Founders Fund: The Prolific VC Behind Facebook and SpaceX Expands Its Footprint in Digital Health

Recently, Rock Health, a renowned U.S. healthcare venture capital firm, released its annual “Top 50 Digital Health” list, a recurring feature that has drawn significant attention. Among the highlights, venture capital firm Founders Fund was named the “Most Prolific VC,” emerging as the most watched investment institution in the digital health sector this year.

Although this marks Founders Fund’s debut in the healthcare venture capital space, the firm boasts an impressive pedigree: its managing partners are members of the “PayPal Mafia,” and it has previously invested in companies such as Facebook, SpaceX, and Airbnb. VCBeat (WeChat ID: vcbeat) reviews Founders Fund’s strategic investments in the healthcare sector, lifting the veil on its operations.

As a renowned investment firm, Founders Fund is dedicated to fostering Web 2.0 companies. In 2004, it provided $500,000 in seed funding to Facebook’s founders, an investment that yielded a 20,000-fold return.

Founders Fund’s investments span multiple sectors, with notable portfolio companies including Airbnb, SpaceX, and Palantir Technologies. The main contents of this article are as follows:

Founders Fund’s Healthcare Portfolio: Spanning Multiple Subsectors, with the Largest Single Investment Exceeding $100 Million;

The History of Founders Fund: Backed by Multiple Star Investors.

Below are the major investments made by Founders Fund in the healthcare sector:

(Data source: Crunchbase)

Oscar Health

In March 2018, Oscar Health announced the completion of a $165 million financing round, with Brian Singerman and Founders Fund as the lead investors. Previously, in January 2014 and April 2015, Founders Fund also served as the lead investor in Oscar Health’s Series A and Series C financing rounds, which raised $30 million and $145 million, respectively.

Oscar Health was founded in 2013, with a primary focus on leveraging technology, design, and data to improve healthcare. The company has now established a robust business model centered on building a new healthcare system that ensures competitive pricing, attracts a large member base, boosts member engagement, helps partner providers expand their market reach, and reduces medical costs. Accordingly, Oscar plans to use its latest funding round to accelerate product development and enhance the quality of its medical services.

Stemcentrx

In 2012, cancer drug developer Stemcentrx completed a $42 million Series D financing round, with Founders Fund as the lead investor contributing $30 million. Since then, Founders Fund has become Stemcentrx’s largest external shareholder, with total investments amounting to approximately $300 million. This represents Founders Fund’s largest single investment, surpassing even its investment in SpaceX.

By the end of 2014, Stemcentrx had become a unicorn in the field of cancer drug development. In 2016, pharmaceutical giant AbbVie acquired the cancer drug developer Stemcentrx for $10.2 billion, marking one of the largest acquisitions in the biotechnology sector in recent years.

Collective Health

Collective Health offers more choices to companies that purchase self-insured health plans through its cloud-based health benefits integration platform, while helping them achieve greater returns on their healthcare investments. Collective Health’s partners include Activision Blizzard, CrossFit, eBay, Palantir, and Red Bull.

In January 2014, Collective Health completed a $6 million Series A financing round, led by Founders Fund. In February 2018, the company closed a $110 million Series D round, bringing its total funding to $229 million.

Ritual

Ritual, founded in 2015, launched its first product: a non-GMO, sugar-free daily vitamin designed to help women replenish nutrients, improve mood, and combat aging.

In August 2017, Ritual completed a $10.5 million Series A financing round, led by Founders Fund, with other investors including Forerunner Ventures, Norwest Venture Partners, and Front Ventures. Katerina Markov Schneider, founder of Ritual, stated that the decision to have Founders Fund lead this round was based on the firm’s “mission to change the world, its approach to solving complex problems, and its unwavering conviction.” Ritual plans to use the funding to attract talent and scale its operations.

Forward

Forward is a startup founded in January 2016, aiming to redefine healthcare by integrating medical trends with technologies such as sensors, mobile devices, and artificial intelligence. It combines medical equipment with algorithm-supported diagnostic tools, as well as genetic, bacterial, and blood tests.

Forward’s core product is a specialized human body scanner that collects vital signs such as body temperature and pulse, and then transmits this information to patients or physicians. In 2016, Forward completed two rounds of financing, with investors including Founders Fund as well as prominent Silicon Valley investors and entrepreneurs.

UNITY Biotechnology

Founded in 2009, UNITY Biotechnology is a biotechnology company dedicated to aging-delay research. Its R&D focus is on senolytic drugs that selectively clear senescent cells, thereby treating age-related diseases such as osteoarthritis, ocular disorders, and pulmonary diseases.

In March 2018, UNITY Biotechnology completed a $55 million Series C financing round, with investors including EcoR1 Capital Fund, 6 Dimensions Capital, Altitude Life Science Ventures, and Founders Fund. The funds will be used for clinical trials of candidate drugs and the filing of its first Investigational New Drug (IND) application.

Emerald Therapeutics

Emerald Therapeutics is a biotechnology company aiming to redefine how laboratory research is conducted. In 2014, Emerald Therapeutics completed a $6 million Series B financing round, with investors including Founders Fund, PayPal co-founder Max Levchin, and Schooner Capital. Meanwhile, the company launched its first product—the Emerald Cloud Lab (ECL)—which allows scientists to remotely access the facility via the internet, where automated robots conduct experiments according to user-specified protocols.

In addition, in 2015, Founders Fund also participated in Emerald Therapeutics' Series C financing round, which raised $20.5 million. Other participants included OS Fund and Sound Ventures, among others.

Cedar

Founded in 2016, Cedar aims to combine machine learning with data science to provide effective solutions for physicians to improve billing operations and ensure a personalized billing experience for patients. In December 2017, Cedar secured $13 million in Series A financing, with participation from prominent investment firms including Founders Fund, SV Angel, Martin Ventures, and Thrive Capital.

In June 2018, Cedar completed a $36 million Series B financing round led by the global investment firm Kinnevik. Other participants included Founders Fund, Thrive Capital, Lakestar, Sound Ventures, Instagram co-founder Kevin Systrom, and Nat Turner from Flatiron Health. Cedar plans to use this funding to further develop its next-generation innovative platform and expand its current team, as well as to launch new features and functionalities in the second half of the year. These enhancements aim to enable healthcare providers to engage more effectively with patients both before and after medical visits.

ZocDoc

ZocDoc, founded in 2007, primarily provides physician appointment scheduling services. In 2010, ZocDoc completed a $15 million Series B financing round led by Founders Fund, which helped the company expand its service offerings and adapt to changes brought about by healthcare reform. Additionally, Founders Fund participated in ZocDoc’s Series C and Series D financing rounds in 2010 and 2015, respectively.

In 2015, ZocDoc completed a $130 million Series D financing round, with Atomico and Baillie Gifford as the lead investors. This funding round valued ZocDoc at $1.8 billion, making it one of the highest-valued privately held companies in New York.

Counsyl

Counsyl, founded in 2007, is dedicated to genetic testing and prenatal screening. In 2017, Counsyl completed an $80 million financing round, with participation from Founders Fund.

In May 2018, Myriad Genetics announced that it would acquire Counsyl for $375 million. Since its inception, Counsyl has experienced rapid growth, generating over $134 million in revenue and conducting 280,000 genetic tests in the past 12 months alone. The acquisition is expected to be completed in 2019, after which Counsyl will become a wholly-owned subsidiary of Myriad. By integrating Counsyl’s advanced testing products with Myriad’s hereditary cancer testing offerings, Myriad is poised to become the premier genetic testing company for women’s health.

Neurotrack

Neurotrack aims to build a digital memory health platform that enables individuals to directly leverage digital tools and technologies to understand, manage, and monitor their brain health. Built on 30 years of scientific research, the platform helps patients assess their memory capabilities and utilize digital interventions to treat memory loss and cognitive decline. Neurotrack completed a $2 million seed funding round in 2013, with Founders Fund as the lead investor. Additionally, Founders Fund participated in Neurotrack’s Series A financing round in 2016.

In March 2018, Neurotrack announced the completion of a $13.7 million Series B financing round, led by Sozo Ventures, with participation from Marc Benioff, Khosla Ventures, Founders Fund, Social Capital, AME Cloud Partners, and Rethink Impact. Neurotrack plans to use these funds to continue developing its digital platform, which includes cognitive assessment and memory health programs.

Virta Health

Virta Health, founded in 2014, is a startup that leverages software to treat diabetes. Unlike traditional pharmacological or injectable therapies, this software platform is accessible via a mobile application, helping patients track blood glucose levels, carbohydrate intake, and other metrics. After users measure their blood glucose levels with a glucometer, the data is automatically uploaded to the Virta app. The platform also provides clinicians and caregivers with real-time access to this data, enabling them to deliver additional guidance and care.

Virta launched this technology in 2017 and secured $37 million in funding, with participation from Founders Fund, Playground Global, Venrock, Obvious Ventures, Creandum, and other investors. Clinical data from Virta showed that after 10 weeks of use, 87% of patients no longer required insulin or had reduced their insulin dependence. In April 2018, Virta Health announced the completion of a $45 million Series B financing round. The company plans to leverage this new capital to continue research and development, expand partnerships, and accelerate the commercialization of its product.

Siren

Siren is a startup founded in 2015. The company launched a pair of socks designed specifically for diabetic patients, with each pair equipped with 12 built-in micro-sensors. Leveraging neurofabric technology, the socks can monitor foot temperature to detect potential foot injuries. In 2018, Siren announced the completion of a $3.4 million seed funding round, with investors including DCM, Khosla Ventures, and Founders Fund.

Hims

Men’s health startup Hims, founded in 2017, has received backing from Founders Fund, Redpoint Ventures, Forerunner Ventures, SV Angel, and 8VC. In March 2018, Hims closed a $40 million Series B financing round. Subsequently, in June, it completed another $50 million Series B round led by IVP, with other investors including Founders Fund.

Meanwhile, Hims has also launched a series of women’s health products under the brand Hers, including vitamin supplements for hair, skin, and nails, as well as shampoos and conditioners designed to prevent hair loss. Additionally, for skin concerns, Hims will offer topical creams for acne treatment and anti-aging creams. The company will also begin selling women’s minoxidil in January next year, a medication commonly used to treat male pattern hair loss.

Headquartered in San Francisco, Founders Fund primarily invests in the following six sectors: biotechnology and health, consumer internet and media, machines and artificial intelligence, aerospace and transportation, analytics, and software. Notable companies in which Founders Fund has invested include Airbnb, Knewton, Lyft, Spotify, Stripe, and ZocDoc. Founders Fund was the first institutional investor in SpaceX and Palantir Technologies, and one of Facebook’s earliest investors.

Founders Fund was established in early 2005 by Peter Thiel (co-founder and former CEO of PayPal), Ken Howery (co-founder and former CFO of PayPal), and Luke Nosek (co-founder and former VP of PayPal). In January of the same year, it raised $50 million in its first round of funding from individual entrepreneurs and angel investors. Sean Parker, co-founder of Napster and Facebook’s first president, joined the firm in 2006. Other partners include Brian Singerman, founder of iGoogle, and Kevin Hartz, co-founder of Eventbrite.

Silicon Valley’s Premier Group—The PayPal Mafia, Image Source: CSDN Blog

Founders Fund completed four rounds of financing in 2007, 2010, 2011, and 2014, raising $220 million, $250 million, $625 million, and $1 billion, respectively. In 2016, Founders Fund closed its sixth round of financing valued at $1.3 billion, bringing the total capital under management to over $3 billion.

Peter Thiel is a renowned entrepreneur and investor. He founded PayPal in 1998, serving as its CEO, and took the company public in 2002, ushering in a new era of fast and secure online commerce. In 2004, he made the first external investment in Facebook and served on its board of directors. That same year, he established the software company Palantir Technologies, which provides analytical services for national security and global finance by leveraging big data intelligence; the company’s technology supported the operation that led to the killing of Osama bin Laden.

Before co-founding Founders Fund, Ken Howery was a co-founder and the first Chief Financial Officer of PayPal. Additionally, he participated in Peter Thiel’s angel investments and Facebook’s Series A financing round. As a venture capitalist, Ken Howery has received widespread recognition from media outlets such as The Wall Street Journal, Forbes, and Fortune, and has been selected as a keynote speaker at the Harvard Business School Entrepreneurship Conference and named to the Midas List of top venture capitalists.

Brian Singerman was named one of the Top 20 Venture Capitalists globally by The New York Times and CB Insights in 2017. His investments span multiple sectors, with a particular focus on healthcare, biotechnology, and education. Brian Singerman serves on the boards of directors of Affirm, AltSchool, Cloud9, Emerald Therapeutics, The Long-Term Stock Exchange, Oscar, Misfit, and Postmates. Prior to co-founding Founders Fund, he spent four years as an engineer and executive at Google. During that time, he launched his investment activities through The XGYC Fund, an angel fund he established.

Singerman, a partner at Founders Fund, once stated, “We aim for every investment we make to have a substantial impact, which requires us to remain steadfast in our conviction throughout the investment process. If we truly believe in a company, we will invest in it wholeheartedly. A fund of our size is well-positioned to provide the most robust financial backing to the most exceptional entrepreneurs.”