Information technology, remote monitoring and technology connected to genomics and diagnostics are all appealing investments, the executives of three investment entities said Monday at the Center for Connected Health symposium.
The event, organized by a division of Partners HealthCare, drew more than 1,000 attendees to Boston.
The investors - principals of an angel group, a venture capitalist firm and Partners HealthCare Foundation - said the country's current economic woes are having an effect on how they look at investments.
Michael Greeley, general partner of Flybridge Capital, which manages a $600 million fund, suggested there would be less total venture capital available for investment in the near future. The total is already down from $30 billion to $20 billion this year, and Greeley expects it to drop to $15 billion in 2009.
He also forecast a "high mortality rate" among existing companies - yet rang a positive note for innovation amid the gloom.
"It's still a great time to start companies," he said.
Greeley warned, however, that startups would have to be more disciplined, or as he put it: "Don't over-engineer your product. Be really crisp as to what your customers want."
As a partner in an angel group, Charlie Cameron, vice president of strategy and business development at Cooley Godward Kronish, said, "The sense is we have to focus on the firms we already have."
Robert J. Creeden, managing partner of the Partners Innovation Fund, said investors are looking for companies to have "more meat on the bones" and to be a lot more "cash efficient."
He suggested that companies with customers and those with beta sites - ones that could show traction - would gain favor with investors.
Investors are looking for a quicker return than in the past, the panelists agreed.
"We need to see that the product you're building - people will pay for it today or next quarter, not two years from now," Greeley said.
While all three avoided mentioning companies by name, Creeden said his group had been working with a connected health company for eight to nine months. The company now has a beta site.
"So we do have that story," he said. "We do have two to three investors that have come to us."
Asked what types of business models tend to be most successful, Greeley said recurring revenue models and business-to-business models are especially appealing.
"We like to see engagements that are paid hundreds of thousands of dollars as opposed to thousands of dollars, Greeley said.
The panelists also offered these forecasts:
- The IPO market will shut down for the next three to five years.
- The mergers and acquisitions environment is "tricky," with some companies selling at "distressed prices."
- It's always about new ideas, regardless of the economy.