|Garheng Kong, HealthQuest Managing Partner--Courtesy of HealthQuest|
It's tough for a sizable venture firm to specialize in med tech, but HealthQuest Capital comes close. This spinoff of the now biotech-focused venture firm Sofinnova Ventures closed its first fund in August 2014 at $110 million. It's already managed to more than double that sum with a second fund less than two years later.
HealthQuest's latest fund closed at $225 million, which was its hard-capped upper limit; the firm had initially targeted $175 million. The second fund attracted a range of undisclosed limited partners including endowments, family offices, foundations, fund-of-funds, pension funds and global healthcare organizations.
"LPs were attracted to our strategy of pursuing emerging growth stage healthcare companies without 'binary' risk in sectors that focused on value optimization (better patient outcomes and better healthcare economics) and delivery efficiency--and the fact that we were agnostic to modality, technology or geography," HealthQuest founder and Managing Partner Dr. Garheng Kong told FierceMedicalDevices via email. "This combined with a team that had both investing and operating experience was compelling since almost all the companies we target are ramping through the steep part of the adoption curve. LPs saw the progress in the current portfolio in the form of revenue growth, margins, and overall adoption."
The Menlo Park, CA-based VC firm is focused on early growth investments in startups that offer value to the healthcare system and improve healthcare delivery efficiency. It's interested in companies that address unmet clinical needs, particularly those that are in regions that aren't well served by venture and growth investors. Investments from the new fund will be in segments including medical products, diagnostics, healthcare IT and technology-enabled healthcare services.
The firm has staffed up with an investing team that includes 6 PhDs and/or MDs and is led by Kong, who came from Sofinnova after more than three years there. He currently sits on the boards of several HealthQuest companies: rare cancer diagnostics startup Castle Biosciences, consumer medicine play First Aid Shot Therapy, in-office diagnostic arthroscopy startup Trice Medical, and biopharma tech services company VirMedica.
Other portfolio companies include cancer molecular diagnostics company BioTheranostics, automated payment player InMediata, developmental delay diagnostics startup Lineagen and wearable textiles company Vestagen.
Earlier this week, HealthQuest came in as a new investor on a $45 million Series C round for minimally invasive nasal obstruction device startup Spirox Medical, which is based in Menlo Park, CA. It joined private equity giant KKR ($KKR), which led the round as well as existing investors Aisling Capital, Aperture Venture Partners and Venrock.
- here is the announcement