Ask A Digital Health Investor: Canaan’s Kjellson On Smart Strategies

Digital health encompasses a motley crew of companies from single-app start-ups to long-established software specialists. Nina Kjellson, general partner at Canaan Partners, makes it her business to sort the wheat from the chaff and make smart investments that will pay off for the VC.

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Nina Kjellson joined Silicon Valley health and tech venture capital firm Canaan Partners as general partner in 2015, with a focus on early-stage investments in biopharma and digital health. She previously worked at InterWest Partners, where her investments were in biopharma, healthcare IT and consumer medicine start-ups. Canaan Partners has a $675m fund, of which around 40% goes to healthcare, a portion of which is directed to digital health. Scrip met her during the BIO International Convention in San Francisco in June 2016 to garner some insights into the world of digital health investing.

Nina Kjellson’s View On Digital Health Exits

“There have been three decades or so of concerted effort into software for the healthcare business, including the last five or six years where there’s been an unprecedented amount of capital going in to back starter companies,” said Kjellson. “However, there have been relatively few positive exits in digital health: the exit side has been quite small and a bit disappointing.” She highlighted a few examples.

  • Veeva: A team from Salesforce built on the company’s CRM model and customized it for the pharmaceutical industry, forming Veeva. “It is a true SaaS [software as a service] business, with an 80%+ gross margin. I view it as an example of a SaaS success that happened to be facing pharma, so it got labelled as a health IT company.”
  • Fitbit: “There’s no doubt that by and large the stock performance and the investor returns on Fitbit have been attractive. But again you can view it as a consumer electronic or IT investment whose use case happens to be activity or wellness

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