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Kraus will be part of Vator's Future of Mental and Behavioral virtual event in May
Steven Loeb and Bambi Francisco interview Steve Kraus, partner at Bessemer Venture Partners. Kraus invests in the healthtech space and currently sits on the boards of Bright Health, Hinge Health, Ginger, Welltok, Artemis Health, Groups, Qventus, Alcresta, and is a board observer at Collective Medical Technologies.
(Kraus will be speaking at our May 19 Future of Mental and Behavioral virtual event. We'll have top-level VCs and C-level executives from the leading mental and behavioral companies, such as Teladoc's BetterHelp, Amwell, Doctor on Demand, Kaiser Permanente, GSR Ventures and more)
In 2021 it’s finally okay to talk about our mental health and that’s why we’re excited to be sponsored by BetterHelp. But what IS therapy? It’s whatever you want it to be. Maybe you’re feeling insecure in relationships or at work, or not very motivated right now. Whatever you need, it’s time to stop being ashamed of normal human struggles and start feeling better. Because you deserve to be happy. BetterHelp is customized online therapy that offers video, phone and even live chat sessions. Plus, it’s more affordable than in-person therapy but just as effective. See if it’s for you.
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For these digital health podcasts, our goal is to also understand these three high-level questions: How are we empowering the consumer? Are we creating productivity that also allows us to see overall economic costs go down? How is this advancement changing the role of the doctor?
Highlights from the interview:
- Bessemer is, technically, the oldest venture capital firm in the world, dating back to 1911, coming out of the family of Andrew Carnegie's partner at Carnegie Steel. The firm invests in consumer companies, fintech, cloud computing, cybersecurity, space technology, and has a dedicated healthcare practice for over 40 years.
- Rather than being reactive, Kraus tries to be proactive in investing, or what he calls "roadmapping," meaning thinking about where the road is headed, or skating to where the puck is going to be, not where it is. The firm spends a lot of time doing market mapping, so that even if partner isn't a healthcare expert they will still know enough to bring it to the healthcare team.
- The firm will invest as early as an idea on a napkin, which is what Bright Health was when Bessemer first put money into it for its Series A.
- There's a lot of behavior change that has to happen for someone to adopt a digital solution, and that's really hard, so most companies have adoption of 5 to 10 percent of eligible patients. Livongo succeeded because it wasn't a big behavior change for diabetics, but for most others behavior change is a big barrier.
- Every major condition has a mental health comorbidity associated with it because, if you have diabetes or chronic kidney disease or back pain, the vast majority will have an underlying behavioral condition due to it making life harder. So, even a company like Livongo has to have a behavioral health offering. That will be true in MSK, in cardiology, and almost every vertical in healthcare.
- One roadmap area that has emerged over the past year thanks to COVID includes value-based care; COVID has shown that a lot of care can happen out of the four walls of the doctor's office, and that's critical for value-based models. It's lower cost, and it's also better for engaging the consumer in their care when they're not in the doctor's office. The other area is pharma and clinical trials, which have become more virtualized.
- Kraus' advice to entrepreneurs is yo start out thinking of the outcomes they want to achieve, either financially and from a clinical perspective. Digital health companies should be thinking early on about what the gold standard is in their space. It takes time, but they should be developing proof points of outcomes.
- If we're going to succeed at bending the cost curve, we're going to have the payment model be value-based. As a result, we'll have continued adoption of digital health. If we don't do that, there's no chance that we bend the cost curve. That's the last trick we have, and a lot of that will come from either government, including CMS, and then entrepreneurs providing examples of how the models can work.
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