Flare Capital Partners, the venture capital firm co-founded by partner Michael Greeley focused on health care tech, oversubscribed its third fund by $100 million.
The Boston-based VC firm founded eight years ago closed its third fund at $350 million, Greeley told BostInno, after filing to raise $250 million last fall. Flare largely invests in seed through Series A startups in health care technology, including mobile solutions, big data analytics and security infrastructure.
“It was a non-trivial decision to go slightly higher than the target,” Greeley said. “We’re not going to change the strategy at all. It just means there’ll be a handful more companies in this fund than there would have otherwise been.”
Venture capital investments in health care have been growing exponentially in recent years. In 2021, funding hit $28.3 billion, according to a report by Silicon Valley Bank, nearly doubling 2020’s numbers.
Greeley said he has witnessed a “paranoid urgency” to get into this industry now before the key players for the next couple of decades are solidified.
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“Google, Facebook, Twitter, all those companies were started 20 years ago. You couldn’t start another social network company or another search company today,” Greeley said. “There is a sense that given the pressures and the budgets to buy technology, that you got get in right now.”
Flare made 17 investments through its inaugural $200 million fund, which was raised in April 2015, and closed its second fund at $255 million in 2019, the Boston Business Journal reported. At the time, Greeley said he expected to make 20 to 22 investments through the second fund. Flare ended up making close to 30 investments through Flare Capital Partners II.
Flare’s portfolio of companies includes Cohere Health, which Greeley said launched three years ago with two executives he recruited from a prior portfolio company. Cohere now has several hundred employees and raised a $36 million Series B last April. Flare also partnered with Uber and Lyft to start Circulation, Greeley said, which was a company that moved people in and out of hospitals to avoid missed appointments. Circulation was acquired by Atlanta-based LogistiCare in 2018.
Greeley said the increase in investments through the second fund was partially driven by a move to invest in some smaller, pre-seed startups. Most of these investments went to participants in the Flare Capital Scholars Program, which gives young executives in full-time roles or academic programs the opportunity to supplement their professional development through interactions with the Flare investment team.
“They tend to be super technical, really over the horizon, innovative technical solutions,” Greeley said. “And as those get traction, we would hope to see many of them raise proper seed and Series A rounds.”
Greeley expects this third fund to finance investments in 25 to 30 core holdings, or 30 to 40 investments including pre-seed startups.
While Greeley declined to share the names of those who contributed to the third fund, he said a “significant portion” of capital came from strategic investors like hospital systems, insurance companies, big health retailers and lab companies. More than half of the capital came from more traditional financial investors, Greeley said.
