Originally published by MedCityNews on September 14, 2022
Redesign Health — a New York City-based company that creates healthcare startups — closed a $65 million Series C funding round on Tuesday.
The round was led by General Catalyst. Hemant Taneja, General Catalyst’s CEO and managing director, personally led the round and will be joining the Redesign’s board. Other investors — including CVS Health Ventures, UPMC Enterprises, Eden Global Partners, Euclidean Capital, Samsung Next, TriplePoint Capital and Declaration Partners — also participated in the financing.
Redesign launched in 2018 with the goal of driving “a new innovation model in healthcare” by bringing together industry leaders, visionary founders and investors, according to Samantha Lynch, the company’s head of strategy and finance. Its model of company creation involves leveraging cross-functional teams in product development, business strategy and marketing to develop companies with a market research-identified unmet need.
The company is different from venture capital funds, which often lack a specific healthcare focus and invest in companies across a broad range of industries. And even VCs with dedicated healthcare arms usually employ “a highly-bespoke process to build a small number of companies leveraging a small team,” Lynch said. With more than 300 employees, Lynch said Redesign is focused on innovation at scale, having spun out more than 40 companies in four years.
Lynch also pointed out that the company powers health innovation through “the ground-up creation of companies” — rather than waiting to invest until a company has done the foundational work, as venture funds do.
Redesign also differentiates itself from incubator programs because they are often only involved in a narrow part or stage of a startup. Instead, Redesign takes a holistic approach, Lynch said.
This approach involves multiple teams. For example, Redesign’s business development teams perform market research and generate new business ideas, the product team helps create initial products for startups, and the marketing team builds startups’ brands and develops go-to-market plans. And from day one, the company’s venture chairs provide operational guidance, help hire the founding team, and serve as board members as the business scales, Lynch said.
The company-building process always begins with a “carefully designed team of experts across technology, healthcare and finance to pressure-test ideas and build the foundations for launch,” Lynch explained. Once the concept has been developed, Redesign bring partners in — such as seed investors, academic experts or health system leaders — to help launch startups in the market.
When building companies, Redesign prioritizes removing costs from the healthcare system, improving care quality and creating easier patient access.
Examples of these companies include cancer care technology company Jasper Health, personalized autism care provider Springtide Child Development, and digital weight loss startup Calibrate. In all of these cases, Redesign spun out a startup because it wanted to disrupt the current state of care which involved “a combination of too few clinicians and too few sophisticated tools leading to sub-par care,” Lynch said.
More recently, Redesign has been building more companies to help providers and payers move toward value-based care. Two of these such startups include home health company MedArrive and Duos, a startup that pairs seniors with a home care manager.
In addition to creating these companies, Redesign also shares upside with them.
“We are shareholders from day-one in every company built at Redesign Health, and are focused on creating a deep partnership with founders centered on strong incentive alignment and a shared vision for impact,” Lynch said.
The Series C funding round brings Redesign’s total amount raised to date to $165 million. The round also brings the company’s valuation to $1.7 billion, according to reporting by Fast Company — Lynch declined to confirm the figure.