The founder of a healthcare venture fund that just raised $200 million shares why she wants to back founders that are building businesses for their communities

lynne chou o'keefe

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One of digital health’s only early-stage venture firms just raised a fresh tranche of funding to help the youngest startups get off the ground during a pivotal year for the industry.

Define Ventures raised $200 million for its latest fund, the second since it was founded by ex-Kleiner Perkins investor Lynne Chou O’Keefe in 2018.

The early-stage firm will continue making new investments in companies in the incubation stage all the way up to Series B, Chou O’Keefe told Business Insider.

The new fund’s timing, coming after a record-setting year of private investment in healthcare startups, was purely coincidental and on track with the typical two-year fundraising cycle at most firms, she said.

“We’ve had well-timed investment cycles,” Chou O’Keefe said “But the activity has increased, overall, post-COVID.”

Read more: A former Kleiner Perkins investor is staking out the future of digital health. Here’s why she just made an early bet on an in-home care startup founded by a former Uber exec.

Define wants to back early startups rebuilding the healthcare system with patients at its center

Chou O’Keefe said she anticipated keeping up the pace in 2021, writing more checks to companies she believes are reimagining what it’s like to be a healthcare patient in the United States. In Define’s first $87 million fund, she backed a wide range of digital health startups, including LGBTQIA+ primary care startup Folx and in-home care provider MedArrive.

She said to expect more of the same coming from Fund II, with consumer-focused healthcare startups taking center stage over other companies that want to sell services to hospitals or insurance companies. The firm’s thesis formed around backing companies that use technology to reimagine the patient’s experience of healthcare was successful enough in Fund I to earn a vote of confidence in Fund II, Chou O’Keefe said.

“We haven’t seen our strategy shifted, it’s more that the time to market has really shortened,” Chou O’Keefe said. 

In practice, the consumerization of healthcare Chou O’Keefe wants to back varies widely. It can look like Dawnlight, a startup that makes remote monitoring products that track fall risks, among other specialties. It can also look like Lightship, a startup that runs decentralized clinical trials that are easy for participants and researchers to use. All these startups, however, share the unique challenge of marketing to regular patients instead of working directly with hospitals, doctors, or insurance companies.

“The make-or-break of digital health is the commercial side of the business,” Chou O’Keefe said. “That’s something that is so critical, and when I started Define the lack of sector-focused early-stage players was a window of opportunity for us because these entrepreneurs need help to build. It takes a village to change healthcare for all of us.”

Chou O’Keefe is betting that founders want to build for their own communities

Chou O’Keefe will write checks from $1 million all the way up to $15 million, depending on the company’s needs. As a former Livongo board member and current Hims board member, she said Define can lead funding rounds that require the active board support, but ultimately leaves that decision to the entrepreneur. 

“Entrepreneurs recognize the oil from water here,” Chou O’Keefe said. “There are people that can partner with you and build these companies with you, but the lessons learned from tech don’t apply in the healthcare space.”

Her investment strategy is in part a bet on authentic founders, she said.

She is particularly interested in supporting the entrepreneurs that are building solutions for their own communities because that perspective can be a differentiating factor that contributes to a company’s success.

Of Define’s 12 portfolio companies, four are founded and led by women, one of the many communities Chou O’Keefe feels has been left out of high-level healthcare business decisions in the past.

“It’s important we have women founders and CEOs in this space because we make the decisions, and it’s really the right business decision as well,” Chou O’Keefe said.

SEE ALSO: The 26 billion-dollar startups to watch that are revolutionizing healthcare in 2021

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Fertility benefits company Progyny lost 85% of its business at the start of the pandemic. Here's how its CEO is ramping up an aggressive growth strategy fueled by acquisitions.

Summary List PlacementLike many Americans, fertility benefits provider Progyny is dusting off its 2020 goals, many of which were sidelined at the onset of the coronavirus pandemic, heading into the new year.
The company, which went public in September 2019, saw an 85% decrease in its business in the early months of the pandemic, CEO David Schlanger told Business Insider. Across the country, fertility clinics closed to comply with regional stay-at-home orders in an effort to stretch meager supplies of personal protective equipment, and many treatments were considered non-essential by state and local governments wary of potential hospital surges.
Progyny works directly with companies to offer fertility benefits to employees. Companies pay Progyny for access to fertility treatment and pharmacy benefits based on how many employees choose to use those benefits. If fewer employees opted into treatment, either because clinics were closed or they simply delayed treatment during widespread uncertainty, the company would pay Progyny less than it had before.
“The period of time through COVID was stressful for us, especially when our revenues dropped by 85%,” Schlanger said.
Within four to six weeks, however, clinics started reopening and procedures picked back up, Schlanger said. He attributed that to the time-sensitive nature of fertility treatments that have improved odds of success the earlier in a person’s life they begin.
“Fertility treatments are not emergency treatments, but there is an urgency factor to it,” Schlanger said.
Read more: The 26 billion-dollar startups to watch that are revolutionizing healthcare in 2021
Progyny is looking for acquisitions to expand Progyny’s reach
In the final quarter of 2020, Progyny’s revenue surpassed $98 million, exceeding expectations and growing nearly 62% year-over-year. The company lost most of its revenue in the second quarter of 2020, reporting just $64.61 million in revenue for the three-month period, a drop from the previous quarter’s roughly $81 million in revenue. 
The V-shaped recovery has placed Progyny in a good position to start reevaluating growth plans the team had abandoned in March.
Instead of focusing on keeping the business alive, Schlanger is able to set his sights on acquiring other businesses that could expand Progyny’s reach in the murky world of fertility healthcare. 
“The nice thing about being public is we can do strategic transactions with third parties to make ourselves better,” Schlanger said. 
Although Schlanger declined to specify which areas or companies he has an eye on, he said Progyny’s proximity to women’s health presents enough of an opportunity to expand into different kinds of benefits it can then sell to employers. 
“There are a lot of things we can pursue, but like anything else we have to prioritize them,” Schlanger said.
Schlanger said he doesn’t foresee the reverse happening, in which a large healthcare company purchases Progyny, now that it’s recovered from last year’s decline. He is focused mainly on transactions that “move the needle” for the company in a material way and building up a base of paying companies that has remained fairly resilient to layoffs and cost-cutting to date.
Since the pandemic began, he said Progyny has added 45 new clients and covered an additional 400,000 people.
“We really didn’t miss a beat,” Schlanger said of the company’s sales targets. “We really flourished. We got through it much better than other companies.”SEE ALSO: One of digital health’s only dedicated early-stage venture firms just raised $200 million for its second fund. Here’s how founder Lynne Chou O’Keefe plans to spend it.
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A startup that raised $175 million to fix primary and urgent care is still struggling with what its CEO called the 'most complex' problem in healthcare

Summary List PlacementSome of healthcare’s problems are so complex that even the most well-funded startups struggle to fix them.
Carbon Health cofounder and CEO Eren Bali found out as much as his company tried to make prices for doctor’s visits, routine procedures like blood tests, and comparative prices for diagnostic tools like MRIs and x-rays transparent for patients, a feat that sounded simple at first but quickly ballooned into a much larger, systemic problem.
In a Twitter thread posted on December 27, Bali ran through the challenges he and his team had identified in trying to create a menu of sorts for different procedures and treatments for Carbon Health patients.
In the end, he ultimately said the fix lies with insurance companies — not healthcare providers — to fix the way patients and clinics are expected to pay for healthcare in the United States.
“The problem is on the payer side,” Bali told Business Insider. “The payer systems are old and antiquated, and that’s opaque to providers. We are doing all we can on the provider side.”
Read more: $1.5 billion digital-health startup Ro wants to be your online doctor. Here’s how its coronavirus response rooted in rapid at-home testing fits into the new unicorn’s long-term strategy.
Calculating prices ahead of visits proved difficult
Carbon Health serves a wide variety of patients with its urgent and primary care services. It offers booking through an app, and also added virtual visits to any patient seeking care but hesitant or unable to go into one of its physical clinics.
Ideally, Bali said, Carbon would be able to show patients the costs of these services upfront so that the doctor and patient can decide on the best course of treatment together, but hasn’t made as much progress as he would like.
Some relatively new healthcare entrants like Walmart have similar ambitions in making shopping for healthcare just as easy as shopping for groceries. Patients can find Walmart’s cash prices online, such as a primary care visit that costs $40.
Carbon Health has developed a system that works well for patients without insurance, Bali said, because pricing is more straightforward. It created a data analysis tool that looks at different inputs such as existing conditions, Carbon’s cost of service, and other factors to provide an up-front cost to uninsured patients, Bali said. For example, Carbon charges uninsured patients $195 for a primary care sick visit and $69 for a virtual visit, according to its website.
But it was when that same system was trained for patients with insurance that things started to unravel, Bali said. The calculated costs for patients with similar backgrounds, insurance plans, and symptoms only matched 40% of the time, Bali said.
“We can’t explain the difference,” Bali said.
Insurance companies are built on out-dated systems
Part of the variance can be explained by how complex insurance plans are, Bali said. Each plan is essentially unique to the individual that has it, and coverage can range widely even among similar plans offered by the same insurance company.
That’s not something that even the most sophisticated data analytics model can fix, Bali explained. If healthcare providers like Carbon want to tell patients how much they can expect to pay for a visit and associated procedures, insurance companies need to update how they bill both patients and providers.
“It’s driven around the inadequate system,” Angela Miles, head of revenue cycle at Carbon Health, told Business Insider. “We need to rebuild that from a payer standpoint to get to a more modern standpoint.”
More complexity leads to increased costs
Startups like Oscar Health are already attempting to bring insurance companies into a more modern model, Bali said, but larger companies have yet to shift in a meaningful way.
Those that do change, albeit in a more superficial way, actually make the problem worse by making it even more complicated, Bali said, because the added complexity adds time, which adds costs.
“A lot of work that goes towards decreasing healthcare costs is making the system more complicated,” Bali said. “My theory is that things that drive increased cost in healthcare is due to increasing complexity because you can’t be transparent and compete on price.”SEE ALSO: The founder of a healthcare venture fund that just raised $200 million shares why she wants to back founders that are building businesses for their communities
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A healthcare startup serving LGBTQIA+ patients just raised $25 million, and its growth reveals a key area of opportunity for other primary care startups

Summary List PlacementPrimary care, and healthcare more broadly, is largely one-size-fits-all in the US. 
A growing group of entrepreneurs and investors are trying to dismantle it and rebuild a more equitable healthcare system in its wake.
One such startup is Folx, a consumer healthcare startup for LGBTQIA+ patients, although there are tens more startups hoping to build trust among other long-neglected and underserved communities of patients. 
On Tuesday, Folx announced it raised $25 million in Series A funding from Bessemer Venture Partners, Polaris Partners, Define Ventures, and Red Antler. 
Although Folx is launching with direct-mail hormone replacement therapy treatments for transgender patients, founder and CEO A.G. Breitenstein told Business Insider of her long-term goals to unseat traditional care avenues for the LGBTQIA+ community, which is often discriminated against in traditional primary care settings. In the coming years, Breitenstein sees Folx drastically expanding the conditions it is able to treat through telemedicine in addition to expanding into owned-and-operated in-person clinics across the country.
“Discrimination is newly legal,” Breitenstein said of the Trump administration’s retraction of protections for transgender patients. “It allowed providers to discriminate against our community. Care has always been unstable for them, but we can be there for them and that’s what we’re here for.” 
Read more: This startup’s pricing model based on health insurer data was wrong almost half the time, and it reveals a huge challenge to reshaping healthcare
Startups like Folx want to reimagine the US healthcare system based on overcoming patients’ negative experiences, and that means building new models that don’t rely on the current network of doctors and clinics. 
“Our big takeaway is that other groups have underestimated the immense market size for advances in healthcare for distinct populations,” Bessemer Ventures Partners investor Morgan Cheatham told Business Insider. “We’re more bullish than ever that these niches aren’t so niche.”
That could contribute to a boon of highly specialized care startups, Cheatham said, in addition to those like his latest investment, Folx, that are already seeing growth among target populations. In fact, he said niche care could become the default for all primary care in the United States after the massive inequities were unearthed during the coronavirus pandemic.
Underserved patients need new healthcare solutions
Since 2014, highly targeted healthcare companies like Folx have collectively raised more than $1 billion, according to Pitchbook data.
The future of primary care could look like Cityblock Health, a $1 billion startup serving primarily low-income communities by addressing external factors like access to reliable transportation and clean drinking water as part of its holistic healthcare model. Its goal is to offset medical costs by addressing those factors, leading to better long-term health in the community. 
Until recently, investors didn’t consider these external factors, now commonly referred to as the “social determinants of health,” as a key area of cost reduction and innovation, one investor told Business Insider. It took a pandemic, and the cracks in the system it illuminated, to prove the environmental aspects of many Americans’ health. Now, it is an area of top investment for VCs going into 2021.
The future could also look like Oak Street Health, a more traditional primary care clinic model for elderly patients on Medicare, or ChenMed, for seniors with complex chronic conditions that need to be actively monitored by doctors. Oak Street went public in August, giving an air of legitimacy to the growing eldercare space.
Startups like One Medical have a broad-strokes approach to primary care but tend to focus primarily on city-dwelling young professionals with a subscription-based payment model and perks like cucumber water in waiting rooms. Village MD is another primary care startup with a broad appeal that works with physicians to provide care and has in-person clinics in select Walgreens locations. Those companies’ successes, however, have helped paved the way for tech-enabled challengers to grow while serving other groups that aren’t able to afford or access care through their networks.
Read more: Meet the 8 primary-care companies building a new future for medicine during the pandemic
Of more interest to Cheatham and other VCs are the communities that don’t yet have tailormade healthcare solutions. He pointed to communities like recent immigrants, undocumented individuals, low-income communities, and even racial or ethnic-specific groups as developments he is hoping for in primary care. 
“The One Medicals of the world focus on the upper end of that income spectrum, but there’s a lot of work to do on the other end,” Cheatham said, referring to the membership-based primary care model primarily targeted at healthy, working-age upper-middle-class patients.
Healthcare equity will have to come from outside
Getting patients to trust upstarts, a monumental task in healthcare broadly, still remains a challenge for the community-based care companies. Winning them over requires an entirely new perspective on medical care and clinic experience, Breitenstein said, even if that perspective comes from someone largely outside the existing system.
That approach involves lots of educational materials, Breitenstein said, so that patients know of and are able to adjust to complications from medications and make informed decisions about their own courses of treatment. 
That “informed consent” model differs from traditional symptom-based care in that it is more proactive and takes more stock of a patient’s lifestyle and goals, Breitenstein said, all in an effort to win patients’ trust.
“The paradigm shift around informed consent model of care, where you come to us and tell us what your goals are so we can help educate and guide you through the healthcare system, it’s informative and empowering,” Cheatham said, adding that he sees the model moving into other aspects of healthcare in the future.
Breitenstein has big ambitions for Folx and believes the market opportunity is large enough to support its growth. Beyond adding new capabilities like STI testing and mental health visits, she sees Folx expanding into in-person clinics across the country that could eventually include surgery centers for gender confirmation surgeries. She also has an eye on family planning and fertility, an already booming market with several startups serving heterosexual couples.SEE ALSO: SIGN UP HERE: Hear from healthcare’s biggest VCs on the future of digital health, biotech, and startups
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$1.5 billion digital-health startup Ro wants to be your online doctor. Here's how its coronavirus response rooted in rapid at-home testing fits into the new unicorn's long-term strategy.

Summary List PlacementRo, a hot digital health startup best known for selling generic Viagra, is taking another big step in expanding its healthcare ambitions.
Ro is teaming up with computer vision startup Gauss to offer at-home rapid COVID-19 antigen tests that provide results in 15 minutes, the companies announced Wednesday. The test is still awaiting emergency clearance from the US Food and Drug Administration. Ro doesn’t take insurance and declined to say how much it’ll charge for the test. 
The launch comes just a month after Ro announced it acquired Workpath, a startup that allows hospitals and clinics to send phlebotomists into patients’ homes to perform routine blood tests, furthering its goals to expand beyond its initial suite of mail-order pharmaceuticals for conditions such as hair loss or erectile dysfunction.
Ro’s aggressive moves into all parts of healthcare come at a pivotal moment for the industry, which has been upended by the coronavirus pandemic. Unlike hospitals or clinics, Ro’s virtual care model combined with its network of real-world pharmacies and logistics makes it poised to tackle distribution for rapid tests and eventually vaccines, cofounder and CEO Zachariah Reitano told Business Insider.
“Right now there are two things universally needed in healthcare: access to the vaccine and easy access to rapid testing,” Reitano said. “We have the technology and the infrastructure to distribute tests to patients across the country, and we have the unique capability to facilitate a connection to a doctor if it requires a prescription to get the test. We can mail it to them and guide them through the next steps. Not many other companies can do that.”
Read more: The 26 billion-dollar startups to watch that are revolutionizing healthcare in 2021
Ro’s ambitions extend well beyond telemedicine
Ro started with a modest proposal: patients could virtually meet with a care provider and get generic prescription medications for conditions like hair loss or erectile dysfunction sent to their homes for a nominal fee.
Nearly four years later and the startup has skyrocketed to a $1.5 billion valuation while aggressively adding new products and services for its growing group of patients. 
When the coronavirus pandemic took root, companies like Ro and its competitor Hims added new patients as doctors’ offices shuttered and people remained hesitant to venture out to a nearby pharmacy, Reitano said. The virtual care model and easy shipping appeared tailor-made for a pandemic that left most Americans house-bound.
“Growth isn’t a problem right now,” Reitano said. “We’re going to expand and add services to try and keep up with the demand of the country.”
At present, that means building specifically for the coronavirus pandemic, Reitano said. The Gauss partnership is the first step in what Reitano said was his company’s responsibility in lowering transmission rates and saving peoples’ lives.
Reitano also said Ro is interested in helping with vaccine distribution, but declined to discuss the plans.
Ro’s future lies in testing
A more ambitious future for Ro could rely heavily on building a network of traditional healthcare services instead of relying on the partnership model it’s worked on in the past, repeat healthcare founder and investor Nikhil Krishnan said.
The ability to control pricing and cut out middlemen is key to the company’s long-term success because it relies on patients paying cash for services instead of working with insurance plans. The lower Ro’s costs, the lower it can keep prices.
“Lab testing, depending on how it’s structured, can be really expensive to outsource so it makes sense to bring it in-house at some point,” Krishnan said. “Ro has been pretty ahead of the curve in bringing those pieces of the value chain in-house.”
Part of the appeal of launching an at-home COVID-19 test is that Ro can substantially cut costs of currently available at-home tests that retail for between $100 and $150 per testing kit. 
“We’d like to put pressure on the market and bring the prices down across the board,” Reitano said.
To stay competitive, Ro wants to play a bigger role in its customers’ lives but needs more patient data to be effective. For instance, by offering lab tests and screenings from Workpath, it can help treat a larger variety of conditions through telemedicine and eventually in-person, Reitano said.
Krishnan said Ro is building an experience for patients in the real world after establishing a relationship with them online. Testing, and to some extent screening, can help companies like Ro gather more information on patients and better compete with physical healthcare practices.
“I don’t know if there’s necessarily a right way to strike a partnership, but I definitely think a lot of the telemedicine companies will have to figure out how to get this information eventually,” Krishnan said.
Reitano said he is eager to expand into other forms of testing with the goal of becoming what he calls a “fully integrated” primary care provider that can host virtual visits and ship a host of medications directly to patients while freeing up in-person care for those patients that truly need it.
“It’s just the beginning of us for testing,” Reitano said.SEE ALSO: 2 former Sequoia VCs just raised $500 million for their firm’s second fund. Here’s how they plan to spend the funds.
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