Two years since the start of the COVID-19 pandemic, a new venture fund is betting on the telehealth boom.
Swiftarc Ventures, the first fund targeting telehealth startups, has launched with $75 million for innovative enterprise solutions in the market.
COVID-19’s impact on healthcare delivery served as the catalyst for the fund’s creation, Sid Jawahar, founder and managing partner at Swiftarc, told Fierce Healthcare. But he said his board is looking far beyond the pandemic.
“Let’s put the pandemic aside,” he said. “Where do we see the greatest opportunity?”
After over a year of research, the team has chosen to focus on solutions in three key areas: mental health, obesity and pediatrics. They considered several factors in their decision, including total addressable markets, rates of adoption and issues of reimbursement.
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The pandemic accelerated demands for virtual behavioral health services as increased stress and isolation wore on patients’ mental health across the world.
Payers now reimburse those services at far higher rates than before, expanding access in the previously stigmatized field.
Global funding for mental health startups hit $5.5 billion in 2021, most of which came from early-stage rounds, hinting there’s still room to grow in the sector.
Yet the virtual mental health market is becoming increasingly saturated. Jawahar said Swiftarc expects to see “significant consolidation” this year as larger players look to swipe up point solutions.
Pediatric telemedicine, in comparison, has seen less innovation. Jawahar said that while major telehealth players like Teladoc and Amwell do offer services for children, they don’t always address the specific combination of needs in pediatrics.
“We found that there is no clear leader in the pediatrics telemedicine space,” he said. “… We feel that the early movers will have a significant advantage.”
Solutions like Noom offer weight loss tools that can target obesity, but Jawahar sees far greater potential in the market.
He noted the firm’s support of pharmacological approaches to treat the disease.
“If obesity can be stopped in its tracks a bit faster, it saves the healthcare system billions of dollars,” he said.
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The venture fund’s first investment went to Intellihealth, a data-driven platform providing virtual obesity care. Jawahar will join Intellihealth’s board of advisers as part of the investment.
Broadly, the fund will invest in companies building services in telehealth, virtual mental health, remote patient monitoring, chronic care management and in-home evaluations and diagnostics.
To secure Swiftarc’s investment, those companies have to offer enterprise solutions, which “just scale faster,” according to Jawahar.
The firm has also formed a telehealth commercialization collaboration with existing partner Nottingham Spirk, a Cleveland-based research and product development company with experience bringing medical devices to market.
“Our partnership is indicative of Swiftarc’s ability to work creatively with key constituents who are fueled by a shared vision to redefine the future of healthcare. As part of our approach, we will assist the Swiftarc team in building and backing best-in-class technologies alongside competitive industry players,” said John Nottingham, co-president of Nottingham Spirk and board member at Cleveland Clinic, in a statement.
Rather than worrying about competition in the sector, Jawahar not only expects more telemedicine-focused funds to launch but hopes they do.
“We may be the world’s first telehealth-focused fund, but I know for a fact that this space is only beginning to get attention,” he said. “Telehealth founders need telehealth-focused investors. The more, the better.”