Despite a venture funding slowdown that has not spared the health care and biotech sectors, one Los Angeles fund is looking to back its next crop of seed-stage health startups.
Wavemaker 360 Health, the Pasadena-based early-stage health care VC firm, announced on Thursday that it has closed its $64 million second fund—a haul nearly four times the size of its $17 million first fund, albeit smaller than the $100 million maximum target it set for itself two years ago. The new vehicle will look to invest in 40 to 50 early-stage startups mostly in the U.S. and across the health care spectrum, from digital health and pharma to medical devices and artificial intelligence.
“The health care industry might not be recession-proof—but the health care industry is about as recession-resistant as it gets,” Wavemaker general partner Jay Goss told dot.LA. “Human beings are always going to need health care. We have more and more health care products and services than ever before, and we have an aging population in this country.”
The new fund will initially invest up to $1 million in each startup and add more over time, Goss said. Wavemaker has already deployed capital from the second fund to 15 startups; one of them, Seattle-based remote patient monitoring platform Alertive Healthcare, has already rewarded Wavemaker with an exit via its acquisition by Carbon Health last year.
The VC firm raised the $64 million fund from around 300 limited partners (LPs)—nearly quadrupling the 80 investors who contributed to Wavemaker’s first fund, which closed in 2019. Those LPs include health care organizations like the Long Beach-based SCAN Foundation, a charity dedicated to improving care for older adults, as well as industry executives and physicians. Goss described Wavemaker’s investors as the fund’s “secret weapon,” since they provide its portfolio startups with access to key connections at hospitals, insurance companies and other industry groups.
“It's harder to get those first three or four or five commercial successes under your belt as a health care entrepreneur,” Goss said. “So we have so much ability to help these startups by virtue of who our limited partners are. We flex that muscle all over the health care industry.”
Wavemaker, which launched in 2018, now has more than $85 million in assets under management across its two funds. The firm has invested in around 45 startups to date including Ready, Set, Food!, an L.A.-based food allergy startup that received a $350,000 investment from Mark Cuban on “Shark Tank” in 2020.
