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VC seed fund to invest up to $250,000 in each startup, up from $100k
Rock Health, an accelerator-turned-VC fund, has just raised its third fund. While the details of the fund weren't disclosed, this fund is valued at well over $4 million, the value of its last fund.
"This fund allows us to invest more than twice as much as we had before," said Halle Tecco, one of the founders and managing investors of Rock Health.
Leading the round are new investors, Bessemer Ventures, Kaiser Permante Ventures, with participation from existing investors, such as Kleiner Perkins, Great Oaks Ventures, and Montreux Equity Partners.
Here's an interview with Tecoo regarding the fund and its focus.
Q: Congrats. This is a much larger fund. Are you moving away from the accelerator model?
Yes, Rock Health is a seed fund. We invest up to $250K per company, usually alongside other investors. While we started as an accelerator, we've evolved over the years. The companies we work with are further along, and the additional capital and support helps them scale faster.
Q: Is this change happening with this fund or was it more gradual?
It’s been a gradual evolution. In 2012, we raised our first fund and started offering $100K. We noticed the companies coming to us were a bit farther along, and so we began hiring a team to help provide full-service support from hiring to sales to PR.
Q: How many companies will you invest in?
With the new fund, we will invest in 20-30 companies.
Q: What’s your follow-on strategy?
We don’t follow on. But other investors do. Rock Health companies have raised over $200M in funding from top-tier investors including Accel, A16Z, Khosla, NEA, and many others.
Q: What are some of the success metrics?
The easiest metric for us to measure is follow-on funding. A less easy, but just as important measure is the impact we have on the healthcare industry. A few years ago, we began surveying our portfolio companies for metrics like diseases prevented and lives saved.
Q: What are some success stories?
We've had a couple of exciting acquisitions. Most recently, Lift Labs was sold to Google and earlier this year Wello was acquired by Weight Watchers. But I think the most exciting stories are yet to come. Keep an eye on Omada Health, Doctor on Demand, and KitCheck.
Q: What investments are you making across healthcare IT? Since Genentech is a partner, do you invest in biotech too?
We invest across the board in a variety of digital health concepts. We haven't done a biotech deal, and are unlikely to get into biotech in the near future. But we work with a lot of biotech companies, including Genentech, which are interested in how technology can help improve and drive efficiencies in R&D, clinical trials, sales, and patient outcomes.
Q: How will data help improve healthcare?
The most important work, today, in terms of lowering costs and increasing the quality of healthcare is to understand what is truly valuable. Medicine is highly variable, estimates suggest up to 50% of the practice of medicine is not evidence-based. Understanding what truly works in healthcare, relative to its cost— that is, the best treatment for the lowest cost-- and ensuring the practice of medicine focuses on valuable treatments and services is a critical component of ensuring sustainable costs and high quality care. The explosion of data sources support a deep understanding of what works and what doesn’t. We need to stop paying for things that don’t work, or things where the incremental effectiveness is not worth the incremental costs.
Q: What about the wearables and quantified self areas?
We are excited about wearables, and did a popular report on the topic earlier this year: https://www.slideshare.net/RockHealth/the-future-of-biosensing-wearables-by-rockhealth Venture funding of biosensors/wearables has grown by over 5X from 2011-2013, reaching $282M in 2013 (versus growth of digital health overall at 2X). We are confident 2014 will be a record year for funding in this specific category.
Spire, a company we invested in, is an example of what we see as the next wave of wearable device innovation. They go beyond activity tracking to provide insight into your state of mind (when you are focused, frazzled and in the zone) using technology that measures new physiological signals in a novel form factor. They've been in development for the past two years and in a recent study at LinkedIn were able to significantly increase the productivity and focus for their users.
Q: What's next for Rock Health?
We are growing and hiring! We have three open positions in operations, BD, and PR. Join us! rockhealth.com/careers
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