- Flare Capital Partners raised $255 million in its latest fund and cofounder Michael Greeley told us what he wants to invest in next.
- Greeley said Flare wants to invest in healthcare businesses that are “risk-bearing entities.”
- Building on the success of previous investments like Iora Health and Somatus, Flare Capital wants to enter into new spaces like behavioral health, senior care, and end-of-life care, he said.
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As Flare Capital Partners looks to put the$255 million it just raised to work, cofounder Michael Greeley told us the startups it wants to bet on all have one thing in common.
Greeley said the biggest area of interest for Flare Capital right now is healthcare businesses that can take on the financial risk of caring for patients, or what he called “risk-bearing entities.”
Michael Greeley, co-founder and partner at Flare Capital.Courtesy of Flare Capital.
In those businesses, doctors and hospitals generally get paid more for keeping patients healthier, and less if they fare poorly. Right now, healthcare providers generally get paid for each visit or procedure.
“You need to take risk, or assume the risk of outcomes,” Greeley said in an interview. “Those are the business models to go for.”
Flare Capital has had success with companies that use that model before. Greeley pointed toIora Health, a company pioneering a new way of providing primary care, and also toSomatus, a company improving kidney care with innovative technologies. While these types of companies usually require more capital and longer periods of time to develop, they can improve patient outcomes and lower medical costs, which Greeley said is what Flare Capital is after.
“In its third and fourth year, Iora Health showed amazing profitability over the traditional healthcare models in those markets,” Greeley said. “If you can get it to work, it’s worth it.”
Flare wants to invest in ‘novel solutions’ in healthcare
The $255 million fund is Flare Capital’s second. Flare raised its first fund in 2015,investing in companies including Iora, Somatus, the startup insurer Bright Health, the investment firm Rock Health, and the data platform HealthVerity.
Read more:A doctor raised more than $250 million to create a new kind of clinic that charges a monthly fee, and it could be the future of medicine
The venture capital firm wasfounded in 2014 by Greeley and Bill Geary. The firm’s goal is to invest in healthtech companies that are creating innovative and non-traditional forms of care.
Greeley said Flare is now looking to invest in companies working to serve sick people in the Medicaid program, as well as in behavioral health, senior care, and end-of-life care.
“We are focused on novel solutions for the most expensive and most disadvantaged populations,” he said, as well as “advanced imaging analytics, care in non-traditional settings, and core infrastructure opportunities.”
As an example of the kinds of companies Flare is interested in in behavioral health, Greeley pointed toQuartet, a platform that treats mental health issues and allows patients quicker and easier access to services.
Read more:A CEO who built a cancer drugmaker and then joined Google’s $4.5 billion venture arm reveals the 2 key elements he looks for before investing in startups
Flare Capital is using its second fund to expand its reach within the healthcare industry, aiming to support the companies Flare’s investors believe to be making transformational change, Greeley said.
“We’re investing in healthcare systems, medical devices, health retailers and advanced data,” Greeley said. “We’ve architected a model that represents all four corners of the healthcare industry. Because it’s such a complex industry and currently in a chaotic phase, we want to make sure we represent it all.”
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