How Health IT Firms Can Open VC Vault at OpenView Venture Partners

12/8/10

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whole health IT spectrum. Consider our two most recent investments. Kareo is a medical billing company, but it’s providing an online medical billing system that is for small doctors offices of five doctors and under. Prognosis Health Information Systems is on the opposite side of the spectrum of health IT. It offers an outpatient order entry system for electronic health records that is sold to smaller hospitals of 200 beds and under. So these are two companies that are almost at opposite ends of the spectrum.

X: What else should health IT entrepreneurs know before approaching the OpenView team?

GR: Entrepreneurs should know about our philosophy. Our philosophy is that it’s not about the money because the types of companies we invest in can get capital from multiple sources. But it’s about how you leverage that capital to scale the business in an operationally efficient manner. If you look at great companies, whether they are in software or not, the key to building great companies is about out-executing your competition from an operational perspective. In health IT, if you look at the Epics and the Cerners of the world, the reason they got to where they are is their ability to out-execute their competition within their particular market segments. OpenView is all about helping founders and their management teams improve their overall operational execution. So if we do it right, the company never needs an additional round of investment. We’re really focused on capital efficiency and operational execution.

X: Do you look to invest as part of syndicate or alone?

GR: Believe it or not, all our investments have been made alone. That’s because if we find a company that we believe in, we are in it with both feet. We’re totally committed, and we’re not looking to reduce risk. Most syndicates are about reducing investment risk. When we select great companies, we’ve taken care of those risk concerns from our perspective. Then what we do is use the outside board director seats to bring in additional expertise that is specific to the industry or market segment that would benefit the portfolio company. The least efficient, most ineffective boards I’ve ever been on are boards with multiple VCs. The last things a founder or a CEO needs, frankly, are multiple wives at the table.

GR: Do you have any set goals for how much of your portfolio you want invested in healthcare?

X: We don’t have a goal because to us it’s about the … Next Page »

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