By Tom Ballard, Chief Alliance Officer, PYA
Josh Schwartz describes the mission of Jumpstart Capital (JSC) as being “a vehicle to reinvest in the best of the best.”
The General Partner of the fund was referring to a subset of the 60 healthcare start-ups that have received seed investments from Jumpstart Foundry (JSF) since its launch in 2015. Both Jumpstart entities are part of the Nashville-headquartered Briovation organization that also includes the recently completed “Health: Further Festival” and Solaster.
One might think of Jumpstart Foundry and Jumpstart Capital as akin to a major league baseball organization that has a farm system or a vertically-integrated enterprise. JSF is the proving ground for early stage companies, and the best ones get advanced to the next stage where they secure more funding and more concentrated assistance.
“We needed more opportunity to help the JSF companies with funding that would take them to the next level,” Schwartz told us in explaining the rationale for the fund. As noted in this recent teknovation.biz article, Jumpstart Foundry has $3 million available annually that it can invest in its early stage companies. Those investments are capped at $150,000 per start-up.
As any entrepreneur knows, seed funding is important at the outset to help with proof of concept efforts or development of a minimum viable product. Further progress, however, can bog down if there is an absence of follow-on capital, a void that Jumpstart Capital fills for the best JSF companies.
It is a $30 to $50 million growth fund that had its first close in November 2017 and should finish its fundraising by the end of this year. Even as it continues to raise dollars to meet its cap, Jumpstart Capital has already made seven investments, five in start-ups that came out of Jumpstart Foundry.
“We’re not restricted to only Jumpstart Foundry,” Schwartz said. “We can look at other deals, but we are exclusively healthcare-focused.”
There are obviously several clear advantages in the JSC model, starting with the fact that it has early knowledge of the companies that are part of the Jumpstart Foundry program. That fact also helps interest other funds for additional capital investment.
“We already know them (the Jumpstart Foundry start-ups),” Schwartz explains, noting that two levels of due diligence have already been completed.
“This approach derisks it,” Schwartz says. “Investors like that embedded deal flow. It’s very different from the traditional venture capital model that usually starts with receiving a pitch deck.”
Schwartz is part of a very lean organization. Jumpstart Capital has a three-person team that also includes Managing Director Dave Vreeland and Vic Gatto, Co-Founder of Briovation and Chair of the fund’s Investment Committee.
“Dave and I met in the late-1990s on an Ernst & Young healthcare management consulting project in Nashville,” Schwartz said. Their careers followed different paths with Vreeland focusing on healthcare IT while Schwartz was involved in digital and consumer health.
“We met over lunch last year, and Dave laid-out the idea for Jumpstart Capital,” Schwartz said. “My response was, ‘You’re not doing it without me.’”
While the majority of the deals have come from companies in Jumpstart Foundry, he described the types of start-ups that would be of interest to Jumpstart Capital. They are: (1) those that take significant cost out of the healthcare system; (2) those that improve patient outcomes; and (3) those that improve the patient experience.
“Nothing wastes more of our time and money than healthcare,” Schwartz says. “The system doesn’t view you as a customer. We need to make it better, more understandable, and more predictable.”
For a list of the seven portfolio companies, click here.