High Stakes

How GE Ventures Finds Healthcare Entrepreneurs Who Solve Problems

Alex DeWinter GE Ventures

The news cycle is full of tech companies entering healthcare with much fanfare. But meanwhile, one of the top 50 corporations in the world has been quietly driving the industry towards the future.

For years, GE’s venture capital arm GE Ventures has been looking for the next best technology to keep its $20 billion healthcare business ahead of the curve.

Alex De Winter, a Managing Director at GE Ventures, spends his time searching for smart startups and strategically brokering introductions to his company. Finding the right fit takes time – last year, De Winter spoke to more than 400 entrepreneurs and funded one.

Jarrard Inc. caught up with De Winter at the 36|86 technology and entrepreneurship conference in Nashville, where he said that more and more, corporate investors like him are funding solutions that bring care outside the four walls of the hospital. He also explained why he tends to avoid “guns-blazing” entrepreneurs, and called trends on the horizon that make it fun to go to work.

Jarrard Inc. How is corporate venture capital different than other types of funding for entrepreneurs?

Alex De Winter: For any one problem you see in the healthcare system, there are dozens and dozens of startups trying to address it. Health systems are inundated with all these startups saying, “Hey, you should pilot us.” A differentiating factor for us is that we know the health system and we know how to grow and scale companies.

It seems like often, health systems and startups fail to connect. Hospitals move slowly, startups don’t know the system. How do you dodge that communication breakdown?

We often see entrepreneurs come out of other fields and go into healthcare thinking they’re going to solve everything. Then they run into regulatory hurdles and HIPPA compliance issues and reimbursement problems and culture problems.

We try not to invest in those entrepreneurs. We’re not going to introduce a health system to a startup that’s guns-blazing, wild-eyed, thinking they can fix everything. We’re trying to invest in thoughtful, experienced entrepreneurs who know the healthcare system and are solving a problem they understand well.

Besides good leadership, what’s another indicator that a startup is worth the investment, long-term, given the chaos in the industry?

Our goal is to have investment themes that are effectively timeless. There are a few easy layups. For example, we have an aging population, so we’re looking at solutions that better service the elderly, even as the number of doctors decreases. Also, the hospital is the most expensive place to care for the patient. So we’re interested in people looking at moving care closer to the patient home.  

Fundamentally, our investing approach is backed by a health economic argument.  Although spending on healthcare continues to expand faster than GDP, we recognize that’s unsustainable. So we ask ourselves: how can our investments help bend that cost curve? How can we improve quality, decrease cost and improve access?

There are a lot of headlines around Amazon and Apple entering healthcare. You’re a big tech company making significant investments in this space – why isn’t GE in the news the same way?

Apple, Amazon and JP Morgan are a great example of a non-traditional partnership that is exploring a new healthcare model.  I think we will start to see more of these types of collaborations. GE Healthcare has been in the healthcare business for decades.  As a technology provider, our business model is different.

What are you seeing in the industry that makes you most excited about your work?

The application of AI or machine learning to healthcare is going to be huge.

Take radiology, for example. Now, there’s an undeniable subjectivity when a radiologist reads an MRI – a radiologist before a cup of coffee is different from a radiologist after a cup of coffee, which is different from one who’s had five years of training versus 20 years of training. As a patient, that should bother you. Machine learning isn’t going to replace radiologists, but instead it will augment them, allowing them to use data from exponentially more scans and diagnose faster.

Another area I find exciting is liquid biopsies. Soon, clinicians will be able to take a blood sample and look for traces of cancer either in shed protein cells or DNA. That will be transformative to the healthcare system. Already, cancer is moving from being a mortal diagnosis to being one that’s more of a chronic disease, just with improved therapeutics. But with improved diagnostics, it may become fully tractable. I find that very exciting.

People may not think of venture capital playing this role, but it sounds like the technologies you’re investing in could save lives.

This is one of the reasons why I think venture capital can be really gratifying. I’m not overselling my role. My role is to hand them money and say, “Go, do it.” But to see the companies that get investment money make a clinical impact is incredibly satisfying. It’s an awesome gig.

 

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