Venture Capital Veteran Bryan Roberts Explains Why He Avoids Investing in Wearable Devices

With the dazzling performance of biotechnology stocks on the Nasdaq Global Exchange and the high valuations seen in various funding rounds for internet healthcare startups, some analysts believe this may be a sign that a bubble is forming in certain areas of medical technology.

However, Bryan Roberts, a venture capitalist who successfully exited six medtech investments last year, does not believe this is a “bubble.” Roberts said,The healthcare industry is entering a phase of “constructive tension.”, and will persist for several years; during this period, the phenomenal success of some companies will remain the norm, while others will face greater consolidation and outright failure than in the past.

He believes that although it remains inconclusive whether the entire biotechnology and internet healthcare industry is a bubble,Some Startups Widely Bullish Today May Become Burst Bubbles in the FutureRoberts has devoted much of his energy this year to the companies currently in Venrock’s portfolio. In an interview with VentureWire, the investment news site under Dow Jones Newswires, he discussed the latest trends in healthcare technology.

Q: In terms of achieving exits, you are arguably the most successful investor in the medical technology sector last year. What have you been working on since 2015?
A: I have invested in Stride Health, which is similar to Zenefits and provides health insurance plan recommendations for individuals who traditionally struggle to obtain affordable coverage, such as freelancers and other self-employed professionals. I also co-founded Lyra Health, a behavioral healthcare platform, with David Ebersman, the former CFO of Facebook. Additionally, I have invested in Intarcia Therapeutics, a biopharmaceutical company. Furthermore, I recently invested in Grand Rounds, a physician referral service provider, aiming to reduce patients’ financial burdens and improve treatment outcomes by optimizing patient-physician matching.

Q: If, as you mentioned, we are entering a phase of “constructive tension,” how do you determine which companies will emerge as winners?
A: I will review it.Long-term Business ModelIn the field of internet healthcare, people are always presenting business plans that show how to increase a company’s revenue from zero to $10 million or $20 million. But what comes after achieving this goal? How can revenue be scaled to $250 million? ▪▪▪▪▪ Furthermore, a major theme of our investment strategy isConsumer Engagement; we need to see the company's concrete measures to improve user engagement.

Q: Are there any sectors in which you would not invest?
Answer:I will not invest in wearable devices., because we have not yet observed the long-term adherence to their use, nor the return on investment for such devices over time. In the fields of digital health and biotechnology, there is a proliferation of me-too wearable devices. Examples abound, ranging from various digital therapeutics and weight-loss products in digital health, to oncology molecular diagnostics and tumor DNA sequencing in biotechnology. In these sectors, we are likely to witness consolidation among companies, with winners rising to the pinnacle of success on the backs of those who fail. I will alsoAvoid companies that aim to make pharmaceutical firms their primary clients, as their data requirements are too fragmented.。

Q: Why did you invest in Grand Rounds?
A: Because it is a company with genuine value, capable of matching patients with appropriate medical specialists. Grand Rounds does not aim merely to find cheaper healthcare services, but rather more suitable ones—a first in the industry. It also employs an effective user engagement strategy and has both near-term and long-term plans in place. Grand Rounds’ “Second Opinion Service” could generate $10–20 million in revenue for the company, while its “Physician Performance Data” has the potential to scale that figure to the $250 million level. I believe that in the future, employers will require employees to use Grand Rounds to search for healthcare services. Venrock has placed its bets on Grand Rounds, as well as on other companies in its portfolio. Incidentally, I now frequently receive calls saying, “It saved my mother’s life!” or “It saved my father’s leg!”

Compiled by Chen Xin | Edited by Mo Renying