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Exploring Consumer Driven Healthcare

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Exploring Consumer Driven Healthcare

  1. 1. EXPLORING CONSUMER DRIVEN HEALTHCAREHEALTHCARE INVESTMENT THESIS Chidi Nwankpa, MD Chicago Booth MBA cnwankpa@ChicagoBooth.edu July 14, 2020
  2. 2. This investment thesis is predicated on the following industry trends: ➢ COVID-19 pandemic crisis and its economic implications ➢ Aging population ➢ Rising cost of healthcare ➢ Increased consumer demand for flexible healthcare ➢ Emphasis on preventive medicine and healthy living ➢ Expansion of the role of social media in everyday living ➢ Advancement in AI and Big Data ➢ Regulatory reprioritization ➢ Increased healthcare information transparency INVESTMENT THESIS | CHIDI NWANKPA
  3. 3. The increasing consumerism of healthcare and the ubiquitous reliance on technology for shared, interactive connectivity are the fundamental drivers of this thesis. This positions investments in consumer healthcare as opportunities to transform the consumption and delivery of healthcare. Healthcare investing presents a plethora of opportunities for the buoyant healthcare disruptor. Various inefficiencies in the healthcare industry and the change in demographics to an aging population, provide a backbone for what the investment outflow of healthcare will look like in the near future. Despite the rising cost of healthcare, life expectancy in the US has remained relatively unchanged from 10 years ago. The need to transform the US healthcare industry is a shared concern among stakeholders that will drive innovations in the consumption and delivery of healthcare. INVESTMENT THESIS | CHIDI NWANKPA
  4. 4. Expectations of Millennials for healthcare Source: Our World in Data | Forbes Percentage of Millennials who want to schedule appointments through an app and access their medical records online. Percentage of Millennials who would choose a telehealth visit over an in-person one if given the choice. Percentage of Millennials who would prefer post care follow-ups via email or text message instead of phone. 71% 60% 66%
  5. 5. ➢ The increased demand on the healthcare system caused by the COVID-19 pandemic, triggered many healthcare organizations to make changes to their healthcare delivery systems. ➢ Consequently, Federal and State regulators were forced to temporarily relax regulations that historically have hindered the adoption of healthcare technology. ➢ This has led to the configuration of certain systems that will favor the increased adoption of new technologies post pandemic. ➢ Furthermore, the increase in the number of uninsured or underinsured consumers as a result of the loss of employment caused by the pandemic, will put more of the healthcare purchasing decisions directly in the hands of the consumer. ➢ These recent developments together with the focus consumers place on health priorities, preferences, and price sensitivity in their demand for healthcare services will serve as primary drivers for the shift towards tech-based healthcare. The COVID-19 pandemic has set the stage for a shift towards tech-based healthcare. Healthcare has been slow to adopt technology because the most frequent users of healthcare – Baby boomers and Silents – do not utilize technology the way younger age groups do. The digital age occurred at the midpoint of the Boomers’ life cycle, after their social networks had already been formed. Hence, personal and physical contact are more important to Baby boomers than digital connections and the use of technology to interact with others. As Gen-Xers and Millennials approach middle adulthood (age 40 -65), the age at which individuals become at risk for most chronic diseases, their relationship with technology today, will drive their preferences for healthcare services and delivery. INVESTMENT THESIS | CHIDI NWANKPA
  6. 6. Millennial healthcare consumers wants their digital healthcare experience to mirror retail. In this era of 1-hour shipping, consumers expect convenience, flexibility, and on-demand access from their healthcare providers. Big Data and AI will provide technological solutions to meet this demand. ➢ Most of the non-physical aspects of the doctor's visit will be moved online. Checking in, medical history taking, medication refill, specimen collection, tech-enabled home medication administration, imaging diagnosis. ➢ The main environment for healthcare would shift from being primarily in the physician's office to being cloud based. A significant proportion of nonacute care delivery models such as office visits, urgent care, home health services will be conducted virtually. ➢ We should expect to see most of the functions of the primary care physician (Family Physician, Internist, Pediatrician), Radiologist, and Anesthesiologist substituted with AI/ML. ➢ Retail stores (Walmart, Walgreen, CVS) will be major players in the consumer health space; involved in the retailing of at-home medical diagnostics, wearables, virtual health services, remote monitoring and biometric devices that enhance self-monitoring and diagnosis. ➢ Healthcare products and services marketplaces (Amazon of healthcare), where third party healthcare providers and patients can deliver and receive healthcare services, will be launched. Pharmaceutical consultations and purchase of prescription medications will also be available here. ➢ Consumers will be able to see reviews of providers and products (Yelp of healthcare) and they can select from a variety of providers. Algorithms will also be able to suggest providers that are best suited for patients using data analytics and artificial intelligence.
  7. 7. Shared, interactive connectivity will be the pillar of the tech-based healthcare. Social media has become a part of the everyday life of Millennials and Gen Z. The data shared on social media can reveal more about the average person’s lifestyle, habit, diet, mental state, and risk factors than several visits to the healthcare provider. ➢ The next generation of healthcare users will embrace sharing of health and wellness data on social media and other connecting networks. The increasing involvement of Big Tech – Amazon, Apple, Facebook, Google, and Microsoft – in healthcare will drive this. ➢ There will be an increase in the use of the smart phone to prevent, diagnose, treat, and manage diseases. This will be connected to other technologies like the smart pill (medication adherence), contact tracing (infectious diseases). ➢ Improved healthcare information transparency will foster collaborations and create new patient/provider business models that will be based on real-time clinical communication. Healthcare blockchain and cybersecurity products will develop to ensure that healthcare data are shared in a controlled manner. ➢ New social and mobile applications will develop that can allow groups of people with shared ailments to have live discussions and interactions. Already we are seeing YouTube channels, Facebook groups, and other platforms in which patients interact with one another and build followership. ➢ Online health goals, aimed at getting people to share their health and fitness targets, medication adherence, treatment progress, and lifestyle variables will arise (TikTok of healthcare); platforms that enable consumers and healthcare providers to crowdsource for diagnoses, treatment protocols, and disease management will be created (Quora of healthcare).
  8. 8. Questions to ask? Investment decisions in this sector should be informed by proper due diligence centered on the market opportunity, competitive analysis, product differentiator, company defensibility, and management’s execution. ➢ How painful is the problem this product is trying to solve? ➢ How likely are potential users to adopt this product? ➢ Does this product offer a significantly better user experience, functionality, information quality? ➢ Will the company’s brand/strategic alliances help to increase adoption? ➢ Will the product generate network effect? ➢ What is likely to be the consumer’s willingness to pay? ➢ How much out-of-pocket sales can this product generate? Even the best product will perform poorly without the right management team. Proper understanding of the backgrounds, skills, and executional abilities of the management team is critical to the due diligence process.
  9. 9. Based on this thesis, I believe that the consumer healthcare startups that are most likely to succeed are those that are primed to anticipate the health priorities of consumers, create connective technological solutions leveraging data analytics, and ensure that the technology aligns with the consumer’s lifestyle and affordability
  10. 10. EXCITING OPPORTUNITIES ➢ HEALTHCARE STARTUPS ➢ NON-THESIS STARTUPS
  11. 11. HEALTHCARE STARTUPS
  12. 12. Routinify Developer of technology-based remote healthcare solutions. The company's WellAssist program collects 24/7 real-time data from wearable and medical devices, as well as in-home sensors and the patient's own interaction with the at-home devices, enabling caregivers to take better care of patients ➢ Total Financing: $1.5M ➢ Last Financing: $1.5M ➢ Last Funding Type: Seed ➢ Notable Investors: Resolute Capital Partners ➢ Founder: Pat Kelly Serial Founder and CEO. Previous company, Onstate Communications acquired by TeleTech Holdings in 2012 for $3.27M Vertical: Virtual health/Telemedicine/Remote Monitoring ➢ Why now? The COVID-19 pandemic is driving a surge in demand for telehealth capabilities to help in diagnosing and treating patients. To facilitate the use of telehealth, regulators have eased restrictions, and payers have extended insurance coverage. This is likely to be a significant near-term catalyst for the industry that could have long-term ramifications as patients, providers, and insurers become accustomed to telemedicine. ➢ Why this? Technology will be critical in improving care for the elderly. Improved data analysis services will combine personal genetic and wellness data with population data to design individual care plans. The founder is experienced in building health tech companies. Company website: www.routinify.com INVESTMENT THESIS | CHIDI NWANKPA
  13. 13. Readout Health Operator of a digital biomarker and hardware research company. The company manufactures non-invasive, clinical- grade ketone measurement device for the DTC, clinical, and academic research markets, providing all-day feedback for personalized metabolic feedback, resulting in stronger protocol adherence ➢ Total Financing: $1.2M ➢ Last Financing: $1.2M ➢ Last Funding Type: Bridge financing ➢ Notable Investors: BioGenerator, iSelect Fund, Synchrony Bio ➢ Founder: Tim Ratto Biophysicist with previous roles in the US National Laboratory system, Lawrence Livermore and Lawrence Berkeley Laboratories. Serves as the company’s Chief Scientist & Board Member Vertical: Digital Health/Health Tech ➢ Why now? The biometric wearable & device technology market is expected to grow at a CAGR of 16.8% from $22.8 billion in 2019 to $70.9 billion in 2024. Biometric monitoring wearables represent most of the market, growing at a rate of 15.8%, while the smart fitness devices market is expected to grow at a rate of 24% ➢ Why this? It integrates with many nutritional and multi-patient platform apps and is reimbursed through RPM as a Class 1 device. The CEO James Howard has 27 years of experience as a MedTech executive. His most recent prior role was EIR at BioGenerator Company website: www.readouthealth.com INVESTMENT THESIS | CHIDI NWANKPA
  14. 14. Gali Health Provider of personalized medicine services designed for individuals afflicted by a variety of chronic conditions. The company's services offer a personalized health assistant that helps people manage their health and a platform for diagnostic and therapeutic discovery based on the analysis of population- level health, lifestyle and genomic information, enabling patients to get access to relevant and valid medical information ➢ Total Financing: $5M ➢ Last Financing: $3M ➢ Last Funding Type: Seed ➢ Notable Investors: Felicis Ventures, Bold Capital Partners, Civilization Ventures, 100 Plus Capital ➢ Founder: llya Kupershmidt Previously, founder of NextBio acquired by Illumina in 2013 Vertical: Artificial Intelligence & Machine Learning/Health Tech ➢ Why now? The digital economy has paved the way for convenient, customizable consumer health tools accessible via smartphone apps. Improved connectivity speeds enable consumers to access solutions on-demand, share information instantly and stream high-quality videos. AR and VR technologies have the potential to create powerful new experiences, particularly AR as it applies to brain activity analysis ➢ Why this? Experienced founder and CEO in the life science tech space. Significant serviceable addressable market (SAM) in the Elderly and disabled space Company website: www.galihealth.com INVESTMENT THESIS | CHIDI NWANKPA
  15. 15. Future Opportunity: Vaizian Vaizian is a medical diagnosis software company that helps doctors prevent misdiagnosis by combining clinical assessment with specialist expertise. The company’s AI software considers all patient data and diagnostic solutions to drive better patient outcomes at a lower cost. Founders: Ari Perlin and Mark Perlin (Background in System Analysis and Mathematics) Significant Opportunity Medical misdiagnosis accounts for about 30% of annual healthcare spending in the US. This number is expected to rise; driven by the aging population, growing clinician shortage, and increasing time spent by providers on administrative duties. INVESTMENT THESIS | CHIDI NWANKPA
  16. 16. Future Opportunity: Ollipsis Fertility Ollipsis Fertility provides egg freezing for free and generates revenue by making half of the retrieved eggs available for IVF patients in need of donor eggs. Goal is to expand fertility choices through education, options and access through a community that radically democratizes access to fertility preservation while increasing the options for parents struggling with infertility. Founders: Albert Castelltort Mikkelsen, James (Jim) van Horne, Anne Tong Significant Opportunity The rise in dual income households and the trend among women to have children later in life is fueling demand for fertility tracking applications that can help with conception. INVESTMENT THESIS | CHIDI NWANKPA
  17. 17. NON THESIS STARTUPS
  18. 18. Virtanza Provider of a virtual class program intended to offer sales education, certification, and job placement. The company's program helps aspiring professional salespeople turn their natural skills into rewarding careers in industries like health care, technology, insurance; enabling college students and adult learners who seek a pathway to income security with employers in need of qualified Business Sales Candidates ➢ Total Financing: $150K ➢ Last Financing: $100K ➢ Last Funding Type: Pre-Seed ➢ Notable Investors: Expert DOJO (Brian Mac Mahon) ➢ Founder: Debbie Holzkamp Previously co-founder Sales2job Academy – a licensed career school in Ohio Vertical: EdTech/TMT ➢ Why now? The economic recession and rising unemployment caused by the COVID-19 pandemic will increase the need for college students and young adults to seek out informal roles. Demand for these roles would also increase, as the economy re-opens and businesses start to resume services ➢ Why this? Company has partnership with colleges and universities. Notably, The Ohio State University, The University of California Irvine. Other partners include Groove.co and Document solutions. Company has successfully placed 80% of graduates in pilot testing Company website: www.virtanza.com INVESTMENT THESIS | CHIDI NWANKPA
  19. 19. BlackCart Operator of an e-commerce platform intended to remove friction during checkout and boosting conversions. The company's platform allows customers to try on clothes at home from their favorite brands without an upfront commitment, enabling businesses to increase sales and profit ➢ Total Financing: $2.15M ➢ Last Financing: $2M ➢ Last Funding Type: Seed ➢ Notable Investors: Struck capital, Revel partners, 500 startup, Mana Ventures ➢ Founder: Donny Ouyang Serial founder: Notable previous companies –Kinkarso Tech, Rayku, experience raising funds Vertical: E-Commerce ➢ Why now? Mobile ecommerce retail sales is expected to reach $3.5 trillion by 2021. One of the limitations of online clothing shopping is the inability to try on clothes prior to purchase. It is estimated that around 80% of online shoppers don’t make purchases from ecommerce sites that have problematic return policies; this leads to lost opportunity for online clothing companies ➢ Why this? Founder is a serial entrepreneur with experience raising funds. Raised $2M (CAD) entirely over Zoom during the pandemic Company website: www.blackcart.com INVESTMENT THESIS | CHIDI NWANKPA
  20. 20. Magic Developer of software development kits (SDKs) intended to end the era of passwords. The company offers SDKs that allow developers to build applications with fast, customizable, passwordless login; enabling developers to add passwordless authentication in their applications ➢ Total Financing: $4M ➢ Last Financing: $4M ➢ Last Funding Type: Seed ➢ Notable Investors: Placeholder, Naval Ravikant, Lightspeed Venture Partners, Volt Capital ➢ Founder: Sean Li Previously- Co-founder of Kitematic acquired by Docker in 2015 Vertical: CloudTech & DevOps/SaaS ➢ Why now? As companies adopt permanent work from home or hybrid versions, Enterprises will have to figure out secure ways to grant employees remote access to permissioned networks. ➢ Why this? Magic aims to make passwordless the gold standard for online applications. Technology already works with decentralized exchanges (DEXs) like Uniswap and RadarRelay. Current investors such as SV Angel have complimentary portfolio (Coinbase, Stripe, Airbnb, Doordash) Company website: www.magic.link INVESTMENT THESIS | CHIDI NWANKPA
  21. 21. Future Opportunity: Emojent Emojent’s MPath is an AI-based software product that utilizes AI technology to provide enhanced insights about participants to market research companies in consumer studies such as online and in-person surveys, interviews, and focus groups. Significant Opportunity The changing consumer behavior and marketing environment creates limitations to the benefit of market research. The ability to control for some of these changes by using AI to track consumers and provide enhanced insights about them will greatly improve the value of market research to enterprises in helping to predict, customer lifetime value and churn rate. INVESTMENT THESIS | CHIDI NWANKPA
  22. 22. ABOUT ME ➢ HOW I MAKE INVESTMENT DECISIONS ➢ PROFILE
  23. 23. HOW I MAKE INVESTMENT DECISIONS ➢ Lifetime access to University of Chicago Polsky Center for Entrepreneurship and Innovation (Incubator for GrubHub, AgileMD, BrainTree, Justo) ➢ Member of Society of Physician Entrepreneurs (SoPE) ➢Member of MBAs in VC (Exclusive network of MBAs from top business schools- Chicago Booth, HBS, Stanford GSB, Wharton, Haas, Columbia GSB, MIT Sloan, Kellogg, and Ross) ➢Member of Blck VC (Network of Black and Latino Founders and VCs) ➢Outsource: Blog and Twitter (Founders and other VCs reach out to me) Sourcing: ➢ Things I evaluate: Market opportunity, Management team, Product, Business Model, Competitive landscape, Investment Positives & Concerns, and Exit Opportunities ➢ Resources: Industry thought leaders, Corporates, In-network calls, Pitchbook, Crunchbase, Tech Crunch, LinkedIn, Management Team ➢ Financial Tools: Financial Modeling, Valuation, Cap Table Screening & Due Diligence: ➢ Health & Wellness companies: Firsthand experience of the US healthcare system as a Physician; Healthcare Startup experience ➢ Non-Healthcare companies: Previous startup and investing experience; MBA with specialization in Finance and Entrepreneurship Portfolio Support: INVESTMENT THESIS | CHIDI NWANKPA
  24. 24. PROFILE I am a recent MBA graduate from The University of Chicago Booth School of Business. Prior to business school, I was a practicing physician in family medicine before moving into the healthcare startup space. I spent two years at Primed eHealth, designing and implementing one of the first electronic medical record systems in Nigeria. After Primed eHealth, I joined Mobicure, a healthcare startup sponsored by the United States African Development Foundation. As the Director of Strategy, I oversaw the creation of Omomi, a pioneer telemedicine software, and grew Mobicure’s user profile from 5000 to 25,000 in seven months. Our success with Omomi led us to win the United Nations Sustainable Development Award for innovation. Since 2016, I have worked in the U.S. in various capacities as a physician, entrepreneur, and investor. Most recently, I interned as a VC Summer Associate at Creative Ventures in San Francisco. I sourced deals by leveraging internal networks; attending events, conferences, and demo days; and reaching out to exceptional founders. Experience: ➢ The University of Chicago Booth School of Business, MBA (Recipient of 1898 Merit Scholarship award, Booth Ambassador Award) ➢ University of Benin, MD (National Merit Scholarship) Education & Awards: ➢ Interests: I love to dance, and I teach hip-hop dance fitness classes; I was also a professional cyclist (retired) ➢ Contact: LinkedIn: https://www.linkedin.com/in/nwankpacu/ Twitter: https://twitter.com/nwankpacu ➢ Website: https://chidinwankpa.com Blog: https://medium.com/@nwankpacu/ Interests & Contact Information: INVESTMENT THESIS | CHIDI NWANKPA

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