JPM 2013: “The Good, The Bad, The Funny & The Snake”

JP Morgan

Well, we survived another JP Morgan Healthcare conference.  While many complain about the madness that is JPM, we love it because 1) it marks the start of a new year and 2) it is one of the few times all year that we get to spend 100% of our time thinking about and discussing what the next great areas of healthcare innovation will be.

It has taken a while for us to dig out from our bloated inbox and the pages of meeting notes but here it is – our post-JPM conference recap and our first “Year of the Snake” blogpost.  Pardon the informality of this post but with more than 40 meetings and hundreds of encounters on the conference calendar, it was hard to sum up our week in one overarching theme.

  “The Good”

  • Overall, the mood and spirit at JPM felt very positive this year.   It was a really refreshing change after a couple years of a conference that felt in the doldrums due to larger macroeconomic concerns and uncertainty around healthcare reform.
  • Specifically, lots of investors and entrepreneurs are focused on new innovations in the healthcare service and HCIT sectors and are pursuing opportunities stemming from the passage and upholding of PPACA.   We are excited by this at BVP as our healthcare practice is  focusing all of its new deal investing efforts on these two sub-sectors
  • We love JPM because the days are chocker block filled with conversations about the future, about “skating to where the puck is going to be,” to paraphrase the great Wayne Gretzky.  And to have these conversations with some of the best and brightest in the industry is always very energizing.   Some of the big themes we took away from this year’s conversations and where we at BVP are looking for investments are:
  1. Technologies and services that enable hospitals, physicians and payors to better coordinate carewe have already made one investment in this space in a company called HealthEssentials but we will continue to look for more
  2. Data analytics or what we call EMR 2.0 –for more on our thoughts on this trend, see (https://hcvcs.wordpress.com/2013/01/04/riding-the-epic-wave
  3. Technology solutions which help payors, providers, and consumers with threats from data security breaches – we believe this will be a big trend/problem/threat with the rapid increase in the amount of digital data in healthcare.  It seems like every day we read a new story about a breach.   BVP has a long history of investing in successful cybersecurity companies (Verisign, Postini, Lifelock, to name just a few) and our partner, David Cowan, is one of the leaders in this field.   We are teaming with David to look for cybersecurity investment opportunities in healthcare 
  4. Seniors, seniors, seniorsanything that helps improve the quality and decrease the cost of care for this rapidly expanding patient population
  5. Consumerization of Healthcare – we spoke about this topic in a previous post (https://hcvcs.wordpress.com/2012/11/15/entrepreneurs-investors-should-no-longer-be-patient-about-consumerism-in-health-care).  BVP currently has two investments in this area (Liazon and GetInsured) and we will continue to look for more                                                              
  • One of the biggest stories of JPM was AthenaHealth’s acquisition of Epocrates.  Indeed, the news made for a nice start to the conference and we view it as a smart move by a really smart team at Athena to increase their reach and distribution to Epocrates 300,000+ doctor network.   But it is also symbolic of increasing strategic interest in innovation.  M&A activity by strategics in healthcare was up 10% last year – double that of the overall economy.   At JPM and over the past few months we have met with teams from Aetna, United, Wellpoint, Cigna, Humana, Kaiser, ClevelandClinic, Mayo, Partners and many other leading institutions who all express interest and have demonstrated activity in working with early stage HCIT and service companies.   We welcome their involvement and think it bodes well for strong venture returns in these areas.

The bad“The Bad”

  • While the overall atmosphere was generally upbeat, JPM was a bit of a tale of two cities as the number of “walking dead” healthcare funds was even more apparent this year than ever.  We don’t need/want to re-hash a much discussed topic but it has unfortunately become increasingly hard to raise a healthcare-only venture fund these days and the streets and cocktail receptions at JPM were filled with as many VCs looking to raise money as those looking to invest money.   Successful Avila Therapeutics CEO Katrine Bosley (@ksbosley) captured it best when she tweeted about VC’s attire at JPM: “if you wear a tie, you look like u want raise $. If you don’t wear a tie, you look like you have $ to invest.”
  • There has been a lot of talk recently about the pending Series A crunch – the idea that too many seed stage companies have been funded in recent years and many of these start-ups won’t be able to raise follow-on Series A rounds.  The seed stage frenzy wasn’t just limited to the tech sector as many investors at JPM talked about this trend affecting healthcare as well.  A number of investors commented to us that a lot of money has been plowed into early stage companies with unproven business models trying to mobilize/socialize/gamify healthcare; one specifically commented rather impoltically that “health 2.0 , to this point, stands for WTF”. 

    Rodin  “The Thought Provoking and the Funny”   The funny

Finally, we will end with some of the “best of” quotes from our week in San Fran.   When you hang around with a lot of smart and witty people for a week, you not only stretch your brain but you share a lot of laughs.   Below are just a few of our favorites (we have left quotes anonymous as these conversations weren’t “on the record” to use old journalist-speak but thought they were worth sharing regardless):

  • A HCIT entrepreneur said about designing product for physicians: “when I think about improving physician workflow, I always think about how we can increase the odds that the physician is able to get home from work before 5:30pm.”  Talk about providing real value prop for your customer!
  • A successful serial entrepreneur reflecting on the challenges facing early stage companies: “The # 1 enemy of start-ups is a lack of brand, the #2 enemy is a lack of time.”   Well said indeed!
  • The CEO of a SaaS healthcare company asked one of the most thought-provoking questions posed in all of our meetings: “Who will become the Salesforce-like platform of healthcare?”
  • The founder of a clinical decision support software company got us thinking when he asked: does ‘real-time’ data even matter if users only review it every thirty days?”
  • Another entrepreneur on his choice to work in healthcare:  “I am a capitalist pig make no bones about it, but I am also driven by the mission of the work.”
  • Finally, a high profile investment banker provided the best quote of the week when he said to us: “Boys, JPM signals the start of 2013 – the Year of the Snake.  And it’s time for me to get my new Zodiac Ferragamo tie!”  Well, we did a little research post JPM and it turns out the banker wasn’t kidding.   Ferragamo does indeed have a Year of the Snake tie!

Ferragamo

While snakes are far from the most coveted of creatures, the Year of the Snake is actually viewed as a strong year;  ancient Chinese wisdom says a snake in the house is a good omen as it means your family will not starve.  That’s good news but we at HCVCs have far more aspirational hopes for 2013.  We hope the Year of the Snake is a very prosperous one for the healthcare industry in general and, most importantly, for our readers!

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