Caduceus Capital Partners has a goal of raising $100 million to invest in digital healthcare start-ups

By Tom Ballard, Chief Alliance Officer, PYA

Dave Vreeland is the Senior Managing Partner at Caduceus Capital Partners LLC, a newly formed digital healthcare-focused venture firm in Nashville with a goal of raising $100 million and making 25 investments in the sector within the next four years.

That’s clearly a big vision, but one that the long-time player in the healthcare sector believes is critically important, and he listed several key drivers in his thinking in a recent interview with teknovation.biz.

“We spend twice as much as other countries on healthcare,” Vreeland says. “We’re headed toward healthcare consuming 20 percent of GDP (gross domestic product). Our national debt is the highest since World War II. It’s unsustainable. Something needs to change, and the biggest problem is healthcare.”

As we’ve learned during our nine plus years at PYA, a national healthcare consulting firm, the sector is slow to change and innovate, something Vreeland underscores by noting that automation was just introduced in the last decade.

“We believe the next decade will be the ‘golden age’ of digital health, and we are poised to take full advantage of this on behalf of our investors and entrepreneurs,” he says, citing four trends that he believes reinforce the thesis.

  • Baby boomers and millennials comprise one-half of the population, and they could not be more different in a variety of ways including the tech savviness of the latter group.
  • The rise of tech titans like Amazon, Apple, Facebook, and Microsoft has upended every sector but healthcare.
  • “Everyone, even insiders, hate the healthcare system,” Vreeland adds.
  • Finally, he says simply that “consumerism has not yet hit healthcare, but it will.”

Add to that the nearly yearlong struggle with COVID-19 that brought to light a fractured healthcare system as well as a perpetually underfunded public health system in the U.S.

“My fear is that we will overreact,” Vreeland says, and he wants Caduceus Capital Partners to be a part of the appropriately balanced solution through its investments.

The fund is structured a little different than many. It took one of the General Partner slots and divided across 14 Venture Partners where an investment of a minimum of $1 million is required. Once the first close occurs, Vreeland and the team will start evaluating early stage deals.

“We will be looking for great ideas created by good people,” he says, adding that Caduceus Capital Partners does not expect the companies in which it will be investing to be run long-term by those who founded them.

As far as investment targets, Vreeland says “Our focus will be on payers and providers,” explaining that the life sciences sector is of no interest. “I see real opportunity in areas like payments and AI (artificial intelligence) on billing and collections.”

Perhaps one example and a quote best capture the vision that he has for Caduceus Capital Partners. Vreeland cites Amazon as “rerouting retail from the storefront to the PC (personal computer), then to the smartphone, and that’s the type of disruption we will begin to see in the healthcare sector” where the fund wants to invest.

As far as the quote, he cites this one from Vladimir Lenin as it relates to the pending disruption Vreeland foresees in healthcare: “Nothing happens for decades, and then decades can happen in weeks!”

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