Oftentimes, the most successful founders identify persistent problems within complex industries and build startups around new solutions.
They're the type of founders that a new Austin- and Chicago-based venture capital firm hopes to support.
Create Health Ventures, which has just closed on its initial $21 million fund, is trying to find founders who have had careers in health care but now want to tackle the problems they know best. The fund's investors primarily include health care executives who've had their businesses acquired, as well as strategic investors such as New York-based marketing agency Butler/Till.
Create Health Ventures was founded by Austin-based Emma Cartmell and Chicago-based Amit Aysola. Both have deep backgrounds in the health care industry as executives and investors.
She met Aysola at a health care conference, and the two realized they liked to invest in the same types of companies – those with founders who have built careers in health care. The idea is that the founders recognize the problems and understand the complex environments that hospitals, pharmacies, insurance companies and other providers exist in.
"There's a lot of great tech talent in Austin, and you can hire the greatest tech talent to come and support you on your journey," Cartmell said. "But I feel that founders who have lived the problem deeply and understand it just do a much better job of ultimately solving and then articulating the problem to the buyers and getting people bought in to buy. So for me, it works better if the founder comes from health care and they just hire their tech talent."
The firm plans to make roughly a dozen investments with its new fund. It focuses on business-to-business solutions that payers and pharmaceutical companies can use to improve patient engagement, as well as recruit and retain patients for clinical trials.
“There is a massive need for innovation in the pharmaceutical field around clinical trials, as the number of late-stage trials are increasing at a fast clip,” Aysola said. “More robust and holistic technology solutions that enable the recruitment and retention of trial participants are what’s needed to keep up with this rising demand.”
Create Health backs companies at the seed stage and it will follow on by investing larger sums in series A funding rounds. It has already invested in five startups, including Illinois-based companies Advocatia Solutions and Carallel.
Aside from funding, Create Health Ventures has developed a broad network to help its portfolio companies learn from each other and connect with payers in the health care market, such as insurance companies.
"All of our CEOs are selling into the same ecosystem, and we host a lot of cross-selling dinners between our portfolio company customers," Cartmell said. "All of our CEOs know each other. They understand what everyone else is selling in the ecosystem, and they help open doors for each other, and this cross selling has been incredible."
Aysola is a former principal at Healthcare Growth Partners, and he is an adviser to the Michigan Biomedical Venture Fund and the Institute for Artificial Intelligence in Medicine at Northwestern University.
Cartmell was chief operating officer at Abraxis BioScience, which was acquired by Celgene Corporation in 2010 for nearly $3 billion. After the acquisition, she helped Abraxis' board chairman set up a family office that invested over $1 billion in companies finding cures for cancer.
After that, she moved to Austin and got involved with the Central Texas Angel Investors group and starting making angel investments in health tech companies, including local startups QbDVision, DocStation and Visie Inc.
"I absolutely fell in love with Austin," she said. "I love the ecosystem. I love how founder friendly it is. I really love how collaborative everyone is."
