Friday, December 28, 2018
Reflections on 2018: Jay Goss, Wavemaker Three-Sixty Health
Editor's note: All this week, and into the start of next year, we'll be featuring reflections on 2018 from notable investors, entrepreneurs, and others from Southern California's technology community. You'll be able to browse all of those contributions here. This contribution is from Jay Goss, General Partner at Wavemaker Three-Sixty Health, based in Pasadena.
What was the biggest lesson you learned this year?
A major differentiator of Wavemaker Three-Sixty Health is our LP base, the majority of whom are healthcare executives. We learned early on this year that one of our key success factors was efficiently “harnessing” this group to create value for our portfolio companies, nearly all of whom benefit in one way or another from our investors. Having healthcare industry LPs is only valuable is you take advantage of their experience, smarts and networks. This effort requires more energy by the fund (for sure!), but the end result is absolutely worth it. Nearly every day our 50+ LPs are creating real and measurable value for our early stage healthcare companies.
What was the biggest news for your company in 2018?
That’s an easy one. We launched! Our fund went “live” in May, and we’ve been funding 2-3 companies per month since. We have 14 companies in our portfolio now.
Are there any technology innovations, gadgets, devices, software, that you found most interesting in 2018?
The technology innovation that we found most interesting in 2018 was around early stage companies finally cracking the code on data. The “rise” of EMRs over the past 10-15 years set the foundation, and now lots of start-up healthcare companies are emerging around the underlying idea that they can make money by selling their technology, but the real source of value in the long run for their company comes from the fact that they are accumulating health data that perhaps has never existed before, and is likely to be insanely valuable to other constituents of the healthcare industry (pharma, payers, ACOs, med device, etc.). We have a funded a few such companies and are looking at several more.
What's your prediction on what will be most important thing for the technology industry in the coming year?
Healthcare is behind, by about 10 years, when it comes to technology (as a general statement). And a lot of the technology we see creates value for payers, providers and big pharma by bending the cost curve. 2019 will be the year we start seeing a lot of pricing models that entail companies charging their healthcare customer a percentage of what they save them. This concept isn’t new, but it hasn’t taken off in healthcare yet. Because value based health is happening in a big way in much of the country, it stands to reason that these new pricing models will become more commonplace, which creates a lot of upside for technology companies that produce results they promise.
Jay Goss is General Partner at Wavemaker Three-Sixty Health based in Pasadena. The fund focuses entirely on healthcare start-ups seeking Seed and Series A investment, and is a joint venture with Wavemaker in Santa Monica. The fund’s investment thesis is that after 40 years, healthcare is transitioning away from fee-for-service to value-based payments, and with that comes a massive amount of disruption. There will be no shortage of clinical operations and business challenges to solve in the coming decade, and entrepreneurs are already coming out of the woodwork to solve these problems. Moreover, countless business models are now for the first time commercially viable because the healthcare industry is embracing value-based payments.