Andreessen Horowitz, the Silicon Valley PE firm that bet on Twitter, Skype and BuzzFeed, is boosting wagers on another industry being transformed by software: healthcare.
The firm, with $10 billion in assets under management, has pulled together its third healthcare-focused fund, Bio III, with $750 million. That’s more than triple the $200 million it raised in 2015 for its first fund that targeted the intersection of tech and healthcare.
What’s changed, Andreessen said, is that its early bets on the convergence of digitization and healthcare are paying off and the momentum shows no sign of slowing.
“Tech, biotech, and our healthcare system are merging,” the firm said. Fund managers will seek “the new generation of companies at the intersection of tech + biotech + healthcare that will attack the most audacious goals in healthcare.”
Andreessen isn’t the first to sniff opportunities at the nexus of bio and technology. AI-powered shrinks, fitness tools, back-office software, and machine-language based molecule discovery are among the technologies eyed by private funds like Magnetar Capital and global tech giants from Google to Amazon to Apple. Global healthcare spending, which hit $8 trillion a few years back, may almost double to $15 trillion in 30 years, the Lancet reported in June.
European VC firms are also investing in healthcare. GHO Capital Partners last year topped expectations when it raised $1.1 billion for Europe’s largest healthcare fund.
- Private equity managers and venture capitalists are racing to invest in digital health, and for the first time last year, PE outpaced VC in 2019, according to PitchBook data. PE spending on digital health jumped to $6.56 billion last year, almost twice that of 2018. Venture capital invested $5.44 billion in the field last year, a 5% drop from 2018, but still almost three-fold from five years ago.