Deal Dive: Why does General Catalyst want to buy healthcare systems?


Deal Dive: Why does General Catalyst want to buy healthcare systems? -Gudstory

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venture capital and Healthcare startups have had a checkered relationship over the years. Before the pandemic, the majority of venture investment in health tech and healthcare startups came from VCs focused on the sector. That changed in 2020, when seemingly every flavor of VC came to market.

Much of this new interest was driven by investors reacting to FOMO as opposed to chasing pandemic headwinds and a desire to build a sustainable health care portfolio. In fact, many VCs retreated from the sector shortly after the world returned to normal.

Of course, not everyone did this; Some decided to double it. General Catalyst was one of them, and that stance has resulted in an interesting development this week.

At the HLTH conference in Las Vegas last weekend, General Catalyst said it was launching a new initiative, the Health Assurance Transformation Corporation (HATCO). The new project will work alongside the firm’s existing partnerships with portfolio companies and health care institutions to pioneer the concept of health assurance, which aims to interact with health care provided to consumers on a proactive basis.

General Catalyst declined to comment on the HATCo effort beyond the blog post it released.

Now, plenty of VC funds set up such partnerships with larger institutions for the sake of their portcos – often filled with lofty goals and mission statements – but this project is different. Why? Because a key point of the HATCo initiative is that General Catalyst intends to buy the entire healthcare system.

There’s a lot to unpack here

Why would a VC firm want to own its own healthcare system? Why would he want that stress or such an expensive property when he can continue his health care partnership?

It appears that General Catalyst has been moving in this direction for years – and I’m not just saying that because I met a VC this week who seemed generally confused that people were so surprised by this news. Were.

The venture firm had built a large healthcare startup portfolio long before HATCo was announced. In fact, according to PitchBook, it has been the most active VC investor in healthcare since the beginning of 2020. The company has raised more than $1 billion to date exclusively for health tech startups. It also launched several SPACs in 2020 in search of companies that could become health assurance platforms.


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