One of the most active players is Qualcomm Ventures, the investment arm of Qualcomm Incorporated, a global telecom corporation. We spoke with Jack Young, Managing Director of the $100M Qualcomm Life Fund (QLF) at Qualcomm Ventures, for his insights.
His investment interest is focused on the emerging wireless health space including wellness and fitness, chronic disease care, remote diagnosis and monitoring, healing and aging in place, health informatics, etc. Jack currently serves as a board observer at QLF portfolio companies including Airstrip, AliveCor and Telcare. In addition, he serves as a board observer at Jana, uCIRRUS, Validity and Visage Mobile. Prior to Qualcomm Ventures, Young was an executive in the telecom space.
Young’s experience in both sectors makes him a unique voice in the osmosis of venture capital between mobile technology and life sciences. Young will participate in a panel dedicated to the subject at the 6th Annual OneMedForum in San Francisco, January 7-9.
Entitled “Connected Health: A Brave New World of Medicine”, the panel will explore future innovation in the space — from how patients adopt real-time monitoring devices and smartphones/tablets to the possibility of implanted computer chips to increase patient care efficiency.
OneMedRadio spoke with Jack Young about investing in this sector, and the points of significant unmet medical need which represent the most promising opportunities.
View the transcript below.
Brett Johnson: Welcome, this is Brett Johnson in New York City with OneMed Radio. Today, I’m with Jack Young who leads the Qualcomm Life Fund, which is part of Qualcomm Ventures, a group that’s active in seeking investments in emerging growth companies in the health information space. Jack will be a panelist on the Connect Health Panel at the sixth annual OneMed Forum in San Francisco January 7th through 9th. Jack, thanks for joining us today.
Jack Young: Thank you, Brett.
BJ: So, Jack, I know Qualcomm is a very big telecom company, can you tell us a little bit about the general investment strategy of your fund and what you guys are trying to accomplish?
JY: Absolutely. Qualcomm Ventures started in 2000 with a $500M commitment from Qualcomm, and has since made over one hundred investments with a portfolio of about 80 companies. Qualcomm Ventures is a global organization with seven offices in different regions around the world. Beginning in 2007, our fund began making investment in digital and mobile health, and in 2012 we established a new fund within Qualcomm Ventures called the Qualcomm Life Fund. The Qualcomm Life Fund is a $100 million allocation focused on making investments in the wireless health space. To date, we have made seven investments, and this morning we just announced a new investment in ClearCare.
BJ: Terrific so and can you tell how did you get involved in the group?
JY: I joined Qualcomm Ventures about five years ago. Personally, I have been involved with investment startups since my days in Silicon Valley dating back to the late ‘90s, and when the opportunity with Qualcomm Ventures opened up, I took it. My background really is in mobile and the internet and telecom in general, but when I joined Qualcomm, I quickly realized that Qualcomm is very interested in digital and mobile heath. Overall in the industry, there is interest in applying digital and mobile technologies in the health industry to improve care delivery and ultimately improve the outcome of patient care. I thought that was a good opportunity for Qualcomm Ventures, so I began to focus on mobile health about five years ago and started to make investments about three years ago. My specialty kind of morphed into mobile and digital health, and I transitioned to focusing solely on this space about a year ago.
BJ: So if you had this sort, you know, offer your general thesis on where the big opportunities are in this space, how would you describe what you think is the big trend?
JY: We have studied this market broadly as well as in depth in specific target areas. From our perspective, we look at healthcare as a vertical where mobile and digital technologies can be applied, with tremendous potential to improve healthcare as we know it. Wellness and fitness is certainly a big area, [as well as] chronic disease management. Transitional care, for example, is an interesting area as the U.S. healthcare system is moving towards an ACO model instead of the traditional fee for service model. We think more and more patients need to be cared for outside of hospital to reduce costs and increase convenience.
The other megatrend is Aging in Place. As you know, Brett, there are 10,000 people in the United States turning 65 every day, and the senior population will double over the next two decades, and I think there’s a tremendous opportunity to apply technology to monitoring these people remotely.
We also spend time studying clinical trials. The cost of developing a new drug, especially in clinical trial stage, is increasingly more and more expensive. The application of mobile and digital technologies can greatly reduce the cost of developing a drug and possibly improve the outcome.
BJ: Can you talk about I guess your most recent investment and why you found that to be a special opportunity?
JY: Yes. I mentioned ClearCare earlier this morning, our 7th investment in the Qualcomm Life Fund, which we announced on November 26th. Specifically ClearCare provides a software platform to enable homecare agencies to better coordinate and deliver care to seniors living at home. As I mentioned earlier, 10,000 Americans turns 65 every day, and today about 13% of our population are 65 and older. Unfortunately, this 13% of the population consumes as much as 40% overall cost.
What’s more, over the next two decades baby boomers will enter the retirement age, and the population percentage will nearly double to over 70 million seniors by 2030. Proportionately, the senior population is going to consume more and more resources than our current healthcare system is prepared for. As a result, I think technology is one of the ways to bridge that gap, which is why we invested in ClearCare. I believe many industry leaders and investment groups will continue to closely follow this megatrend as well.
BJ: Can you talk a little bit about the ClearCare business model and why you found it attractive?
JY: In Silicon Valley, there is a lot of talk about the Quantified Self movement, and about younger populations becoming healthier, but as I mentioned earlier, the older populations really need help. Additionally, the older generation is not as technologically savvy as the younger generation, which may decrease or slow the penetration of new technologies in the senior market. For example, tablets and smart phones are still viewed as advanced by some of the elderly population, especially those 75 and older.
However, in order to live independently in their homes, the elderly will need to adopt new healthcare technologies. ClearCare provides the first step by moving paper-based workflow and services into the digital age. They provide a software platform that allows homecare agencies to better coordinate with field workers who report on the condition of the seniors on a more real time basis. This new workflow enables problems to be detected earlier, and will eventually lead to remote monitoring and other advanced care technologies.
BJ: So can you talk a little bit about sort of the stage of companies you invest in and the size of investment and do you tend to syndicate your investments or do you go in by yourself? Can you talk a little bit about sort of the general approach that you guys take at Qualcomm?
JY: Qualcomm Ventures is more mature, having been in business the last 12 years, and invests in all stages of the investment cycle. In fact, we started a seed program about two years ago so we’re participating in the angel stage of investment as well. But generally speaking, as a corporate investor a bulk of the investments start in series A and series B. Because mobile and digital health is still an emerging area, there are a lot of new innovations and ideas, however the business models are less mature. As a result, our Qualcomm Life Fund tends to observe what’s happening in the market, and for winners or business models to emerge in specific sectors before investing.
Typically, we prefer a company to have demonstrated close to a million or a million dollar annual round rate revenue and have some serious endorsement from other industry leaders. We also tend to partner with investors with a life sciences background. I think that by combining our expertise in mobile with the healthcare expertise of life sciences firms we can make smarter investments. Our typical check size is $2 million to $5 million, and in most cases we syndicate with other corporate or financial VCs.
BJ: Can you talk about like the specifics on the ClearCare case?
JY: We are fortunate that ClearCare launched its service in 2010 and has rapidly gained traction in the marketplace by winning hundreds of homecare agencies in software adoption. This is a series A investment that totals around $4.6M. We partnered with Voyager Capital and the Pacific Harbor Investment Group to co-invest in the series A of $4.6M, which we hope will take the company to that next stage.
BJ: Are you seeing a lot of deal flow now in terms of companies with new ideas and any sort of insight on what’s happening in the broader market?
JY: Absolutely. The deal flow has been very good, and Qualcomm js in a unique position in the market. Not only are are we leaders in the mobile space, but are also early thought leaders and supporters of the mobile health and digital health arena. As you know, Brett, just about 10 years ago, Qualcomm began championing this area and now has a wealth of history and partners in the industry. As a result, we have tremendous deal flow.
Generally speaking, there are many of good ideas and innovations, but unfortunately healthcare - unlike the IT or consumer industry – has lots of rules, regulations and boundaries. These complexities cause some great ideas to never make it to market, and for sustainable business models to take more time to develop than for models in the consumer or internet space. Overall, we are seeing many deals, but are also being very practical while identifying winners in each of those given verticals I spoke to earlier.
BJ: Interesting. So as you give any –you know, if you had advice to investors, say encourage investors or to entrepreneurs in sort of the digital space within healthcare, what would be sort of the big advice you’d give to people and say look at investments and/or developing companies here?
JY: I think the key is that in healthcare, unlike any other industry, there are multiple constituents. Whenever you have a new innovation, you need to somehow balance the interest of these multiple participants.
There’s a 4P model with healthcare. A startup needs to think about how its solutino affects the Patient (will the solution improve the quality of care for the patient), and how it affects the Physician. Startups must also focus on the Payors, and address why they would pay for a new solutino. Lastly, the needs or interests of the large Pharmas are important as well. Unless a startup can balance the interests of the 4 P’s, the main constituents in healthcare, it’s difficult to make the solution or service successful and ultimately scale.
BJ: Terrific. Well there’s certainly a lot of new innovations and a lot of companies that are trying to enter the space. It’s a big and growing space so we truly appreciate your comments today and we thank you for also joining us in January at the JP Morgan Healthcare Conference where OneMed Place is running its sixth annual OneMed Forum. So thank you for your time today, Jack.
JY: Brett, I’m looking forward to that. Thank you again for your time.
BJ: So that is Jack Young who leads the Qualcomm Life Fund, part of Qualcomm Ventures, a group that’s been very active investing in emergencies companies in the health information space. It’s Brett Johnson with OneMedPlace, OneMed Radio in New York signing off. Good day.