venture capital and Healthcare startups have had a tumultuous relationship in recent years. Before the pandemic, the majority of venture investment in health technology and healthcare startups came from venture capitalists focused on the sector. That changed in 2020, when seemingly all types of VCs flooded the market.
Much of this new interest was apparently driven by investors chasing pandemic tailwinds and reacting to FOMO rather than a desire to build a durable healthcare portfolio. In fact, many venture capitalists withdrew from the sector shortly after the world began to return to normal.
Not everyone did, of course; some decided to double their bet. General Catalyst was one of them, and that stance has resulted in an interesting development this week.
At the HLTH conference in Las Vegas last weekend, General Catalyst said it was launching a new initiative, Health Assurance Transformation Corporation (HATCo). The new project will work with the company’s portfolio companies and existing partnerships with healthcare institutions to advance the concept of health assurance, which aims to proactively engage consumers with healthcare provided.
General Catalyst declined to comment on HATCo’s effort beyond the blog post issued.
Now, many VC funds enter into such partnerships with large entities for the sake of their portfolios (often replete with lofty goals and mission statements), but this project is different. Because? Because a key element of the HATCo initiative is that General Catalyst intends to purchase an entire healthcare system.
There’s a lot to unpack here.
Why would a venture capital firm want to own its own health system? Why would you want that stress or such an expensive asset when you could simply continue with your healthcare partnerships?
It seems like General Catalyst has been moving in this direction for years, and I’m not just saying that because I met a VC this week who seemed generally confused why people were so surprised by this news.
The venture firm had built a significant portfolio of healthcare startups long before HATCo’s announcement. In fact, he has been the most active venture capital investor in healthcare since the beginning of 2020. according to PitchBook. To date, the company has raised over $1 billion specifically for healthcare technology startups. It also launched multiple SPACs in 2020 in its search for companies that could become health guarantee platforms.
