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Venture capital used to be a cottage industry, with very few investing in tomorrow's products and services. Oh, how times have changed! While there are more startups than ever, there's also more money chasing them. In this series, we look at the new (or relatively new) VCs in the early stages: seed and Series A.
But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?
We're highlighting key members of the community to find out.
Dr. Jeremy Krell is Managing Partner at Revere Partners.
Krell is a general dentist with a combined business background. He previously built out the Barchester Bay Group, a portfolio consisting of over 35 ventures. Krell has held key operator roles at startups including Head of Marketing and Chief Dental Officer at Simplifeye based in NYC, and the Chief Marketing Officer of Verena Solutions, based in Chicago.He oversaw provider and clinical growth initiatives at quip, the oral health and subscription electric toothbrush company and strategic provider innovation and development at Oscar Health(which had an IPO in 2021).
He has practiced general dentistry part-time for nearly a decade following his DMD at Tufts, sits on the Boards of healthcare and dental startups, and is an angel investor in approximately 30 companies. Krell has a 18+ year proven track record with startups through several successful multi-million dollar fundraises and acquisitions.
Krell started his career with three web and graphic design startups and moved into a luxury goods and commodity venture, DormAid, for college students. He later founded a ventureincubator, CEO in A Box, following his MBA at Chicago Booth.
He received The President’s Volunteer Service Lifetime Achievement Award from PresidentJoe Biden, Crain’s Notable in Health Care, Top 100 Healthcare Visionaries award from IFAH USA,Top 100 Doctors from the Global Summits Institute for his commitment to oral health innovation,and 40 under 40 awards from Incisal Edge and YJP.
VatorNews: Tell me what you're all about at Revere Partners, where you fit into the ecosystem, what you're trying to accomplish with your fund.
Jeremy Krell: Revere Partners is really the first and only venture fund focused on oral health; there really is no other fund, globally, that has focused on this area, in particular oral technology. What we are trying to do is push oral technology innovation forward in order to meet better patient and provider experiences and outcomes. There really isn't a fund that is focused on or ingrained in the industry doing that to date. And so, we really have focused heavily on this specific space and we can get into some of the different target and sub-target areas within oral technology, but oral technology has been our focus. We really started very much within the industry and now have expanded within and beyond in terms of involvement from the investor base. So, many have looked at this industry as a way to diversify, or a way to expand what their current portfolio looks like, whereas others are highly strategic within the industry and want to be investing in what they know, and expanding the industry forward.
VN: I know that you are a dentist, and that is your area of expertise, but it's interesting to me, rather than being a generalist healthcare fund, that you are that targeted. What do you see happening in oral health that made that a space that you felt needed its own fund?
JK: First of all, it's a very inventive and innovative field, that's one one piece of it. There are tons of new products and services that are really trying to come to market and their biggest hindrance in doing so is capital flow. So, those levels of new IP that are hitting the patent and trademark office, seeing the new NAICS codes for different businesses that are coming out, however you want to quantify it or cut it, the amount of innovation is really large, but their ability to get to market due to a lack of capital flows really hinders them. That is a big struggle.
The other part of it is failure to get involved, or difficulty in getting involved, from other types of funders. It takes a lot of individuals, like dentists, to fund a company to the level that it needs to get to market. A lot of these corporations in our space really deal more with M&A, and later stage products and services, and so don't have any workflows or anything else to deal with the earlier stage startups. Other venture capitalists simply do not have the data and the means to strategically help the startup, so they can't get involved. So, you see this big gap between a large amount of innovation and the inability to properly fund it.
That's matched with two other things: one is the fact that dentistry is a little bit laggard in terms of its technology being updated with current consumer demands, current technology demands by both the providers and the consumers. It’s even laggard behind healthcare, so when you come into an industry that has really antiquated products and systems, that tends to be ripe for innovation. The last area is if you compare it from a more financial sense to how the S&P performs, if you compare it to, especially these days, the way that the other side of our industry works, which is dental practice consolidation, and I'll draw a clear delineation here: we do not invest in services businesses, so no distributors, no dental practices, but that's really heavily owned by the private equity world, but the CAGR on that is growing enormously, and some of the subspace growth within dental is enormous. So, if you take a look at just the financial performance then it's a space where you’d say, “why would I not want that in my portfolio?”
So, if you put all of those pieces together you come out with that there needs to be a fund, there needs to be an organized, centralized system that allows startups to find their funding source, that allows them to work with other bigger institutional players, that can allow investors to participate in and benefit from the financial upside that's clearly present here, and that can bring the industry’s antiquated technologies up to current times and consumer demands.
VN: Do you feel like other VCs are not equipped to fully understand the space enough to invest in it? Does it take a certain level of expertise to really be able to invest in oral health?
JK: There's really two sides of the coin there: there's everything that happens pre-investment, and then everything that happens post-investment, and both are trouble areas for external VCs. In fact, where Revere actually started was with a massive data and analytics project; we found that PitchBook and other data sources were completely insufficient, inclusive of CrunchBase, in their data on how early stage startups in oral health technology performed. What are the changes in value over time by type or subtype of dental company, and at what stage? They don't have the answers to that, so we took a lot of time and diligence and accessed a lot of data sources that are tough to get a hold of and put together now over 700 company database that continues to grow, that we've published twice off, of the never before seen data on how these companies perform. So, that is a really North Star, guiding light that we've used to build the rest of our technology infrastructure, and that helped to aid our large 75 person team now in making the best decisions within dental technology companies, because our portfolio is now over 500 companies, we meet two to three new companies per business day, so the toughest part is not deal flow, it's choosing those best deals. We need to rely on a data driven approach and it would be very, very difficult for other investors and, in fact, we often hear this from other investors, they want an industry expert investor to be a part of the dental deal. There just hasn't been one and a big part of that is owning and understanding that data.
The other piece of it is what happens post-investment. It's very important for Revere Partners, and how we're able to support the investment after we've formally come on the cap table. What's key there is that we've developed what we call our ecosystem, which now consists of over 25 different services that help these startups get over the activation energy and some of the toughest hurdles and obstacles within dentistry. Some of these will include integrations to practice management systems; DSO partnerships, of which we have nearly a dozen; co-VC investors that will or do understand or will work with us of which we have about six dozen; executive recruitment within dental, because it's hit just as hard as any other industry with staffing problems; and a couple dozen more services there that really help startups activate and scale within this space. So, those are the two big pieces of our special sauce that make it inherently easier for us to operate here, and more challenging for others.
VN: So, within oral dental health, what are some of the most exciting verticals that you've seen right now? Where do you like to invest in?
JK: This is one of maybe my favorite topics to talk about because there are a couple of really explosive opportunities within dental right now, big problems that are met with bigger solutions. One of them is this area of FinTech or revenue cycle management within dental; you might not believe it, but there is no organization to the way that merchants, vendors or dental practices are really doing this. So, Revere has mapped it to four major buckets: payments, patient financial, insurance verification, and claims processing, and we believe that these are the four key components to a cohesive, coherent, and comprehensive revenue cycle management solution. So, we have been investing in each of these categories, there are nuanced differences within each one of them, they are not necessarily winners in all categories, and it's important for us to synergistically work with the startups in each of those buckets and, together, within our portfolio just to help solve that problem.
For example, we've invested in FeatherPay within the payments bucket of revenue cycle management. The key component there is it's able to take multiple different payment methodologies from a patient, which helps meet those consumer demands of today that are standardized in other verticals when a consumer takes out any form of payment, but aren’t necessarily met in a traditional dental office setting. If you look into the patient financing bucket, there's a huge problem there: the existing solutions really only accept 700 plus FICO scores, it's really high, they're declining 70% to 80% of people, and their insurance coverage is not sufficient, if they have it, to cover the cost of their treatment plans, so there need to be adequate financing solutions that are not denying FICO scores, and that are not at interest rates like 30% that are really unachievable for most people. So, we've now invested in a company, Choice Payment Services, that looks at higher acceptance and broader acceptance criteria for startups.
If you look in the insurance verification bucket, there is a lot of nuance there. Insurers have different rules, sometimes different policies have different rules on what they're willing to approve. Those offices are spending a lot of time calling the insurance company, and those patients are being sent away from the practice and being asked to come back in for an expensive and painful procedure. That's not a good business model, it doesn't work in any other industry, why should it work in dental? So, these insurance verification tools are really important. We've invested in a company called AirPay, for example, that is solving some of these most difficult playbook problems across different insurers and providing deep information on what's covered and what's not. And then, the claims processing bucket is an entirely different solution; practices are using multiple different TPAs and clearing houses and their practice management systems to send off claims. Claims are headed through this complicated web, there's no doubt that providers aren't getting paid in an efficient fashion and that things aren't getting lost and that errors are made, so there definitely is systemization happening in that bucket as well.
VN: Obviously, those are B2B solutions, but you also do any B2C? Or is it mostly focused on enterprise?
JK: At a high level, some of the biggest categories at Revere are software and services, we’ll definitely look at consumer products, and FinTech, as I just described and mentioned. We'll do devices and therapeutics, so we really look at any oral health technology or any technology that has an application for oral health; it doesn't necessarily mean it was de novo founded within oral health, it doesn't mean it only has to apply to oral health, but it has to have an oral health application.
Another area that has these types of synergies, and is also a big growth area, is what we call, internally, microbiome; all the things going on in the mouth at any given point in time. There are a few different buckets here: on one part of it, there's the consumer education. What's going on in my mouth? Can somebody educate me? And can somebody tell me who the bad actors are? The second bucket is true diagnostics: tell me what's going on from a bacterial standpoint, or tell me what's going on from a biometric standpoint. There's lots of things we can look at track in the mouth. “Somebody tell me, diagnostically, what's going on in the mouth.” The third bucket are some of the platforms through which we can deliver. So, we’re looking at consumer platforms, or oral hygiene product platforms that we can actually deliver real solutions through. And then the last piece is the therapeutic piece. What are the personalized precision medicine type solutions that can be provided to solve some of the real problems? We exist in this world of one size fits all oral health products: you go to the shop to buy a toothpaste that’s really a general toothpaste for everybody but what if your mouth has different problems in somebody else's mouth? What if there's calculus or plaque hardened to your teeth, but not to somebody else's teeth? How's that going to get loosened from your teeth? What if there's a bad actor in your mouth that's giving you this high predisposition to Alzheimer's or other types of cardiac disease? Why shouldn't you be using an oral hygiene product that will eradicate that bad actor versus somebody else that doesn't have that bad actor? So, those are the buckets of this microbiome space, and why it spans both B2B and B2C and it’s crucially important for us to be synergistically working these startups together so that there can be real end-to-end solutions versus this fragmentation that we so often see within dental.
VN: It sounds like there's a lot of exciting stuff happening, probably much more than I or most people realize. I have covered other dental companies before, we had Overjet, for example, on our podcast, but it's not a space where you see a lot of activity. From what you said, it seems like there's a lot of things happening, maybe behind the scenes that we aren't seeing yet.
JK: It's your classic tip of the iceberg case. Toothpaste and toothbrushes are a huge market, and some of these especially direct to consumer or B2C brands that really put themselves on the map have definitely become very prevalent, especially in news and media, but all the stuff that goes on behind the scenes, whether it's B2C or B2B, there's this massive, complicated, nuanced set of technology that lies beneath the surface of the water. That's really the space where we've become experts and have specialized in navigating.
VN: What's the size of your fund? How many investments do you make a year? And what is the size of the investments?
JK: We are approaching and raising a $50 million fund, we are targeting a $200 million fund, and I want to pause right there because we have a unique structure: we co-founded this rolling fund for dental industry structure, which means that our fund remains open. So, we don't close the fund, we continue to take in LPs, and whether they're angels, high net worth individuals, family offices, other funds or corporations, we're continuously taking in funding. We don't mark ourselves by a specific size, but rather continuous growth over time. That's critical for us, because this is a really emerging space that has been snowballing.
We will typically make a smaller check the first time we invest in a company, and then, ultimately, a larger check in those that perform the best. So our checks can range from $500,000 to about $5 million in total; we'll be on the smaller end of that the first time we come into a startup, and then we'll try to really strategically support them through our ecosystem for six, 12, 18 months. And then, for those high performers, be on the middle to higher end of that range for our second check. We invest in about 20 to 25% seed, about 40 to 45% Series A, and maybe 30 to 35% either post Series A or follow-on type investments.
VN: So, it's majority seed and Series A, so that's pretty early on in the life cycle of that company. Does that mean that it's too early for traction? Or do you actually want to see certain numbers at that point? Do you want to see a certain amount of ARR, a certain number of customers? Or, because it is a broad space, does that depend on the type of company you're looking at?
JK: It's a broad space, so it depends a little bit, so we don't publish, say, a specific revenue or user type cut off. Validation is critical, no matter what stage you're at. This idea of developing technology in a silo or a vacuum, developing the thing that you think is the best thing since sliced bread, but that has no market validation, is a myth to be busted within entrepreneurship in general. So, we always look for validation, no matter how early or late stage that startup is, and it just means a different thing depending on what sub-vertical of dental that they're in, and what stage of growth or funding that they're in.
The vast majority of our portfolio is commercial. They typically do have an established user base that's growing month over month, they typically do have revenue that’s growing month over month. Again, this is not a hard cutoff, but valuations typically range from $2 to $3 million on the very lowest end, which would be rare, up to $20 million probably encompasses the majority of them. Do we look at ones that are $30, $40, $50 million? We do. Have we invested in some? We have. But that is the general sweet spot for where they tend to fall. So, it's a little bit of a range, depending on the type and the stage of the startup, but validation is key. If they’re going to be a pre-market or pre-revenue company, again, we will take a look, we always like to keep the door open and have the conversation, but that would need to be really groundbreaking technology that would change the way that that application is really done for us to get involved from an investment standpoint at that stage. It doesn't mean we can't help them strategically.
VN: It sounds like you're not investing pre-product.
JK: Yeah, it's rare. Again, it's happened within our portfolio; so we've invested in 24 companies to date, we invest in three to five on average per quarter, and it definitely has happened in a couple of rare cases that we've invested in some pre-market, getting ready for growth stage devices, but some of the things we'll look for there, besides the groundbreaking marker, is where they’re at with regulatory, because that carries a big, big level of risk. And what is the viability to actually go to market once they're ready? And do they have real interest from key industry players there? So, they would have to pass a number of certain thresholds for us to actively invest at that stage. Again, it's rare within our portfolio, but we have done it before.
VN: I was going to ask how you validate the market, but it sounds like what you do is, like a lot of other VCs, go and ask experts about the product, pick their brains a little bit about whether this is something they have to have versus just being a nice to have.
JK: We do it in a couple of ways. So, our team is 75 people spread across a few different tiers, and lots of different job roles, but some of these folks are really well known in their subspaces within the dental industry, so we're able to have access to a lot of validation just through our team. Beyond our team, we then look to our partners who are aligned with us, associated with us through some type of agreement or mutual structure whereby we share deal flow or discuss deal flow or test theories or check data with them. We have inroads to most of the major players in dental from the manufacturers to distributors to insurers to DSOs, professional associations, academic institutions, labs, retailers, you name it, we're constantly checking ourselves against them. And then the third level is Revere has a whole corporate services arm to it. And so, this is the client level relationship, where we're serving that institutional or organized side of dentistry, those big corporations, with the ability to be more connected with, and get actively involved with, the deal flow itself. Through our team, through our partnerships, and through our clients, we're able to really get strong market validation and understand what the future potential for a startup is going to be.
VN: We talked about product and the market, so the third aspect, especially at the early stages, is the team. So, how do you validate them? What's your due diligence on the team? What are you looking for from that entrepreneur or founder that makes you want to invest in them?
JK: Such an important one, but such a hard one. It's intangible, and you can't quantify it, it's that EQ that is so important.
The first thing I guess is citing any human being’s bias. Do we like them? How was their first impression? How do they conduct themselves? It's incredibly important because they're going to be faced with an awful lot of objections, they're going to be faced with a lot of different work styles and personality types throughout scaling a startup, so they really have to be likable and personable. The second piece is, does their background mesh well with what they're trying to do? We have a lot of folks from different expert backgrounds, but that are trying to do something completely out of category. That's challenging for the team, because we need to understand, how it is that you're going to hit these milestones? Who is it that knows how to travel these roads? How is that risk mitigated? So, having the background that meshes well with what they're trying to do is really important.
Another piece is being coachable, which is slightly different from likable. You're going to be getting a lot of opinions from investors, from board members, from very big and important clients; they really have to be able to hear feedback, and they have to be able to react to it in an appropriate way. They have to be able to implement that which is not noise. So, that piece is critically important. We always look for references, direct and blind references, and want to hear from other people that the startup has worked with before is, in most cases, telling as to how they’ll be in the future. It's such a difficult one but it's so important for us to really spend that time and have that personal touch. Other funds that take a more automated or digital approach to this may be missing a big piece there in who it is that they’re working with. It’s very, very critical,
VN: That coachable part is interesting, because the way that I've heard it put forth many times from other VCs that I've talked to is, “the person has to be firm in their beliefs, and be willing to fight for what they believe in, but also flexible enough to take advice and change course, if necessary.” It's like you have both sides: you have to have that combination of both not being a pushover, but you also can't be too stubborn and not take any advice at all.
JK: It's very well put, very eloquently put. They have to be able to fall down multiple times and be able to get back up and you have to have that resilience, that endurance because it's a marathon, not a sprint. On the other hand, repeating things that you're doing the same way over and over again and expecting a different result is, quite literally, the definition of insanity. So, they do need to be able to seek feedback and hear feedback and implement feedback when it's appropriate. You're choosing a captain for the ship that you are boarding in the middle of an open ocean, so that Captain needs to know what they are doing in order to get you from point A to point B. And so, it's absolutely critical. Does it help if they have a previous track record of successful startups, of successful business operations? Sure. Is a must have? No, of course not, we've invested in first time founders before, but it helps, So, there are these markers that can play in somebody's category but, ultimately, it's really the total package coming together.
VN: Let's talk about valuations, which you brought up a couple of times. We saw digital health, from the beginning of COVID until the end of last year, really explode. Telehealth, virtual health, digital health, everybody couldn't go to the doctor, so those spaces all blew up. And then in the last nine months or so the markets really deflated and valuations have really come down. Did you find that to be also the case in oral health? Did valuations go up the same way that they did in digital health? And have they come down in that same way as well?
JK: It tracks pretty well across the board from our data that we're seeing and that we study and that we track: valuations over our lifetime have definitely been at the lowest point now than they have been. Putting myself in the shoes of the startup and the founder, they're saying, “if we officially call this a recession, and money really does get tight or unfindable, we really want capital in now so that we can get through that storm.” Whether or not they themselves believe that they can justify a higher valuation, they are showing us that they are willing to come down a bit. It's not just shown in the valuation, because they are trying to protect the future story that they need to tell the future investors, it's also seen in the terms: we're starting to see discounts when they may have sat for 10%, 12%, 15% but now they're 15% to 20%, if you're talking about a safe note or a cap. Where previously rounds might have gone, especially on some of those notes, uncapped, they're now almost always capped. It's a tightening of the valuations, it's a tightening of the terms. We're also seeing this from the investor side; we've seen an enormous influx of investors come into Revere and want to actively put capital to work because they're seeing that the the terms are affordable versus inflated, which is what they just were. So, what's real? It gets a little hard to tell what's real, especially coming from a world that was super inflated and now is contracted. Has it contracted to real? Or is it below real? It's hard to tell. We look historically and from what we can tell it sits down a little bit below what is the normal pre COVID, but it's always tough to predict where it's going to go. For now, startups are in a place where they're really able to collect funding and bring down some of their terms to a mutually agreeable point, and investors have been really actively engaged and taking advantage of some of those terms.
VN: It sounds like it's a really good time to be an investor. It's always great to go in at those low valuations because hopefully the market will be back by the time those companies exit, but for the companies themselves I would imagine that, especially the companies that raised during the last couple years, if they have to raise now, it's going to be a down round for them. So, probably not so great for them.
JK: We try I'd be careful and sensitive to that. I actually don't think, up until this point, we have forced any down round, or even been a part of any down round, because I do think that that's really important for the startup in terms of the future story that they tell investors, and working with those investors moving forward as well. So, we're sensitive to that in making the decision as to whether or not to invest as to where they're at in their financing. So, yeah, pre-COVID, like say 12, 18, 24 months pre-where we're at right now, the company raises at a really high valuation, that is going to take a lot of justification at the next round to really measure up to, they are in a tough spot, because their valuation was probably inflated way before the inflation, and that's maybe the toughest spot to be in. So, those ones might be facing a quote unquote down round, but it's almost less of a traditional down round, because their initial valuation was justifiably inflated prior versus what I would call a real down round, and the company has followed a typical pathway, that they have reasonable justification to notch the valuation up in a reasonable way, and now have to accept the down rounds because of the funding state and just where they're at in this time cycle of doing it. There's a difference between that traditional and inflated down rounds, if you will. And so, we try to be sensitive to it and it's part of our decision making process. We want to help the company as best we can moving forward.
VN: In a certain sense it almost sounds like you have to protect the investment. You put money into this company, by giving them a down round that might make it hard for them to get the next round, and that affects your investment in the company. So, it's sort of like you have to have to protect the company from that. Is that accurate?
JK: If we're going to take part even though it's better terms, what's the cost of those better terms? So, it is definitely something we think about, we really do try to avoid a down round for the startups and get involved in ones where that can be reasonably avoided.
VN: Talk to me a little bit more about your LPs. What's your pitch to them? It may be an easy sell to strategic LPs but the general LPs that invest in a lot of different funds, who maybe don't know about oral health, or aren’t well versed in this space, what's your pitch to them that explains why this is important?
JK: First and foremost, if you look at it from a pure financial sense, our fund has an IRR right now of between about 31-32%. So, the internal rate of return is really strong from our fund. We have seen growth in all of our startups, we mark our books quarterly from our involvement there forward. So, it's that piece of our performance that is critical. We sit about 52% or so above other other comparable market assets and so our performance, and then our performance compared to the norm, is really high.
From the almost mechanistic standpoint of investing, there's also differentiation there, which is, with our model, we have very, very flexible terms. So, we have investors who, first of all, see a lot of diversification. We invest in three to five companies per quarter, so in the year minimum that they're involved with us, they're seeing exposure at 12 to 20 companies. So, there's a lot of diversification that happens there, and risk mitigation within it. So, that's one thing that's important. The other thing that's important is we have flexible payment terms as well; every fund works, their call schedules a little bit differently, and we allow it to be anywhere from upfront to spread out quarterly. And so, that benefits a lot of investors who have other financial commitments, but also want to be a part. So, that's a key piece. The fact that it remains open at all times, so we're not turning investors away, they can get in the very next quarter, that's a key piece of our differentiation.
We also know, and this is a little bit more Revere focused as a differentiator, rather than the investor focus, but we've achieved, through our partnerships, some rare SEC regulation exemptions. So, one of them is we can actually publicly solicit investors and we do that because of the careful degree to which we make sure every investor is accredited. So, that's a key piece you can actually see and learn about Revere in the media, as you'll be doing here and elsewhere, and that's something that hamstrings a lot of funds. Another piece is, we don't have a filing hurdle, this so-called DRA/IRA filing that happens at $150 million in AUM, we can keep going so we're able to target a $200 million AUM without this obstructive obstacle in our pathway. So, from the investor and Revere perspectives those are some of the differentiators.
We've already discussed the industry piece as a differentiator to the startups, and really the key piece is our strategic nature. A lot of investors out there call themselves strategic investors, but it's to the startups to determine who is the real strategic investor. When you look at our ecosystem of over 25 support services and the hands-on ability that we have to help each one of them through those next critical steps post-investment, it's clear that Revere is the strategic investor in dental. So, to the startup, the differentiator is really our ecosystem of support services that come post-investment. So those would be the differentiators from different perspectives.
VN: Talk about some of those companies. You mentioned a few earlier, if you want to do a deeper dive into those, that's fine or you can talk about different ones. What was it about those companies that made you want to invest in them when they first pitched?
JK: Sleep Architects was one of our early investments. It's founded by a woman named Alice Limkakeng, she really impressed us right off the bat; she comes from a highly educated background, as well as being really heavy in some consulting and related financial services industries, and that was really impressive. She also came from a startup background, successfully running and exiting a startup. So, from a team perspective, it was really, really, really, really, really exciting. The next thing that we saw was calling a bluff, calling an opportunity, before everybody else. So, a lot of people have been saying sleep is not that big an industry but now people are realizing sleep is a huge industry. They're not maybe sure where it fits between medicine and dentistry and this broader thing we called healthcare but Alice took it upon herself to say, “sleep is a part of dentistry, but the offices need a turnkey solution.” So, she created the 360 degree platform solving for those different problems, from the understanding of diagnosing the patient to the devices that they need to the sleep studies that they need to have to the insurance reimbursement, including medical reimbursement, that they need to get. She really provides this 360 degree platform. She's also engrained herself within the industry; she's not only collected Revere, but other major strategic investors to the investment. So, we look at something like Sleep Architects and it's a super exciting investment into a space that we know is up and coming and that she's got a critical and pivotal solution to.
VN: What is the connection between sleep and dentistry? Because those are two spaces that you don't really think about together.
JK: Just to maybe help frame it a little bit, it's really the airway. A key piece of sleep is what is or is not obstructing your airway. You see these big CPAP machines that everybody has talked about, they go over your head and mouth and they're tolerated by some and not by others. You see a lot of other maybe newer therapies, which are different types of devices that will go in your mouth that are really serving to do something called jaw advancement. Basically, they bring your jaw forward so that it's not sitting on top of your airway, but all of these therapies serve the airway, ensuring that you can breathe and breathe properly and breathe consistently throughout your sleep cycle. So, one of the main connections between oral health and sleep is this element of airway and breathing, which is very much, of course, controlled by the dynamics of the mouth.
VN: I have sleep apnea, I have a CPAP machine, but I never really made the connection between that and dentistry. I thought of it more as a respiratory thing.
JK: There are certainly other allied health professionals and fields that are involved in this, from your primary care physicians to your ENTs, your pulmonologist, there's a lot of people that might be involved in helping to diagnose and treat conditions like sleep apnea, or other sleep related disorders. But, at the end of the day, if the provider doesn't have the pieces at their disposal, if they're not comfortable with those pieces, it's one of those things that just slips through the cracks. Sleep is too big to just slip through the cracks and that's what Alice picked up on. In dentistry, we often talk about orthodontics, we often talk about implants, these are two areas that have shown massive growth over time, and have received a lot of focus from corporations, manufacturers, investors alike, as well as the public markets. But sleep is really a third contender that can sit within that arena.
VN: You have an interesting background: you’re a dentist, you worked at Oscar, now you're a venture capitalist, so you had the broad spectrum of experiences within this space. So, how did you wind up going from being a dentist to working in tech to then being in venture? Talk to me about your journey and how you wound up here.
JK: I would love to say that I had this massive brain trust and plan written out and organized and that's simply untrue. A lot of it happened by happenstance, a lot of it I was following my interest or my passion. Some of it happened by good people around me bringing opportunities to me. So, a lot of it is some of the triumphs versus some of the failures and what I learned from those, there's a lot of factors that were really involved. You're right: I've been a clinical dentist by training for about a decade now, I'm a part owner in some practices, I don't practice clinically but, really, I'm a startup guy. I love the early stage product development process, I love the scaling of the startup from its early days, all the way through, not just commercial viability, but real scale within the market and watching those flights take off and being a real part of them.
So, where I really started was in tech, I was in web and graphic design, sold two businesses off, went from there to luxury goods and commodity services, had an exit before the 2008 market crash, then into an incubator, which I founded in Boston, New York, Chicago, San Francisco, it was industry agnostic, stepped down to sit on the board because I went to Oscar Health Insurance and led strategic provider innovations and development, overseeing a lot of the major hospital system partners, their technology integrations, some of the special internal projects going on there to do with federal risk adjustment and virtual doc encounters. That was really my foray in healthtech, if you will. And then from Oscar, over into oral tech; I saw Quip come out early days as this then really just subscription electric toothbrush, maybe oral health product platform, that has really grown and evolved into an education and consumer engagement platform and beyond that into a professional services platform. So, I headed there on the professional services side of the business, and really helped to scale that up over about four to four and a half years. And then I started getting approached by a lot of different startups who sit on boards to invest, so I founded my own management consulting firm meets family office called the Barchester Bay Group which has about 40 ventures under management there and about a dozen and a half my own investments and, from there, so many of those dental startups coming with some of the problems that we started with, which were, “hey, Jeremy, this investing is great, your services are great, how can we get this at scale? We need a venture perspective here. There's no venture perspective in dental, there's bootstrapping and bank loans and private equity and all these other things, but we can't get it from the angels, we can't get it from the corporations, we can't get it from the other VCs. So what are we going to do?” So, it was, “Do I continue on this smaller scale family office pathway, or do we do this and do it at scale?” That was the jump into Revere and we started with our data project and then growing our team, our pipeline, and now our portfolio.
VN: What have you learned since you’ve gone into venture?
JK: A very critical piece is that you don't invest in something that you don't know or can't help. It's a really uncomfortable, powerless position to be in if there's a problem and you really don't have any of the chops to solve it, or any of the infrastructure around you to help solve that problem. So it's critical and now is very apparent in what we do and how we do it at Revere, that what we invest in is not just the best investments that we see from a financial sense, and some of these other diligence areas, but how can we help move the needle as people, as a firm for that, for that startup? That's really a big one. I can recount countless scenarios of startups that I found interesting, I found the compelling from a financial sense, had some insight into but not enough to really help when things got tough.
Another key one is, you need to rely on the smart people around you. Yes, I did go to business school, I have an MBA, yes, I did go to dental school, I have a clinical dental degree and have practiced dentistry; I do know some of these areas enough to be proficient and fluent in several of them, but there are people a whole heck of a lot smarter than me in some of these categories, especially the really niche categories. We get into biology and chemistry and engineering, we get into software design, there are a lot of areas that are far beyond my scope and you really need to rely on the other people around you before you get involved in something. So, it's easy to get excited about something that looks like it's glowing or shiny, but it's harder to choose the best shiny one to get involved with. That is a factor of the people around you in the process that you take, you have to be calm and you have to wait for that right move and really take it. It's that boogie boarder or surfer, and there's a wave every couple of seconds, but you wouldn't have so much fun if you just took the small waves, then you'd spend all this energy swimming back out. You’ve got to really wait for the best wave to come in. In my sense, if you're not a full time surfer, you need to rely on the other surfers around you.
Last but not least, and to one of our previous points, you're investing in people. Revere does venture capital in a very people first way: it's not just founder friendly from the startup perspective, but we are very open and communicative and engaged with our investor base, versus a lot of funds that take a check and close, this is a people first approach. So, you need to know the people that you're getting involved with. And so, we've done that on the investor side and on the startup side, and when you don't do that, on either of those two sides, you can end up in a real predicament. If your values aren't aligned on the startup side, if you're headed in a different direction than they are, it can cause real tension and so you really have to be very aligned with the people that you get involved with.
VN: What's the part of the job that you really love the most when you go to work every day as a VC? What really motivates you?
JK: I don't just wake up because my four year old and 18 month old are up at five, I don't just wake up because there's some sort of constant house related issue going on that we're contending with; I wake up because I am excited to help these guys and gals break barriers down. Each one of them has their own set of barriers but what really excites me is the resilience that they have and supporting them in ways where you can hear that click. There's nothing better than hearing that click that comes on with their self realization, but also with your help alongside it, and seeing that they really got there, they really traveled the distance, that there was real market growth and improvement, and that you contributed to that. It's really what a lot of us strive for in legacy. At the end of the day, when you're done doing what you do professionally, and you've moved on to another chapter, how do we look back and say that we made a difference? In my case, it’s getting involved with each and every one of these startups doing the groundbreaking things that they're doing to change the way that oral health care is provided to patients and the experience for those providers in the value chain. That is exactly what gets me up in the morning.
VN: Is there anything else that you want to mention about yourself, the firm, or the space?
JK: You may not have thought of or heard of dentistry as an investment or a startup space before, but I hope you think about it now. My true and biggest reward overall would be to take some consideration, consider this alternative asset class. Whether you're an investor or you're a startup, this is a space that it's exciting to be in and that you should be in.
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