Strategic Investors: Profiles of investors with strategies to consider.
Juliana Garaizar manages the $25 million Texas Medical Center (TMC) Venture Fund, which provides early stage funding for promising innovators in healthcare and life sciences.
She also leads the Consumer Fund for the innovative Portfolia FemTech Fund, a female-led investment group that works in health care and aims “to bridge the gender gap in investing.”
The past several years have seen important new initiatives in women’s investment groups, with Goldman Sachs announcing last year it would invest $500 million through VC Fund and the New York City Office Economic Development creating a $10 million fund in February to help seed women-led investment funds. But it has not been enough to level the playing field.
This makes Garaizar’s mandate stand out in what remains a male-dominated field. She notes that women tend to be more interested in backing businesses founded by other women and offering solutions for a consumer market that has been overlooked by the VC space.
Karma Network’s Contributing Editor Michael Moran spoke to Garaizar about opportunities and financing solutions in the fertility services industry.
Michael Moran: Could you tell us more about why you’re focusing on the fertility services space through your funds, TMC Venture Fund and Portfolia?
Juliana Garaizar: The demand for fertility services is exploding not only because of higher rates of in vitro fertilization, but also women are getting very proactive in wanting to freeze their eggs. The fact is that today’s solution only helps the 1% who can afford it. The costs for fertility are actually extremely high. You know that typically the cost is around $20,000 for a single cycle of IVF, and in many cases those are not successful. Insurance coverage is limited for that. The treatment is enormously complex and confusing. Plus the support systems available to patients are very limited.
One of the first investments we did in the Portfolia FemTech Fund was Future Family. Future Family is a start-up that we are really excited about and it innovates in intersection between science and fertility. And I think that’s an area that needs, you know, a lot of innovation.
One in six couples today struggle with fertility. This is only getting worse because of women delaying childbirth into the 30s and 40s. Also the male sperm count has decreased by more than 50%. Future Family is the innovation platform that cares for the 99% who aren’t served in the market. It’s an engagement platform. It has the power to guide consumers through their entire fertility journey, from fact-finding to treatment.
So the platform has testing, planning resources, on-demand medical expertise as well as affordable treatment plans. Their business model is pretty interesting because they not only have deals with lab work and lab facilities all over the U.S., with pharma companies, but they have the biggest network of fertility clinics in the U.S.
What’s really interesting is the financing part. This has normally been the bottleneck in the fertility services sector with only about 58% of the couples that were interested in fertility clinics actually enrolling at a clinic. One of the biggest advantages for Future Family is that they acquired a $100 million line of credit to help those couples who really want to get moving, but could not otherwise afford the services.
Michael Moran: What effect do you think decreasing fertility rates in the developed economies have had on the development of this industry?
Garaizar: One out of six couples are struggling with fertility and this is only getting worse because of the fact that we are delaying our first babies. First babies are coming in our 30s and 40s just because women are more integrated into our workforce. The fertility service companies and startups are booming as a result.
So we’re very excited to be a part of that.
Michael Moran: Do you see a reliable return on investment over 10 years or so? Or is this market segment vulnerable because it is so closely tied to demographics?
Garaizar: There’s going to be a real return on investment just because the technology is really improving and we are also seeing and experiencing economies of scale. Companies like Future Family are able to negotiate much better deals because they are buying pharmaceuticals, lab services and clinical services in bulk.
That’s totally going to change the ball game. We’re going to see prices for fertility treatment drop. And that’s going to make it much more interesting for services that would have been too expensive otherwise. It’s going to stimulate even more and more innovation in those areas. And I think the return on investment is going to be pretty obvious for many people.
Michael Moran: Could you tell us a little more about the TMC Funds, what you’re doing with Johnson & Johnson and others?
Garaizar: So the TMC Venture Fund is a $25 million fund and all Texas Medical Center money. So far it’s been working for a year.
The TMC itself, as I mentioned before, is the biggest medical city in the world with 24 hospitals, structured as a non-profit. TMCX, our accelerator space, doesn’t take any equity because of our non-profit status. So it came time where we decided that we also wanted to invest in some of the winners that were coming through those acceleration programs. We decided to do this first proof of concept with $25 million to start.
So we’ve been doing it for a year. We’ve already invested in nine companies, mostly in the areas we know best: digital health and medical devices. But we are pretty opportunistic in terms of opportunities that we can have there in our ecosystem.
Meanwhile, Johnson & Johnson established The Center For Device Innovation within the Texas Medical Center and there have been a lot of very interesting deals in pharma and medical devices. So we’re looking very carefully at their deals too because we want to make sure we put money into the winners that are coming from our ecosystem at large.
