Healthcare investments set an all time record for VC investing in 2007!

Venture capital firms are investing heavily in the healthcare sector. Life sciences (biotechnology and medical device industries) and healthcare services are a trendy investment nowadays… and we have been anticipating the trend for quite a while now, I’m so happy to say so!

Last year was by far the biggest year in health-care venture history, according to the MoneyTree Report. The medical devices and health-care services and information technology sectors have generated an intense deal flow in the past six months here, at the Barcelona Medical Association. From one idea per week last year, we’ve moved to more than one idea per day.

An aging population that refuses to give up its active lifestyle, coupled with evolving medical technologies, are fueling those health-care deals.

Here in Europe, at last, we are seeing new capital being raised by dedicated health-care funds, or even diversified funds with a strong health-care focus. About time!

Moving from academic research to entrepreneurship

There is always some tension between academic research, applied research and entrepreneurship. While academic research is primarily driven by curiosity, applied research and entrepreneurship need to solve a real world problem. Scientists working in healthcare (and I guess this could apply to any field) have an extraordinary desire to test things, curiosity is what at the end of the day makes them go to the lab on a Sunday afternoon just to see if an experiment has proved them right or wrong (where else would someone go to work on a Sunday afternoon?). This is obviously great, and it is a fantastic driver of science, but to help people, ideas need to move to the real world and get to the marketplace, and therefore they need to be able to solve problems.

Basic research pursues an increase in knowledge. More and more knowledge is again the driver of scientists. But this knowledge needs to be protected in order to get to the marketplace, and (whether we like it or not) this is done through IP protection, through patents (see my previous post patents are so XXth century).

And finally, scientists are eager to publish things, to show their accomplishments, to get respected in their academic world. The system rewards or punishes them depending on the impact and number of publications in prestigious journals. Again, this is not good or bad, it just reflects how science is structured, but scientists working in healthcare should be aware that publishing is not the ultimate goal, but commercializing whatever they are working on to help patients and society.

By solving this tension between the two worlds, we will innovate faster and better.

From idea to opportunity

A lot of good ideas are, well, good ideas, but not opportunities. I went yesterday to an international event about technology transfer hosted by ACC10-COPCA-CIDEM, excellent event by the way, and someone from the Massachusetts Institute of Technology (M.I.T) really described the process of identifying opportunities in a very appealing manner. He recommended entrepreneurs to ask themselves four questions:

(1) Who needs this and why?

(2) What attributes are important? (meaning, how should the product or service that I am willing to bring to the marketplace be to become really useful?)

(3) What are the economics?

(4) What will investors need to see in order to get interested?

These four questions can probably be answered in one hour if the entrepreneur really knows what he/she wants to do, and the answers are crucial to define the magnitude of the opportunity.

Keiretsu

The japanese word Keiretsu defines a set of companies with interlocking business relationships and shareholdings. It is a type of business group.

Keiretsu Forum is the world’s largest angel investor network with 750 accredited investor members throughout sixteen chapters on three continents. Since Keiretsu Forum’s founding in 2000, its members have invested over $180m in 200 companies in technology, consumer products, healthcare/life sciences, real estate and other segments with high growth potential. Forum members collaborate in the due diligence, but make individual investment decisions, with rounds in the range of $250k-$2m.

Its Barcelona chapter just opened some months ago. I’ve been following it since then, because it represents a very interesting alternative for raising money for very early stage start-ups looking for a small quantity of money. I’ve participated in all their meetings so far, and I must say I am deeply impressed by their professionality. Interesting companies, interesting opportunities.

Well, two months ago, while advising a very promising team of entrepreneurs willing to bring a new medical device to the marketplace, I suggested them we should present their company to Keiretsu. And we did.

Everything went OK, and after the general presentation, and some “face to face” meetings with investors, last week I received confirmation from the entrepreneurs they finally raised €500.000 with a very competitive pre-money valuation and a very interesting deal structure.

So, yes, the Barcelona Keiretsu forum is here to stay! Congratulations Keiretsu Barcelona for your second “completed” investment, and congratulations Health Solutions for a well managed fund-raising opportunity.

Healthcare 2.0: hype or reality?

Tomorrow I’m giving a lecture on Healthcare 2.0, trends that will drive the future of our healthcare system. While preparing my slides, it came to my mind that the Internet will end up by rationalizing, and making transparent all of those forces that have contributed to the current health care market failure.

Health 2.0 will be a game changer, wikis, mash-ups, videos, bloggers, and assemblers of user-generated data – all designed to connect health care consumers, providers, and players in a seamless web of data and ideas.

Health 2.0 will provide simple applications allowing the use of information at the site of care by end-users, that is patients and doctors and everybody else connected to health care. A winning combination of evidence-based information, sophisticated algorithms, centralized data repositories, and user-generated data will hold health 2.0 together

Websites such as Sermo or patients like me are gaining speed at attracting physicians and patients. Other European initiatives, such as esanum are coming to the marketplace as well.