manager of Merck’s $700m private equity fund as well as a managing director in the $500m venture fund, Merck Global Health Innovation.
Both these funds are run by William Taranto, a former colleague of Volpe from Johnson & Johnson, the oldest corporate venture capital (CVC) unit in the sector.
Taranto, president of the Merck Global Health Innovation fund, said: “Joe Volpe has been instrumental in co-developing and leading our transformation from a simple corporate venture firm into one that executes on venture capital, growth equity and M&A.
“He was recently put in charge of our growth equity company because he has shown extraordinary capabilities in building out the ecosystem strategy I have implemented at Merck Global Health Innovation. He is not just a rising star. He is a star.”
Volpe said his main tasks for the new growth equity fund were to “strategise and execute investments around several ecosystem theses within heathcare information technology, remote monitoring and patient-physician engagement.
“My attraction to CVC is primarily around the ability to look at the bigger picture within healthcare and design and build offerings that are not a single point solution but a larger, more dynamic collaboration of offering. This creates more monetary value and is usually game-changing in nature within healthcare.
“I execute these ideas by investing in later-stage, digital health entities using venture funding as well as using the growth equity fund to grow, bundle, merge and bolt on entities where appropriate. I have made more than one-third of Merck Global Health Innovation venture investments with over 45 transactions in total between venture, M&A, growth equity and follow-ons.”
Having scoured investment targets by the thousand, he now sits on seven portfolio company boards. His M&A deals include ECardio, Medhelp, Tomorrow Networks, QuantiaMD and C3Nexus. There are several others in the pipeline.
He added: “I have been fortunate to not only have had some significant exits such as Humedica, Physicians Interactive and Preventice, within my time at Merck, but I have also been able to realise three ecosystem roll-ups and many M&A successes, yielding what I feel are very innovative disruptions in healthcare.”
The Humedica deal was completed in six weeks, held for only seven months and yielded a 17-times return, he added.
After a merger with ECardio and a spin out after acquisition, Volpe said the Preventice asset deal paid Merck back more than 80% of what was invested and left it still owning approximately 48% of the asset with significant value.
For this deal and the remote patient-monitoring thesis that underpinned it, he won his second divisional award at Merck. This thesis was one of three ecosystem strategies he devised and put into effect with the others in healthcare information technology and physician-patient engagement anchored by the Physicians Interactive platform.
However, Volpe said while such theses were useful, the parent corporation’s strategy could still go in a different direction.
He said: “It is difficult digging up innovative investments in our focus areas, as well as finding companies ready to invest, as well as those entities understanding our thesis or investing strategy, as well as aligning all parties’ timing, as well as mixing venture, growth equity and M&A.
He said compensation had often lagged comparable remuneration to VC peers. “Although getting treated fairly is important, and CVCs need to get more of a VC model from a compensation point of view, I still get satisfaction in having the ability to change healthcare for my children.”
Greater changes could come if more corporations collaborate, Volpe said. “The power of combining forces and not letting greed guide you, if done correctly, will yield much more than a single entity going it alone.
“Our position is that Merck does not need to own or control all the assets we invest in. As a result, what we spin out and bring in is more valuable monetarily and from a functionality perspective as well.”
Volpe has worked at Merck for just over five years and was with Johnson & Johnson for 23 years in many operational, strategic and investment roles. Before that, he was an engineering consultant at Electronic Data System and said “coming through its three-year programme was one of the hardest things I have done in my life. More difficult than any degree I received.”
“For fun”, he is a serial marathoner, an “avid four-wheeler” – a driver of all-terrain vehicles – and has broken bones horse riding in the mountains of New York and Pennsylvania.
As a result, “work hard, play hard” seems appropriate for the motto he has chosen.