An Overview and Directory of Corporate Venture Capital (CVC) in Healthcare
Large companies are playing an increasingly important role in the venture capital ecosystem. In fact, 26% of deals in Q1 2023 included corporate venture capital (CVC), an increase from 20% in 2022 and 11% in 2010.
Often referred to as "strategic" investors, CVCs indeed invest with a view towards furthering the long-term objectives of their parent companies. But their motivations are more than just strategy. CVCs seek to achieve significant financial returns, mitigate risks through diversified portfolios, and gain early insights into emerging market trends.
In this article, we’ll explore CVCs in healthcare, including:
How does corporate VC work?
Why do corporations invest in the first place?
A list of 75 strategic healthcare investors
Do corporate VCs get carry?
Should founders take money from a CVC?
CVC Glossary
How does corporate VC work?
Corporate venture capital (CVC) is an investment arm set up by a corporate entity to invest directly in external private companies. Investments are typically made from the balance sheet of the corporation or from dedicated funds, which means the capital invested is the corporation's own operating capital.
Why do corporations invest in the first place?
CVCs are established as a means of sourcing innovation and growth. We all know that scrappy, small teams serve as the lifeblood of innovation. Large companies (which were once scrappy themselves) know this, too. And by investing in startups, they hope to remain at the forefront of market evolution and innovation. In the process, they gain market intelligence that can subsequently inspire the team and inform the corporation's strategic planning.
CVCs also serve a financial purpose. They put their parent company’s cash to work with the hopes of generating substantial returns. A good CVC portfolio can yield considerable financial gains, demonstrating the dual role of CVCs as both strategic enablers and potential profit generators. In terms of risk management, the diversified nature of a CVC's portfolio serves as a buffer. Even if one startup underperforms or fails, the success of other companies within the portfolio can balance out the losses.
Of course, some CVCs invest as a strategy for business development and strategic partnerships. Through their investments, CVCs gain privileged access to the inner workings, technologies, and market strategies of portfolio companies, enabling them to identify potential partners or acquisition targets early on. At the same time, this means they are preventing competitors from accessing these same opportunities.
CVC deals by sector of healthcare
From 2018-2022, corporates participated in over 3,500 private venture-backed life science and healthcare deals across the US, EU, and UK. Digital health deals made up about a third of those, with over 1,100 CVC deals from 2018-2022.
A list of 75 strategic healthcare investors
Healthcare systems with venture arms:
Ascension Ventures has under $1B under management and invests in digital health, life sciences, healthcare services, and med tech
Catalyst by Wellstar is a $100M fund aiming to build better healthcare
Cedars Sinai Health Ventures backs startups advancing healthcare and biomedicine through technology
CHV Capital (Indiana University Health) invests in life sciences in Indiana
Cleveland Clinic Ventures invests in intellectual property developed at the Cleveland Clinic, as well as companies that drive strategic value and address their organizational priorities
CommonSpirit Ventures (CommonSpirit Health) invests financially, operationally and strategically in opportunities with the potential to advance their mission of improving patient outcomes, enhancing patient experience, and reducing the cost of health care
Corewell Health Ventures focuses on solutions that align to their vision of personalized health, made simple, affordable and exceptional
CU Healthcare Innovation Fund is a strategic healthcare-focused venture capital firm that is affiliated with the University of Colorado Anschutz Medical Campus
Edward-Elmhurst Health Venture Capital invests in digital health, health-tech, tech-enabled services, and healthcare services sectors
Healthcare Innovation Fund (Acadian Companies, Lafayette General Health System, LHC Group, Ochsner Health System, and William C. Schumacher Family Foundation) invests in companies that are delivering transformative and innovative solutions in patient care/experience, value based payments, back office automation, and data coupled with deep learning
Inflect Health is the innovation and venture arm of Vituity - the largest physician partnership in the nation
Intermountain Ventures invests in healthcare IT companies with a strong provider angle
Kaiser Permanente Ventures makes investments in promising healthcare companies targeting areas of real need
Mass General Brigham Ventures invests in seed and early-stage life science ventures
Mayo Clinic Ventures develops, manages, protects and licenses technology that saves lives and advances patient care
Memorial Care Innovation Fund focuses on healthcare information technology, healthcare services, and medical device innovation
MultiCare Capital Partners is the innovation and strategic investment arm of MultiCare Health System
NewYork-Presbyterian Ventures prioritizes investments in NewYork-Presbyterian customers and leverages internal expertise to support the development and growth of portfolio companies
Northwell Holdings (Northwell Health) invests in novel ideas and business models across the health care landscape
Orlando Health Ventures invests in innovative companies that demonstrate potential for a strong return on investment, high growth opportunity and that align with the mission of Orlando Health
OSF Ventures, the corporate investment arm of OSF HealthCare, invests financially, operationally and strategically in opportunities with the potential to improve patient outcomes, enhance patient experience and reduce the cost of health care.
Providence Ventures (national, not-for-profit Catholic health system) offers investment capital, health system expertise, and access to health system decision-makers
The Texas Medical Center Venture Fund (TMCVF) is the venture capital arm of Texas Medical Center Corporation
UnityPoint Health Ventures invests in care experience, care financing, care delivery and care innovation
University Hospital Ventures invests in companies poised for taking on the future of healthcare
UPMC Enterprises provides portfolio companies and partners with capital, connections, and resources to develop solutions to health care’s most complex problems
Health and life insurance companies with venture arms:
Aflac Ventures invests in companies operating in the cancer, healthtech, insurtech, finance, internet of things, big data and analytics sectors
Aviva Ventures is the corporate venture capital fund for Aviva, a UK-based firm offering life insurance, general, and health insurance
The Blue Venture Funds (BVF), a collaboration among Blue Cross Blue Shield (BCBS) companies, the Blue Cross Blue Shield Association (BCBSA), and Sandbox to invest in venture and growth opportunities within healthcare technology, healthcare services, and clinical sciences
Cobalt Ventures (Blue Cross and Blue Shield of Kansas City) invests in high growth companies that align with Blue KC’s mission and can scale nationally across the payer industry
Cigna Ventures is focused on maximizing impact across data analytics, digital health experience, and care delivery
Echo Health Ventures brings together Cambia Health Solutions, Mosaic Health Solutions, USAble Corporation and BlueCross BlueShield of Tennessee as members of the Echo Innovation Alliance to accelerate health care innovation on a national scale and drive meaningful health care impact
Erie Strategic Ventures will invest across the personal and commercial insurance value chain as well as natural adjacencies that offer potential to deliver value to ERIE customers and agents
Healthworx is the innovation and investment arm of CareFirst BlueCross BlueShield
Humana Health Ventures takes advantage of its parent's extensive assets to invest in and to assist innovative health care companies, focusing especially on new technology
Kamet Ventures is focused on creating breakthrough companies that will redefine the sectors of insurtech, healthtech and mobility
MassMutual Ventures (MMV) is a multistage, global venture capital firm investing in enterprise software, cybersecurity, financial technology, and digital health companies
Nationwide Ventures invests in products and services that help consumers prepare for and live in their next stage of life
New York Life Ventures (NYLIC) is the largest mutual life-insurance company in the United States.
Optum Ventures (UnitedHealth Group) has over $1B under management to invest in digital health companies that use data and insights to help improve consumers' access to health care services and how care is delivered and paid for, and that make the healthcare system more reliable and easier to navigate
Pharmaceutical and biotech companies with venture arms:
AbbVie Ventures focuses exclusively on novel, transformational therapeutics at discovery and pre-clinical stages
AB Health Ventures (AmerisourceBergin) has a $150M dedicated corporate venture capital fund to invest in and partner with emerging healthcare startup companies working to transform healthcare
Amgen Ventures invests in early stage companies in therapeutics and technologies to support R&D and digital health / healthcare IT
AstraZeneca’s BioVentureHub offers emerging life science companies and academic teams an innovative way to access AstraZeneca’s experience, expertise and infrastructure (unclear if they offer cash?)
Boehringer Ingelheim Venture Fund invests in pioneering science that offers the potential to provide a significant benefit for their patients
Hikma Ventures operates as the corporate venture capital arm of Hikma Pharmaceuticals, investing in digital health companies that could enhance Hikma’s value proposition, reputation and market intelligence
Johnson & Johnson Innovation - JJDC, Inc. has invested $3.5B across pharmaceuticals, medical devices, and consumer healthcare—and at all stages
Leaps by Bayer invests in “paradigm-shifting advances in the life sciences”
Lilly Ventures (Eli Lilly and Company) has $200M under management and specifically targets opportunities in biotechnology, healthcare IT, and medical technology
Merck Global Health Innovation Fund is a growth investor partnering with innovative digital health and data science companies that facilitate and optimize biopharmaceutical operations, they run a $500M fund and have made 60 investments
Novartis Venture Fund has $750M under management in committed capital to invest in biotechnology/biopharma life sciences companies
Novartis Digital Health Venture Capital (dRx Capital) backs entrepreneurs who are transforming healthcare through data and digital technology
Novo Holdings (Novo Nordisk Foundation) invests in life science companies at all stages of development
Pfizer Ventures is a $600M fund focused on potentially transformative therapeutics, with an emphasis in our core therapeutic areas: Inflammation & Immunology, Internal Medicine, Oncology, Rare Disease, and Vaccines
Roche Venture Fund is an ~$850M evergreen fund investing in life science companies in pharmaceuticals, diagnostics, and digital health
Sanofi Ventures invests in early-stage transformational science and technology, when companies are too early to partner with or acquire
Takeda Digital Ventures invests in Virtual First Care (V1C) companies that are using digital to improve outcomes and experiences throughout the patient journey
Device, diagnostics, and lab services companies:
Boston Scientific Ventures has invested over $1B in more than 60 portfolio companies that are developing innovative medical solutions to improve outcomes, increase efficiencies, and serve patients connected to their businesses
Bruker develops and manufactures analytical solutions for X-ray diffraction, scattering and X-ray microscopes, and makes adjacent direct investments
GE Ventures has invested in 15 companies in Europe (note: they sold their healthcare portfolio to Leerink in 2019)
Intuitive Ventures is a $100M fund investing in the future of minimally invasive care
Labcorp Venture Fund invests in early stage, private companies operating in current or strategically adjacent spaces that are making healthcare more convenient, accessible, affordable, and personalized
Medtronic Ventures looks to invest in companies that Medtronic may like to acquire down the line
Philips Ventures invests in promising start-ups to help drive the future of Philips digital transformation in healthcare
Qualcomm Ventures invests in companies leveraging Qualcomm’s technology to expand the mobile ecosystem and beyond
Samsung Next invests in digital health companies delivering better health outcomes with more convenience and lower cost
Samsung Venture Investment Corporation invests in semiconductors, telecommunication, software, internet, bio engineering, and medical startups
Other healthcare CVCs:
Access Fund (venture arm of Reckitt) invests in OTC medicines, supplements, digestive health, and sexual health
Alexandria Venture Investments invests in companies advancing transformative new modalities and platforms to meaningfully improve human health
Bertelsmann Investments is the investment arm of German conglomerate Bertelsmann SE & Co. KGaA
CVS Health Ventures funds early-stage companies focused on making health care more accessible, affordable, and simpler
Danone Manifesto Ventures invests early in innovative companies that are bringing high potential emerging brands, concepts, or capabilities to the market
GV (formerly Google Ventures) operates independently from Google, but is an evergreen fund with Google as its sole LP
Inventages (Nestlé) invests in strategic life-sciences, nutrition, and wellness focused startups
McKesson Ventures helps entrepreneurs in the healthcare technology and services space build and scale businesses that tackle some of the toughest challenges in healthcare
Morgan Health (JP Morgan Chase) is investing its capital in healthcare companies focused on improving healthcare in the commercial marketplace
Salesforce Ventures invests in enterprise software companies
Should founders take money from a CVC?
When it comes to fundraising, you may be wondering if you should pitch any of the corporate VC firms on the list above. Let’s consider some of the pros and cons, and the implications it can have on your company's future trajectory.
On one hand, CVCs can offer startups more than just a check. They often come with the promise of strategic alignment with the parent company, which can translate into valuable partnerships, potential customer introductions, and even an acquisition. CVCs can also offer deep industry insights, the possibility of greater market credibility, and access to resources that might otherwise be unavailable or costly to obtain.
But sometimes, taking money from CVC can hold you back. It could limit future strategic options, particularly if the investment comes with strings attached—like an exclusivity clause that may prevent partnering with or receiving investment from other firms. Or, the parent company's competitors might be less willing to do business with your startup, limiting potential market opportunities. There's also the risk of misaligned expectations: while you may be focusing on growth and market capture, the CVC's parent corporation might be more interested in strategic benefits, such as market intelligence.
I think the answer here really is that it depends on the CVC and your specific company.
Here are some things to consider:
What information rights would they have? Can they be revoked if your startup and the CVC become competitive?
Would an investment from this CVC deter other potential investors, customers, or acquirers?
What strategic resources can the CVC offer beyond capital? Look for resources like industry expertise, access to potential customers or partners, and operational support.
How would any conflicts of interest be handled?
Does the CVC require any exclusivity or rights of first refusal? These terms can limit future strategic and financial options for your startup.
What is the decision-making process like for follow-on investments? Knowing this can help you plan for future funding rounds.
Does the CVC have a history of successful exits? This can indicate the CVC's ability to support startups through to a successful conclusion.
How stable is the CVC? If the parent company faces financial difficulties, the CVC could be affected.
Finally, I would highly recommend talking to a few companies the CVC has backed in the past (those that were successful as well as those that were not). They can give you the genuine scoop on how the CVC treats portfolio companies.
As corporate venture capital continues to grow, one thing is clear: CVCs are reshaping the venture landscape, bringing more capital, and adding a new dynamic to startup fundraising. The keys to navigating this lie in understanding the nuances of CVCs, asking the right questions, and making informed decisions that align with your startup's long-term objectives. Wishing you the best of luck!
CVC Glossary
Balance Sheet Investing: This is when corporations make investments directly from their own balance sheets, meaning the capital invested is the corporation's own operating capital. This type of investing is common in corporate venture capital, as opposed to raising a separate fund from outside investors.
Corporate Venture Capital (CVC): This is the investment of corporate funds directly in external startup companies. These investments are made by a dedicated venture capital division within a corporation.
Carried Interest: This is a share of the profits of an investment or investment fund that is paid to the investment manager. In some CVCs, carried interest may or may not be part of the compensation structure for the investment professionals.
Evergreen Fund: Unlike traditional venture capital funds, which have a fixed lifespan, an evergreen fund has an indefinite lifespan and doesn't have a mandated end date. The fund makes investments, and then the returns from those investments are reinvested back into the fund, allowing for continuous operation. Some CVCs use an evergreen structure.
Exit Strategy: This refers to the way an investor plans to make a return on their investment. For CVCs, this could mean a strategic acquisition by the parent corporation, a sale to another company, or a public offering.
Limited Partners (LPs) and General Partners (GPs): In traditional venture capital funds, LPs are the investors who provide the capital, and GPs are the managers who invest that capital. In CVCs, the corporation typically plays both roles—it provides the capital (as an LP would) and manages the investments (as a GP would).
Portfolio Company: This is a company that a venture capital firm has invested in. It's part of the firm's portfolio of investments.
Strategic Investing: Unlike traditional venture capital, corporate VCs often invest with strategic goals in mind. This can include gaining access to new technologies, markets or business models that align with the corporation's long-term business objectives.
Syndicate: In venture capital, a syndicate refers to a group of investors who pool their resources together to invest in a startup. CVCs often participate in syndicates alongside traditional venture capital firms.