US-based healthcare services provider Providence Health & Services is set to make investments of up to $5m through its recently formed corporate venturing unit, the company’s senior vice president of strategy and innovation Aaron Martin told Global Corporate Venturing.
Providence Ventures was launched in September with $150m of funds, and Martin stated that it will concentrate on investments at early stage where it can use its resources to help companies develop technology it can use in its day-to-day operations.
“We are going to mainly focus on earlier-stage companies, so it will be pretty rare that we in invest in, for instance, a mezzanine round,” Martin explained. “We are going to be mainly focused in seed and series A with a smattering of series B, so that means it is going to run the gamut from seed-level investments of, call it $250,000 up to $4m or $5m.
“We are going to be very focused on companies where we think we can add specific early value. For example, we will be more likely to work with a company that, for instance, has a specific clinical application or a better way of giving patients access to the health system – those types of health-related applications, or even a medical device – than a more generalised IT system that could be used across industries.
“The reason is that we can add less specific value around that; they can certainly inform discussions but, say an early version generic data visualisation shopper like Tableau for instance, something that could be used across industries, is the type of investment in which we would be less likely to be involved.”
Providence Ventures is part of a three-pronged strategy the company is instituting in order to harness advances in digital technology that can improve its business, the other two involving a dedicated digital innovation team that is building the infrastructure that will allow the companies in which Providence is investing to collaborate with it, and a team that will focus on consumer services that can help keep customers healthy.
“I joined the company back in January and was at Amazon for nine years prior to this, and one of the reasons why our CEO Rod Hochman and Mike Butler, our COO, hired me is to drive digital innovation at Providence,” Martin said.
“There is a lot of activity in innovation and healthcare IT, probably more than there has ever been, and it is being driven by the massive changes in the healthcare system right now. A lot of that has to do with consumerism.”
The $150m will be allocated in five to seven years, and Providence Ventures has elected to target start-ups developing technology based around online access to primary care, care coordination, patient engagement, tools to help clinicians engage with patients and manage chronic diseases and data analytics.
The company has firm ideas on the kind of areas it requires technology fixes, but its existing capabilities also mean it can fund companies working in other areas where it can provide assistance and ultimately profit financially from an equity stake.
“What we are working on is being very specific about the problem statements we have got, so that we can be focused in our search around technology solutions that may already be out there as well as solutions that may be plus or minus 10% from the target we are going after,” Martin said.
“We can maybe help those early-stage companies that are more focused on specific problems we are trying to solve.
“That is one direction but we are also keeping our ears open to new and innovative ways companies are solving problems we did not know it was possible to solve through digital. That happens from time to time as well. You do not want to ignore that other direction where someone is presenting to you a novel way to deal with a problem in the healthcare system and asking whether you are interested.”
– Photo of Aaron Martin courtesy of LinkedIn