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Chris Booker, partner with Frist Cressey Ventures, explains what factors go into the the venture capitalist firm’s decision to partner with health care companies, and what role the government has in investing in medical research.
Transcript
How does Frist Cressey Ventures decide whether to invest in a certain health care company?
We’re focused on our mission, and our mission is, “How do we partner with entrepreneurs to improve health care?” That’s the underpinning of anything that we look at. After that, when we’re looking at a company, it’s really, “Can we get market validation?” This is a really innovative company that is moving the needle in health care. Can we go out to a lot of our partners—which are majority the payers and providers we work with—to understand, is this a problem that they’re looking to solve? Is this something that they are looking for? So those are the big ingredients. It’s got to be able to meet the standard of improving health care.
The second is we got to get it validated. The third, specific to Frist Cressy, is “Can we add value?” A lot of our in-markets are payer-provider focused, sometimes pharma, but really can we drive value creation within this company in areas of recruiting, connecting, and executing? Not only does it have to meet those standards before, but we have to have the standards of, “Can we add value moving forward?”
Can you elaborate on your belief in the importance of partnerships when committing to work with companies?
Partnerships—a lot of firms say portfolio companies; I’ve used portfolio companies in verbiage in the past. When you think of a portfolio company, I’ve got Apple, I’ve got Google, I’ve got Facebook, I’ve got GE, Ford, all of these companies that are portfolio companies. It doesn’t mean I have a relationship with the CEO [or] I’m helping them grow. The only thing I could really do is maybe consume their products. So that’s what’s in my personal portfolio.
We say partnerships. Now, partnerships is different, because we’re saying we want to work with you and you’re using your resources, we’re using our resources to help this company grow, to help this company expand, and to fulfill its mission. So while portfolio is “these are the assets we have, investments that we’ve made,” the partnerships and the language we use is important, because we want to use our resources to help the company grow our connections—not just our capital—to help the company grow, unlike some public companies that you have within your portfolio. So it truly is a partnership approach.
What role does the government have in investing in medical research?
The one thing about cancer is it affects everybody. My father passed away a couple years ago, the day after Christmas, from cancer. When you talk about a subject like this, it’s affected so many people, not only physically but emotionally, and their lives have been changed for. There’s no doubt that the government has a role with helping facilitate the world, frankly, from how do we get rid of cancer. You see a lot of diseases—look at HIV, where the government put a lot of money, time, and effort in to help research and solve it. Now that’s more of a chronic condition instead of a terminal illness. I think you’re seeing more and more in that, with money flowing into cancer research.
From a government perspective, what is the proper role? It’s whatever the elected officials think is a proper role. For me, it is focused on how do we facilitate innovation, how does the government help facilitate innovation and change, and help fund research. I think that’s the proper role for the government is to say, “This is a major issue in our society. This is something we have to fix. Let us facilitate it, provide financing and help some of the most brilliant researchers in the world figure out a way to solve this problem.”
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