SV Life Sciences, Fresh from Closing $523M New Fund, Looking at Health IT Deals

8/2/10

While many venture firms are struggling in the aftermath of the Great Recession, there are a few outfits with plenty of capital to invest. SV Life Sciences, which has operations in Boston and the Bay Area, is one of those few. Last month the firm closed one of the year’s largest healthcare-focused venture funds, its $523 million Fund V.

It turns out that SV Life Sciences—which we have known primarily for its bets on biotech firms like Lebanon, NH-based Adimab, and Waltham, MA-based NKT Therapeutics—plans to take a slightly greater interest in the health IT sector with its latest fund.

SV Life Sciences has made investments in six health IT firms to date, and perhaps the best known of those is Waltham, MA-based clinical trials software provider Phase Forward (NASDAQ:PFWD). Eugene Hill, the managing partner at SV Life Sciences who leads its healthcare services and health IT investing, says that the firm plans to be “a little bit more” active in funding tech startups focused on healthcare because of new incentives for U.S. physicians to adopt technology.

With the government providing $17 billion in incentives for doctors to adopt electronic medical records over the next several years, physicians who three years ago weren’t considered receptive to new technologies are now a viable market. Hill, who cited the federal incentives as a reason to be bullish on health IT, says that there are still some major barriers for startups that wish to enter this market with new products. (Notice he said the firm will be “a little bit more” active in this sector.)

One major hurdle for startups is the lack of interoperability among health information systems. That puts the burden on a startup to integrate its software with each of established players—such as Cerner, GE, and McKesson—if they want to break into the lucrative hospital market. That costs time and money, both of which are often scarce for tech startups.

“So it’s not as simple as … Next Page »

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