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10 Years Later: A Health Tech Investor Reflects on Her Early Days at StartUp Health · StartUp Health NOW Podcast

• 0:00
  It was a super ambitious goal, but I loved how impactful StartUp Health was trying to be.
• 0:06
  It was, it was attracting folks, you know, outside of healthcare to come innovate in healthcare, provide them with, you know, the resources and support and introductions, um, to excel in being able to build these moonshot healthcare businesses.
• 0:23
  And so it was just fun to play, you know, a small role in, in trying to drive that impact.
• 0:30
  [upbeat music] Welcome to StartUp Health NOW, the podcast where we celebrate the entrepreneurs and innovators who are transforming health. I'm your host, Logan Plaster.
• 0:40
  Ten years ago, Irem Rami became one of the first fellows to join StartUp Health. In her role, she helped vet companies in the very first cohorts.
• 0:50
  That was back when it seemed very audacious indeed to have a goal of supporting a thousand healthcare startups. A few years later, and we've now welcomed five hundred startups into the community and still going strong.
• 1:02
  In that time, Rami moved on, went to business school, and is now a principal health investor at Norwest, a three billion dollar multi-stage fund.
• 1:11
  I wanted to call Irem up for this episode to give us that decade look back. You know, it's hard to understand where you're going if you don't know where you came from.
• 1:20
  She's got a unique perspective on the durability of the StartUp Health vision and what it means to chase the same seemingly impossible dream for more than ten years.
• 1:30
  But I also wanted to hear Rami's advice for health innovators who are seeking to raise funds in this difficult market.
• 1:37
  She evaluates opportunities on a daily basis, and she had some sage advice to share for our listeners. Stick around. [upbeat music] Irem Rami, appreciate you taking the time with me for StartUp Health NOW.
• 1:51
  Uh, excited to hear about your, your journey since you have an interesting connection to StartUp Health and kind of where you're at right now with healthcare investing, but thanks for coming on the show.
• 2:02
  Thank you for having me, Logan. I am really honored and excited to, to come full circle given, you know, my starting grounds as a, as a StartUp Health fellow early on. Well, let's just start there then.
• 2:14
  Before-- so, you know, this is kinda how we came to this conversation. You're obviously in investing, and that's important to our audience, but also your history. When was it?
• 2:23
  When did you start as a fellow with StartUp Health? Yeah, you know, I wanna say it was back in twenty thirteen, right before I joined, um, business school. It was like my pre-MBA internship.
• 2:36
  I had gotten connected to Unity Stokes through one of the transformers that I was working with, a business called Caremerge, that I was actually advising at the early stages. Yeah. Yeah, I know Caremerge.
• 2:48
  And so they were, they were in one of the early cohorts. What were some of your experiences that stand out from that time? I'm just...
• 2:55
  I'm kind of curious about the continuity of StartUp Health to talk to somebody who was at the beginning because I think a lot of the interesting elements about what we're doing have actually stayed pretty consistent.
• 3:07
  Yeah, you know, it, it's actually true. I remember there were s- very similar themes that I, that I feel like StartUp Health was focused on back then.
• 3:17
  I know you guys have a couple of these moonshots that you're focused on, and I wanna say they were pretty similar even then.
• 3:23
  And my role was really focused on looking through a lot of the initial applications for the companies that were applying to StartUp Health and trying to triage that down to, you know, a select few that I thought, um, other members of the team should interview and spend more time with.
• 3:42
  And so for me, it was just like a great introduction to early stage investing and building that muscle of what to look for in, in companies, and it, it was, it was a great introduction.
• 3:54
  So you were reviewing applications, looking at these companies. At the time, uh, how many portfolio companies were there, uh, roundabout? You know, it's a good question.
• 4:04
  I wanna say it was probably like the second or third cohort. So I don't remember how many companies were in each cohort. Uh- Maybe ten, maybe twenty, maybe thirty. Yeah, I think so. Okay.
• 4:16
  It's, it's gotta be in that ten to thirty range. Okay. Okay. Because, you know, I'm curious, at the time, Steve and Unity, the co-founders, they were talking about their vision of a thousand companies. Yeah.
• 4:27
  How did you feel about at, you know, it was last year that we hit five hundred, so not a thousand, but, you know, a lot.
• 4:34
  Uh, how did you feel about that crazy idea of a thousand companies [laughing] back when you were at, like, company twenty? Be honest.
• 4:41
  You know, it was a super ambitious goal, but I loved how impactful StartUp Health was trying to be.
• 4:48
  It was, it was attracting folks, you know, outside of healthcare to come innovate in healthcare, provide them with, you know, the resources and support and introductions, um, to excel in being able to build these moonshot healthcare businesses.
• 5:05
  And so it was just fun to play, you know, a small role in, in trying to drive that impact. I love that. I, I love just thinking about being at, you know, company number twenty and imagining a thousand.
• 5:18
  Most people in the industry thought, you know, that's just a cute thing to say.
• 5:22
  And now, you know, once we hit five hundred, you know, people kind of thought differently and thought, "Okay, well, I guess you kinda stuck around." You know, it took ten years, but- Yeah...
• 5:33
  you know, you, you're doing it at scale now, which is, which is a whole different ballgame. Absolutely. And it's, it's impressive to have achieved kind of even that five hundred mark.
• 5:41
  Given, given how slowly healthcare moves, I think StartUp Health has done a very nice job, you know, hitting, hitting those growth ben- benchmarks. Okay, well, let's talk about where you're at now with Norwest.
• 5:52
  Just tell me your role currently and kind of what, what you're doing day to day.Yeah, absolutely.
• 5:57
  Well, I joined the team here at Norwest a little over a year ago, and I'm a principal on our team where I lead our healthcare services and our healthcare software investments on the venture side.
• 6:10
  And I actually co-lead a lot of our growth equity investments. And for us, you know, Norwest is, is pretty unique since we're a true multi-stage firm.
• 6:19
  We're investing out of a three billion dollar fund that can invest as early as kind of seed and incubation businesses all the way up to, you know, profitable businesses and checks, you know, in that hundred fifty-plus range.
• 6:36
  And so it's, it's truly kind of my dream job to be able to invest across the early stage and the growth stage and brings together a lot of the prior experiences that I've had.
• 6:47
  Um, and so it's been a ton of fun since I've joined the team here. Very interesting. So, uh, how much of your time is spent on early stage versus more, more scaling up and, uh, later stage? Yeah.
• 6:59
  It, it flexes quite a bit. I'd say, you know, I traditionally spend about sixty percent of my time more on the early stage and then forty percent more on our growth stage or profitable type, uh, business models.
• 7:11
  But given the market environment, it's really nice to, to have more of this barbell approach where, you know, things are active still on the seed and Series A, and I can look at a lot of these early-stage businesses and then be pretty opportunistic with anything that's break-even or profitable, um, and you don't have to layer on much debt given where the debt markets are.
• 7:33
  So, uh, it's been nice to have that flexibility to go across stage at this point.
• 7:38
  Well, you, you know StartUp Health and you know our portfolio, so you know the, the million-dollar question for any of our founders, and particularly right now in today's market conditions, is how to get your [chuckles] attention.
• 7:51
  You know, how to come across your desk in such a way that you give it a second look and you consider funding an early-stage idea.
• 7:59
  So talk to me about what some of your filters are, what you're looking for, and also kind of how that has shifted, if it has, over the last, you know, twelve to eighteen months.
• 8:09
  You know, we get a ton of cold outreach, and I think the best advice that I have for folks is obviously do your homework on our portfolio, on where we spend time, and to the extent you can have kind of some personalized outreach around, you know, "Hey, I'm aligned with some of these the-thematic areas that you've been spending time on or the team has invested in," or you get a warm intro, that's usually kind of best path to get, get ahold of us.
• 8:36
  Um, but we will take a look at, you know, every email or LinkedIn outreach that comes to us. And in terms of what we're looking for, I mean, it really hasn't changed.
• 8:46
  Like, it-- for, for me, I am hyper-focused on market and team, especially at the early stage. And when it comes to market, we are looking probably across a couple main themes that we go really deep in.
• 9:01
  And right now, I'd say on the venture side, there's probably two or three areas that we've really fleshed out our investment thesis around.
• 9:09
  And so we are looking at a lot of models in and around kind of risk-based providers and value-based care.
• 9:17
  Either the, um, technology or services enabling a lot of these physicians to take on risk now that we've seen real commitment from CMS to get, you know, the majority of Medicare and Medicaid into these models by twenty-thirty.
• 9:31
  We are very much investing in a lot of, like, the picks and shovels, I'd say, around value-based care. And so that's an area that I spend quite a bit of time on and what that tech stack will look like.
• 9:42
  In addition to, um, looking at a l- a lot of new Medicaid models that are, that are popping up in value-based care. So we've, uh, looked quite a bit at, um, women's health and pediatrics.
• 9:55
  We have historically done a lot around Medicare Advantage, so we're invested in a business called Monogram Health, which takes full risk on the CKD, SRD pop-population.
• 10:06
  And then we're also investors in, um, CleverCare, which is a culturally competent Medicare Advantage plan down in Southern California.
• 10:13
  And so it's an area that we've invested quite a bit in, and we're still actively investing in and around, um, that category.
• 10:21
  And then I'd say the other big bucket for us right now that we're going really deep around is, um, models innovating around pharma tech and pharmacy tech and services.
• 10:34
  And so that's an area that I have historically spent a lot of time in, given, you know, I started more of my venture investing career as a strategic investor at McKesson, leading a lot of our, our pharma value chain work.
• 10:47
  And so we are evaluating a lot of new models in and around, I'd say, pharma commercialization technology. So how to get kind of right patients on the right drugs at the right time and ideally at the right cost.
• 11:01
  Uh, so those are a few key themes. Yeah.
• 11:03
  And, and yeah, that-- I mean, that's the biggest hurdle, and then obviously we're, we're looking at all the other, um, aspects around having a competitive moat with the business model and, and strong unit economics, which, you know, we can always touch on further.
• 11:18
  Yeah. I wanna talk a little bit more about the value-based care piece 'cause I can tell that that's a passion for you and the company and a focus.
• 11:25
  Uh, what I'm, what I'm hearing you say is that it's not just about the infrastructure companies that are enabling value-based care at a huge macro level. Like, we've got a company called Enlace Health that- Yeah...
• 11:38
  uh, that enables, uh, large providers to, to enact value-based care billing, uh, et cetera, but also the, you know, the s- the niche solutions that have value-based, uh, business models that kind of plug into that system.
• 11:54
  Is that fair to say? Yeah, that's right.
• 11:56
  We don't shy away from traditional healthcare services businesses, so we'll invest in the actual clinics and provider groups themselves as well as the, the technology that enables them. Got it.
• 12:08
  So, so my question for you is, if a-- an early-stage business has a value-based business model and they sayThis is gonna work because we're gonna share the risk, we're gonna share the reward, and, um, but we're not gonna be able to prove that it's profitable until we kinda get this big arrangement in place.
• 12:26
  It's c-- It can be a kind of a chicken and egg thing, right? Mm-hmm. Um, so how do you evaluate that, that value-based business model is gonna work down the road in an early stage situation?
• 12:37
  Uh, I've just talked to a lot of founders that end up having to figure out like a fee for service model to kinda get over the hump because proving out their big vision of sharing the risk and the, the revenue is, is s-so difficult.
• 12:51
  Yeah. I think it's, it's two, two things.
• 12:54
  One, um, ideally you do have a model that works well under both fee for service and value-based care, and have a thoughtful plan around how you're gonna crawl, walk, run to those risk arrangements.
• 13:09
  Like we, we get scared with companies that are wanting to go full risk and take upside and downside risk immediately without having- Mm-hmm... kind of the,
• 13:22
  the data to be able to back, you know, their conviction around successfully enabling those contracts. Um, so that is one, one thought.
• 13:32
  We, we really wanna see kind of a glide path to that, um, such that we can, we can build up conviction along the way. Mm.
• 13:40
  Um, the second is, at the really early stage, we ideally want to see examples of, of similar models that have struck those types of arrangements in the past. Okay.
• 13:51
  And then we are going to very highly anchor on the team as, hey, has this team been able to successfully manage risk in the past and have strong case studies around, you know, not just getting the low hanging root-- fruit around risk adjustment, but really driving MLR and cost savings as well.
• 14:12
  Got it. That's a really interesting point you make about blocking out the crawl one-- uh, crawl, walk, run strategy.
• 14:18
  Would it be beneficial for a founder to actually come to you and say, "Look, I broke it down into three categories. Here's how we get there." Like, show you that path? Yeah. I mean, that...
• 14:27
  Especially if they are striking arrangements with these payers that phase, phase in that way. That's even more appealing. Okay. So you said you're also interested in pharmacy tech and services.
• 14:38
  What's kind of getting you excited in that category? Yeah. We are looking at a lot of new models in and around kind of patient access and market access.
• 14:49
  We're finding that pharma is much more focused on how to digitally target and identify the right, um, physicians to both educate and market around new therapies that they're bringing to market, but also the patients themselves, especially as we're seeing these pharma pipelines really focus on much more personalized therapies or like a lot of these cell and gene, gene drugs that will be more expensive but also have smaller kind of cohorts of both physicians and patients that they need to target.
• 15:24
  So we're, we're looking to identify a lot more companies that are able to do that successfully, leveraging data.
• 15:31
  We're also cautiously optimistic around, you know, the use cases and applications of GenAI and LLM, and this wouldn't be a venture podcast if I didn't say that.
• 15:41
  Um, so we are looking at a lot of those, those new emerging models, uh- Yeah... across pharma.
• 15:48
  Now, it makes sense that you'd say that your thesis and your, uh, priorities haven't shifted that much over the last twelve, eighteen months, but obviously founders have to figure out new ways to get your attention, kind of raise funds in a, in a more challenging market.
• 16:04
  So do you have any advice for a founder, a way that they can tweak their story, a way that they can approach you in a nuanced way given today's market, uh, forces? Yeah.
• 16:17
  I, I go back to, um, you know, I always welcome more personalized outreach. So why, why me specifically? Um, why do you think I am uniquely positioned to be able to support your company?
• 16:32
  Or, you know, is this in a thematic area that we've focused on or invested on in the past?
• 16:38
  Generally speaking, like, the way that we think about companies is we really wanna be investing in businesses where we think we can add meaningful value as well, and so it's, it's a two-way street.
• 16:47
  I mean, you, you probably want, um, to vet, vet us just as much as we vet you, and so we always welcome more of that, um, personalized outreach versus feeling like you're, you're blasting a bunch of other VCs at the same time.
• 17:03
  So you want someone to know kind of who you've invested in before, a bit of your... y- some of your patterns, and kind of reference that in an email? That's exactly right. Yeah. Interesting. Okay.
• 17:15
  Since you have the Startup Health history, I wanna ask about kind of the idea of the health moonshot mindset, which is kind of stock and trade for Startup Health.
• 17:24
  This idea that when you set an audacious, you know, twenty-year goal for what you're trying to accomplish, all of a sudden it starts to unlock things within your business.
• 17:34
  It starts to attract some of the right, you know, partners, people who have a mindset towards collaboration to you so that you can, uh, then make this progress versus sort of a quarter-to-quarter limited mindset.
• 17:48
  I'm curious, since you have some of that background as well from Startup Health, kind of how you would describe the current culture of founders who come to you.
• 18:00
  Do you find that they have this sort of expansive understanding of what they're building, this health moonshot sort of mindset, or do many of them lack that and need to be coached in it?
• 18:11
  Yeah, it's a, it's a good question. I actually do find, especially healthcare entrepreneurs-Are much more mission-oriented in the first place in terms of what they're working on.
• 18:24
  And so it's-- it actually hasn't been as much of an issue in many of the companies that I've evaluated. It feels like people really do wanna tackle big problems with pretty large, you know, market sizes.
• 18:39
  I mean, healthcare is an area that we're spending massive amounts of money on, it continues to grow.
• 18:45
  Um, so I haven't actually found that to be as, as challenging for people to position kind of what they're working on and that ultimate goal or outcome that they're trying to achieve.
• 18:57
  It's really how are you gonna do that in a sustainable way, and what is the business model that will get you there?
• 19:05
  And in this market environment, thinking through kind of that capital efficient growth and that unit economic model such that you can survive long enough to, um, ensure you're on that right back path to, to hit those types of moonshots.
• 19:20
  So are you pretty hands-on with the companies that you invest in? We are. Yeah. We try to be, um, pretty hands-on, uh, in more of this, I'd say, invited guest mentality that we have as a, as a culture here at Norwest.
• 19:35
  And so, you know, we both bring kind of thought partnership and pattern recognition, obviously, given our, our investment track record and the other companies that we've invested in.
• 19:45
  But we've also invested a ton in our portfolio resources in just about every functional area you can imagine, and then have a broad senior advisor network that, you know, it's really up to the, the entrepreneurs to tap into when and how they want to.
• 20:04
  Um, but at the board, we like to take, um, you know, an active role if that's, if that's what you, you want us to do and, um, bring those resources to the table. Well, can you be a little more specific? Like how...
• 20:16
  what does that active role look like on a week-to-week basis for you particularly? Yeah. So, um, it's really, like I said, tapping into everything from talent and recruiting.
• 20:26
  So if you're trying to recruit across that VP, that C-suite, or that independent board level, um, we've got a phenomenal head of talent and recruiting on our, on our healthcare team who is super well connected across just about every aspect of the healthcare industry that can both mine our own networks as well as manage kind of search firms.
• 20:48
  Um, we focus on everything from go-to-market, and so, you know, we've brought in advisors who were very early, um, managing the sales organizations of massive companies like Salesforce, uh, on the enterprise side to very specific kinda healthcare go-to-market strategies, whether it's health systems or pharma that you're trying to break into.
• 21:11
  We can help you think through how to optimize pricing and product mo- roadmap with like technical advisors that we have on board. And so those are really kind of the aspects of where we try to support our companies.
• 21:24
  Like oftentimes, we'll pull together a loose, um, kind of value creation map with a company shortly after we invest to give them a sense of all these different resources and menu of items that they can tap into and, and guide them through that in the first three to six months of making an investment.
• 21:45
  Uh, it's more of a philosophical question, but I feel like I've seen, um, you know, a number of articles in health tech, health tech investing about, you know, advising founders to, um,
• 21:58
  not retrench, but really sort of be, be mindful of, you know, be very conservative in today's market, kind of assume that the next twelve year-- twelve months are gonna be really, really rough from a fundraising standpoint.
• 22:12
  And then we've got our cohorts of folks that we talk to that, you know, we're really also trying to inspire them to be doubling down on that health moonshot mission and say, "Look, even when times are tough, um, it can be the time when you need to be, uh, going as-- going harder than ever and sort of distinguishing yourself by your commitment to, to, to what you're working on."
• 22:37
  So, like, at a philosophical level, how are you coaching folks that, uh, need to sort of play a little bit more conservative right now, uh, but also have an opportunity to, to double down and distinguish themselves during a, a tough market?
• 22:51
  Yeah. It's, it's a great question, and the, the true answer is it, it varies by stage of company and where you're at in terms of proving out your, your business model and your product market fit.
• 23:03
  So at the earliest stages, we are encouraging companies to have a little bit more cash runway, especially if you're in more of like a tech-enabled services or a care delivery model that can just take longer to prove out, and really focusing on specific markets or customers and going really deep to prove out your unit economics.
• 23:27
  And once you get to kind of a sustainable level where you're, you know, positive contribution margin, um, in a range that you feel like, "Hey, now we can really throw a bit more fuel on the fire," it'll help you position yourself for, you know, a successful raise and then really be able to double down and grow.
• 23:50
  And, and the great thing is, like, with some of those models, there really are some true barriers to entry, and it's challenging for anybody else to, like, go and try to start something in that space right now, so you really can commit to accelerating the growth if you feel like the model is working.
• 24:07
  Um, but until you feel like you've got that traction and momentum, it's hard to really put pedal to the metal if you don't know whether or not you'll be able to raise, having not proven out those milestones in the next twelve months.
• 24:21
  Hmm. That makes sense.Now, this is gonna sound like a leading question, but I'm gonna ask it anyway.
• 24:26
  [chuckles] Is there anything that you have carried with you that you picked up at Startup Health that has sort of informed your, your journey as an investor or your current job at Norwest? It's a great question.
• 24:38
  I think my initial inkling was way back when I had to be very thoughtful and come up with a clear framework and criteria for triaging businesses, and I still have to bring that same, uh, mindset to my day-to-day jo-job now because, you know, I get flooded with companies, especially as you think about the range of size and stage of businesses that I take a look at.
• 25:07
  And so at the bare minimum, like, what I still synthesize it to is the same things that I did when I was looking through all those applications.
• 25:16
  It's market, team, and product, and trying to get conviction across those three areas and what specifically about this business is unique and has that, you know, founder market fit, product market fit, um, that, that gives me that conviction to spend more time with that business.
• 25:36
  And so that criteria or triage mechanism is still something that I, you know, keep to this day. I love it. I love it. Last question.
• 25:43
  What are you most excited about in terms of your investment priorities for twenty twenty-four? Yeah. I am very excited about where, you know, the Medicaid market is going.
• 25:55
  I think we have invested quite a bit historically in senior care and Medicare Advantage, and we are, you know, finally seeing Medicaid, which has been maybe five to ten years behind, um, the MA market in terms of exploring these types of value-based and risk-based arrangements, having much more of an interest in partnering with, um, both, uh, primary care groups and specialty groups.
• 26:20
  And so we are doubling down on our, on our interest in evaluating Medicaid models. I love it.
• 26:26
  Well, it, it's exciting to see how your, you know, starting point at Startup Health led to this sort of journey into health tech investing and, and here you are, uh, at Norwest doing this, this great work.
• 26:38
  So I appreciate you taking the time and kinda walking me through that journey. Well, thank you so much for, for having me, uh, Logan.
• 26:44
  It's been, uh, wonderful getting to reconnect with the Startup Health team and so impressive to see what you guys are doing, continuing to push the ball forward on these moonshots.
• 26:54
  I will make sure that the founders in the portfolio listen to this and understand your investing priorities and know to, to, uh, when they reach out, to make it a personal outreach where they've done their homework and sort of learn the-- learn, learn the lessons from this conversation.
• 27:10
  [laughs] That sounds great. Thank you, Logan. All right. You take care. Be well. Thanks. [upbeat music] Thanks for listening to Startup Health NOW. We'll be back again with another episode next week.
• 27:24
  [upbeat music]