Venture capital firm LRVHealth raised $200 million to launch a digital health-focused fund, the company said Wednesday.
The fund is Boston-based LRVHealth’s fifth and largest to date, doubling the size of its last fund, rolled out in 2018. Managing partner Keith Figlioli said the company will use the money to invest in digital health companies that help shift care away from acute settings into virtual settings and increase access for patients.
LRVHealth's previous investments include Current Health, which was acquired by Best Buy for $400 million in October 2021, and Phreesia, which went public in June 2019. Recent investments include Greater Good Health, a virtual network for nurse practitioners, and KeyCare, a virtual-care platform built with electronic health record vendor Epic Systems.
Unlike venture funds that rely on investments from family offices, Figlioli said LRVHealth worked exclusively with health systems, insurers and vendors to raise the $200 million. The company received investments from 29 organizations.
“Every person on both the provider and the payer side of the equation understands that they have to run their businesses today while continuing to transform them at the same time,” Figlioli said.
LRVHealth launches the fund amid the worst funding environment in five years and as health systems face operational and financial challenges. Quarterly returns for venture capital funds were negative for three consecutive quarters starting in the second quarter of 2022, according to a report released earlier this month from research firm Pitchbook. The report cites rising inflation and interest rates as well as public market volatility as the reasons for the decline.
Figlioli said the economic climate did not dampen enthusiasm among its limited partners.
“We had more demand than we've ever had in the history of our business for this particular fund,” Figlioli said. “We had to say no to a handful of people.”
Arlington, Texas-based health system Texas Health Resources, which operates 27 hospitals and more than 80 outpatient facilities, was one of the 29 investors. Chief Operating Officer Winjie Tang Miao said the relationship between the health system and the venture firm is symbiotic.
“We're both looking for credible, sustainable solutions that will enhance care for patients,” Miao said. “And because we have access to really different pools of startups, we are each able to make connections that might otherwise not make it on the other's radar.”