Exit Interview: MVCA Venture Fellow Kathryn Gardner
MVCA Fellow Kathryn Gardner’s transition from investment banking to venture capital has been a smooth one, thanks in part of the experiences she’s had working at Michigan’s largest healthcare venture investor, Arboretum Ventures. In the two years since Gardner joined the firm, the firm has raised $220 million to invest into healthcare companies in Michigan and beyond. Doing the diligence on those potential investments has given Gardner a peek into what makes a company stand out in the crowded healthcare market. We asked her to share some of her experience and insight with us as she ends her MVCA Fellowship period.
Tell us about your Fellow position – where are you, what have you been doing?
I am currently one of two analysts at Arboretum Ventures, where I am responsible for tracking and analyzing incoming deal flow, supporting the diligence process and assisting current portfolio companies with a variety of projects. I spend the majority of my time diligencing new opportunities and assisting our portfolio companies with future capital raise analyses. I am also a board observer for My Health Direct, an Arboretum Ventures II company.
What favorite new technology or solution did you encounter during your time as a Fellow?
A recent Michigan investment we completed was Strata Oncology, which gives hope to late-stage cancer patients through genetic sequencing. Another promising investment I worked on is Pear Therapeutics, a digital therapeutics company focused on pairing pharmaceuticals with digital cognitive behavioral therapy to increase the effectiveness of treatments for those with behavioral or mental health disorders. Since starting at Arboretum, I was very interested in the behavioral health space, taking it on as my topic during our 2015 strategic initiatives project. Behavioral and mental health disorders affect many people, but most go untreated due to the negative stigma and ineffectiveness of current therapies. Pear is focused on the gamification of behavioral therapy and incentivizes patients to retain and use the information learned in the various modules in conjunction with face-to-face therapy to improve their outcomes. In addition to being passionate about the need Pear was addressing, the diligence process was also a great networking experience. We syndicated the deal with (MVCA member firm) 5AM Ventures and JAZZ Ventures and I worked with professionals from each firm on various aspects of the closing diligence.
Is there something you’ve learned during your Fellowship that you didn’t know before you started in the industry?
With Arboretum investing solely in healthcare technologies, I had a lot to learn about the industry since my background was in food and consumer-related products. Throughout various diligence processes, calls with experts and learning about our portfolio companies, it was extremely apparent that the healthcare field is a very broken system that moves slowly. These inefficiencies have caused a lot of companies to try to tackle problems, with very similar technologies (“me too”). At Arboretum, we tend to stay away from these technologies because they aren’t differentiated, and it is very hard to diligence which one will be most receptive in clinical practice. In addition, health systems are very slow to adopt new technologies, as we have witnessed through some of our portfolio companies. The industry is extremely large and complicated and requires thoughtful diligence processes to be able to identify companies worth investing in.
Has there been anything surprising you’ve learned about yourself/your perspective on venture capital as a profession you didn’t know before you started?
I came into venture capital from investment banking, where success was measured predominantly by how big the fees were. While large returns are still much better than small ones, when Arboretum makes an investment in a new company, we do so because we believe the technology has the potential to save the healthcare ecosystem money while improving patient outcomes, there is a solid management team running the company and a large exit is likely. To date, Arboretum’s portfolio companies (both active and exited) have positively impacted over three million patients and created over 1,500 jobs.
What are your plans post-Fellowship? Do they include growing your career in Michigan?
After my Fellowship period has ended, I will continue to work as an analyst at Arboretum Ventures. In addition to continuing my role, I will also be attending U of M in the fall to obtain my Master’s in Healthcare Administration. So yes, I will definitely be sticking around the Great Lakes State!
Posted August 8, 2016 in Entrepreneurial Resource News | Venture Firm News | MVCA Venture Fellows Program | MVCA NEWS