- The prominent healthcare VC 7wireVentures just closed a $217 million fund, its largest ever.
- The cash will be used to back about 10 to 12 later-stage startups, a new strategy for 7wire.
- Despite big returns, 7wire has kept the operation small so it can get deeply involved in startups.
7wireVentures, a prominent venture-capital firm, just raised $217 million to fund the next generation of healthcare startups, bringing the firm's total assets under management to more than $500 million.
The fund, which closed last Friday, is the biggest that 7wire has ever raised and represents a strategy shift for the firm. Whereas 7wire has historically stuck to early-stage investing, this cash will be used to back 10 to 12 later-stage startups.
7wire, led by the healthcare veterans Glen Tullman and Lee Shapiro, is best known for its role in identifying and growing Livongo, a chronic-care company that sold for $13.9 billion, a record exit for a digital-health company, in October 2020.
Alyssa Jaffee, a 7wire partner, said her firm's new fund should serve as an encouraging counterpoint to a downturn that's sunk digital-health funding to pre-2020 levels. Still, 7wire plans to use much of the cash to bolster its own portfolio companies, with just a few spots for later-stage startups it hasn't previously backed.
"The future of digital health is bright," Jaffee told Insider in an interview. "There is so much opportunity still to be captured in healthcare."
Some of the new funding, which has been raised in waves since 2022, has already gone to a Series C round for NOCD, a mental-health startup that 7wire has been backing since the seed stage. The startups Folx Health and Parsley Health, new investments for 7wire, have also won contributions from the new fund.
How 7wire secures wins
Tullman and Shapiro like to joke that they've been investing together since they were in grammar school. The reality isn't far off. About 35 years ago, the two started investing in promising companies, often with a group of friends, high-net-worth individuals, investors, and company leaders. Many of them would eventually become 7wire backers when Tullman and Shapiro launched the first fund with Robert Garber in 2016.
Despite Livongo's returns — investors who contributed to the 7wire fund that backed Livongo have seen a return of more than three times their money thus far, per Shapiro — the firm has maintained a kind of family-office level of intimacy akin to the style of investing Shapiro and Tullman used to employ.
7wire keeps funds and the portfolio size, just north of 20 startups, both relatively small, all managed by only four partners: Tullman, Jaffee, Shapiro, and Garber.
The small size of the operation is intentional in keeping with 7wire's "quality over quantity" approach to investing, Garber said. The partners work in the trenches with 7wire's entrepreneurs, helping them win deals, build teams, design products, and more.
Early-stage investing is notoriously risky, but part of 7wire's success likely stems from the hands-on role it plays with portfolio companies.
The partners have cultivated strong relationships with large companies like health plans, health systems, employers, and pharmaceutical companies, which make up more than half of the firm's investors, Garber said. Many of these kinds of backers, such as the insurer Cigna's venture arm, have contributed to 7wire's new fund.
7wire shares market research and helps healthcare companies shape their strategies, Jaffee said. It also learns their priorities, occasionally leading to new business ideas or deals for 7wire's startups, a huge boost for early founders given the complexity of working with insurers.
"We don't just make an email introduction," Jaffe said. "We will often jump on the Zoom, get on an airplane, and help close that business."
What 7wire is looking for
7wire tends to invest in companies that build health services people can use, and possibly even enjoy, outside the four walls of the hospital.
Tullman and Shapiro's experience leading the health-tech company Allscripts shaped that mission. The company made technology for doctors' offices and hospitals, and Tullman and Shapiro saw that the systems were not designed to help patients manage chronic conditions like heart disease and diabetes, Shapiro said.
"That was well before this sector was called digital health," he said.
7wire looks beyond strategy when it picks founders to back. The firm wants to invest in entrepreneurs who have a passion for changing healthcare and who work with an urgency that matches its partners, Jaffee said.
"We want to believe that the founders that we back believe in what they're doing, too — that they will stop at nothing, that they're on a mission to make this happen," Jaffee said.
7wire often looks for founders who have personal experiences with the problems they're trying to solve and are comfortable telling that story to the market, Garber said. Jaffee calls it "founder-market fit." When Tullman led Livongo as CEO or chairman of the board, he spoke often of his youngest son's experience with diabetes, the first condition Livongo treated.
"What we've learned is that people who are sales-driven early in the life cycle are really important, because at that stage, you're selling a dream, you're selling a vision," Garber said.
However, taking after Tullman, who has been known to hide Garber's chair in closets around the office and give Jaffee jokey awards written on Starbucks sleeves, 7wire doesn't take itself too seriously.
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