When Michael Yang started at Comcast’s venture capital arm nearly a decade ago, he was charged with establishing the Philadelphia-based company’s presence on the West Coast and taking the lead on investments that he felt would shape the future of work, technology and healthcare.
Now in his new position as Managing Partner at OMERS Ventures, the VC division of the Ontario Municipal Employees Retirement System, he’s hoping doing it all over again by helping the $71 billion Canadian pension fund make inroads into the U.S. market. MedCity News spoke with Yang about his new position, how healthcare investing has changed over his career and where he sees potential in a market characterized by sky-high valuations and a dearth of successful exits.
So why make the move to OMERS Ventures?
OMERS Ventures Managing Partner Michael Yang
Just as a little bit of background, they are an 8-year-old venture firm, that is multi-stage, multi-sector with a portfolio of about 40 companies mostly based in Canada. I had gotten to know these guys over the last couple years because Comcast Ventures co-invested in a Montreal-based VR company called Felix & Paul Studios. So I had seen them in action in the boardroom and when I heard about their growth and expansion plans it was too good to pass up. I’ve had experience of being that early pioneer and helping to build the team, the investment practice and the strategy and this was an opportunity to do it again for a larger, different type of organization.
What’s the difference in how you’re thinking about setting up a firm in today’s landscape versus back 10 years ago?
I think you have to be a lot more thematic and a lot more thesis driven to get your entry point. If you look at healthcare and the big end markets there’s the direct to consumer market, there’s the B-2-B-2-C employer market, there’s a payer market, a provider market and a pharma market. On the employer side, the way I’ve always thought about the healthcare landscape was there’s the physical part, the behavioral part and, increasingly, the financial part. So the trinity of healthcare and a well-rounded, well-balanced individual is those three attributes.
At OMERS Ventures we’re multi-stage so that that means we can invest and write checks thatare less than $1 million up to $40 million. It’s a pretty wide dispersion that allows us to have more thesis driven thematic approaches and regardless of when we find the company in their timeline we can still find an opportunity to converge and show up on the cap table. Based on my efforts at Comcast Ventures in helping to start BrightsideI’m also very much interested in ground-ups or building companies De Novo.
As someone who’s been pretty involved in the self-funded employer category, have you seen issues of fatigue with all the companies trying to sell into that market?
I used to joke when I first started investing no one would give the employer the time of day. Then I think a lot of healthtech companies went from consumer-focused to trying to go enterprise, and at that point, any enterprise would do. So it was a complete tsunami. There’s no HR benefits organization that could possibly handle the intake of employer point solutions willing to pitch them and sell to them. With all the venture dollars that went not only into the software side, but increasing sales and marketing, it was overload. So there absolutely is fatigue.
But that’s why my main thesis has been more of an aggregation, horizontal platform play. Accolade is my horizontal aggregator for physical and medical health. Brightside is the equivalent in the financial health space. Ultimately your most prescient employers know what they want to do and they just need the instruments to do it. These horizontal platforms are really the general contractors for making that happen.
Any other investing themes and theses that you’re interested in?
One are areas that are not on the surface healthcare, but ultimately play in the healthcare market. A lot has been talked about how healthcare meets transportation. I think financing meets healthcare is going to be a major area, which goes to the fact that so many GoFundMe campaigns are really medical or healthcare related. It goes back to the underlying macro trends in American healthcare: access, cost and quality.
What are your thoughts on the current digital health market conditions and how OMERS can still find value?
I think we need to see more businesses of this generation at scale. What I’m talking about is over $100 million of revenues, the sub $50 million revenue range is not compelling from an exit perspective. I think there needs to be more consolidation because you’ve just got too many venture-backed companies in the same category kind of beating each other on the head. But being a multi-stage investor at OMERS means we could get in on something that’s a couple of years from IPO as opposed to the usual eight to 12 years. Deals that I maybe wouldn’t have done in a prior life could come back in the target zone.
Photo: bob_bosewell, Getty Images
