Why the “echo” in the Echo Health Ventures (EHV) brand name? What drove Cambia Health Solutions to combine efforts with Mosaic Health Solutions for this venturing initiative?
Cambia Health Solutions and Mosaic Health Solutions share the same focus on building a better, more efficient, consumer-centric healthcare system. Candidly, the name Echo reflects our early partnership discussions, common themes and perspectives. Leadership at both Cambia and Mosaic articulated not just this shared focus but also potential impact that our organisations could deliver together as partners, bringing dedicated access to network, expertise, resources, and scale to the next generation of emerging healthcare companies.
What is the new EHV team going to look like? Will it include all existing venturing team members from both Cambia and Mosaic? Where will its offices be located and why?
The EHV team will include the much of the existing Cambia and Mosiac health teams, including professionals from the investment, market development, subject matter experts, as well as support teams. We will also continue to staff up over the next year to execute on our plan.
Echo will maintain offices in Seattle, Durham, and Portland, with additional staff mobilised in the field to provide us coast-to-coast coverage. This model provides us close access to the resources of our parent and affiliated companies, while extending our reach, so that we are present with our portfolio companies and sourcing efforts.
Geographically speaking, what will be the investment scope of EHV domestically? Are there any innovation geographies of interest outside the U.S.?
The primary focus of our investment effort is to drive change through the healthcare system in the United States, so that’s where much of our sourcing activity will focus, although we have one international company in our portfolio and continue to evaluate opportunities irrespective of geography.
How exactly is EHV going to be structured? What is its reporting structure going look like vis-a-vis both corporate parents?
Echo Health Ventures is an independent investment and management company with equal, shared ownership and governance by Cambia Health Solutions and Mosaic Health Solutions.
Rob Coppedge will lead Echo Health Ventures as President and Chief Executive Officer, while Mark Ganz and Brad Wilson will lead the EHV board of directors. Mark Ganz is the President and Chief Executive Officer of Cambia Health Solutions, and Brad Wilson is the President and Chief Executive Officer of Blue Cross and Blue Shield of North Carolina.
What is the combined total capital EHV will seek to deploy and over what period of time?
EHV’s capital allocation places it among the top healthcare-focused private equity investment funds, and is well-capitalised to build a balanced portfolio of early, growth, and late stage company investments over the next several years.
How much will EHV seek to commit per company and what percentage of a company will it normally seek to own?
Our approach to venture is a style, not a stage – so we do not have to target a specific equity stake and back-solve to an artificial equity percentage or deal size target. Our approach is to determine the right investment parameters, including cheque size, on a deal-by-deal basis. We have enormous flexibility to structure deals for what is right for the company, as long as we have clear line of sight on how EHV is able to engage at the board and market development levels.
What value added will EHV provide to its new portfolio companies, given its double corporate backing? What synergies are envisioned with corporate divisions in terms of sharing expertise and striking partnerships?
The difference between EHV and other corporate venture investors is that in addition to the resources and scale offered by the parent and affiliated companies – which in this case is sizable (over 6 million health plan members), EHV has oriented itself towards a long-term commitment to deliver value to its portfolio companies as a way to compound returns. And I do not mean “commitment” in the soft, abstract way. I mean we have dedicated significant resources – professional teams of business development, subject matter experts, finance and operating professionals – all to contribute for the benefit of our portfolio companies. With that comes a deep engagement that may not be right for all companies, but for management teams seeking an experienced, dedicated partner at the board table alongside the capital provided, we may be just that right partner.
What is EHV’s ideal investment case? What is the “next great healthcare company” like?
Echo enables a shift to move healthcare to center around consumers, and provides the sourcing for innovations that make healthcare more efficient for consumers.
To what extent will EHV scout for potential acquisition opportunities for either corporate parent?
Echo Health Ventures is not an M&A “search fund” for the corporate parents. Our corporate parents have their own corporate development functions. Rather, our expectation is that each portfolio company will have its own liquidation event independent of us.
What opportunities and challenges do you see ahead for EHV?
There is an enormous opportunity – we are looking at a crowded landscape of companies and offering to partner with capital, scale and expertise to grow businesses. The challenge is delivering on the value we have promised. This is tough work and takes commitment and resources, and it also demands a structure be in place. We will also be adapting to the changing landscape and uncertainty. However, we remain committed to the same strategy of our parent companies, and have planned for a long-term approach to investment regardless of the current environment, ensuring we are positioned to move aggressively. It takes a lot more than capital to understand the complexities of healthcare, and Echo Health Ventures has the experience and resources to transform healthcare moving forward.
