WEBVTT - Relevance Ventures CEO on Investing 0:00:00.160 --> 0:00:04.160 This is Bloomberg Business Week with Carol Masser and Bloomberg 0:00:04.240 --> 0:00:08.360 Quick Takes Tim Stinovic from Bloomberg Radio. Listen, folks, we 0:00:08.440 --> 0:00:10.280 have talked a lot in the past year about the 0:00:10.440 --> 0:00:13.520 renewed dare I say, a really new real emphasis on 0:00:13.600 --> 0:00:15.720 things like health and wellness and all of its forms, 0:00:15.720 --> 0:00:18.960 Investors really committing a lot of money to the area. 0:00:19.000 --> 0:00:22.040 Just recently, you might recall we mentioned that Blackstone Group 0:00:22.120 --> 0:00:25.080 leading a hundred million dollar funding around in on demand 0:00:25.079 --> 0:00:27.560 mental health company Ginger. So back with us to talk 0:00:27.600 --> 0:00:30.760 about VC investments and things like health and wellness and 0:00:30.840 --> 0:00:34.000 those beyond those traditional areas often sought out by Silicon 0:00:34.080 --> 0:00:37.239 Valley and Silicon Alley is Camer Newton, founding partner and 0:00:37.320 --> 0:00:40.200 CEO at Relevance Ventures. Back with us on the phone 0:00:40.240 --> 0:00:44.560 from Nashville, Tennessee to Cameron, how are you. I'm doing great, Carol, 0:00:44.600 --> 0:00:46.839 thanks for having me back on Well, it's nice to 0:00:46.880 --> 0:00:48.960 have you back before we get into some of your 0:00:49.000 --> 0:00:52.839 thoughts about what's going on in VC and investing. Um, 0:00:52.960 --> 0:00:56.840 how's Nashville. Nashville is great. You know, we've had a 0:00:56.920 --> 0:00:59.400 couple of days a really good weather here after having 0:00:59.640 --> 0:01:01.600 you know, the of some flooding and so forth, which 0:01:01.640 --> 0:01:04.560 was unfortunate, but we've come out of that, and uh, 0:01:04.600 --> 0:01:06.200 you know, it's a great place to be. I often 0:01:06.240 --> 0:01:09.479 get to ask why I chose to locate in Nashville, 0:01:09.480 --> 0:01:12.000 and you know, it's really easy answer. It's it's a 0:01:12.040 --> 0:01:15.640 business friendly area, business friendly state, no state income tax. 0:01:16.120 --> 0:01:19.560 And probably one little known fact about Nashville to most 0:01:19.640 --> 0:01:22.560 in the country is, uh, within a six hundred mile 0:01:22.680 --> 0:01:25.640 radius is you know, over fifty of the U S population. 0:01:25.680 --> 0:01:28.959 So from a geographic perspective, it's a it's an ideal location. 0:01:29.080 --> 0:01:30.880 It's a windward It's one place I have not been 0:01:30.880 --> 0:01:33.399 in the country, and I'm dying to go um for 0:01:33.440 --> 0:01:35.479 so many different reasons. You know, it's interesting you brought 0:01:35.560 --> 0:01:39.160 up no state income tax, and tax policy definitely shapes 0:01:39.200 --> 0:01:42.360 what companies do, what individuals do. What do you think 0:01:42.400 --> 0:01:45.560 about some of the initiatives that the Body administration are 0:01:45.600 --> 0:01:49.360 talking about, especially when it comes to corporate income tax. Well, 0:01:49.400 --> 0:01:51.280 I I tend to stay out of, you know, the 0:01:51.320 --> 0:01:54.040 discussion about the taxes at the federal level. I think 0:01:54.080 --> 0:01:56.960 when you get granular on it, though it certainly affects 0:01:57.240 --> 0:02:01.680 emerging ecosystems in the venture space. I would consider Tennessee 0:02:01.720 --> 0:02:05.040 and Nashville to be, uh, you know, very business friendly 0:02:05.120 --> 0:02:08.799 with a public policy geared towards the business friendly environment. 0:02:09.040 --> 0:02:12.079 And that's encouraging businesses to move to Tennessee. That's encouraging 0:02:12.200 --> 0:02:15.639 entrepreneurs to leave other areas that perhaps of public policy 0:02:16.320 --> 0:02:20.200 arrangements or tax arrangements that are not as compelling. Uh. 0:02:20.240 --> 0:02:22.680 And I think that that's lending to this kind of 0:02:22.800 --> 0:02:25.320 rise of the rest that you're seeing throughout the country 0:02:25.360 --> 0:02:30.040 where you're having entrepreneurship and the entrepreneurial spirit just rage 0:02:30.120 --> 0:02:33.560 in areas that you know are not historically areas where 0:02:33.560 --> 0:02:37.120 you would see companies being started at, including the Southeast 0:02:37.200 --> 0:02:42.040 and Midwest. Well, okay, so interesting, and I do wonder 0:02:42.440 --> 0:02:45.480 as you see, you know, some of these new companies 0:02:45.480 --> 0:02:48.880 that are ultimately being started. I mean, I know you 0:02:48.919 --> 0:02:50.840 guys are looking for things that are different when it 0:02:50.880 --> 0:02:55.280 comes to investing, uh in the VC world. Um, what 0:02:55.360 --> 0:02:57.160 in particular, I know we've talked with you about health 0:02:57.160 --> 0:03:00.800 and wellness. What more are you seeing on that front? Well, 0:03:00.880 --> 0:03:03.640 I think you mentioned earlier in your comments about the 0:03:03.720 --> 0:03:07.720 Ginger round, so we're very bolish on the mental health space. 0:03:07.760 --> 0:03:10.640 We have two investments in that space, one on the 0:03:10.680 --> 0:03:13.280 health system side and one on the outpatient side. When 0:03:13.320 --> 0:03:15.800 we just did in January actually in New York a 0:03:15.880 --> 0:03:19.880 company called Talkaiatry, which is really bringing you know, mental 0:03:20.280 --> 0:03:23.600 health services to the masses. Uh. You know, it's an 0:03:23.600 --> 0:03:27.640 industry that has historically been kind of anchored by a 0:03:27.720 --> 0:03:31.280 cash pay system and somewhat of a taboo. People didn't 0:03:31.280 --> 0:03:33.560 want their insurance companies to know they were going to seek, 0:03:33.919 --> 0:03:35.840 you know, someone to talk to. And I think that 0:03:36.000 --> 0:03:39.320 is falling away, and I think insurance companies now are engaging, 0:03:39.640 --> 0:03:41.880 and I think it's a prime time for that space. 0:03:41.920 --> 0:03:44.600 I think you're just going to continue to see massive growth. Yeah, 0:03:44.600 --> 0:03:46.400 when you look at your health and wellness. We've talked 0:03:46.400 --> 0:03:50.120 about some of its sun Basket. Um, you mentioned Crew, Diet, 0:03:50.120 --> 0:03:52.600 I d the Good Patch. Um. What is it that 0:03:52.600 --> 0:03:54.840 guide you in terms of, you know, where you want 0:03:54.840 --> 0:03:57.840 to commit money. What is it that you're looking for. Yeah, 0:03:57.920 --> 0:04:00.560 that's a that's a good question. So you know, Carol, 0:04:00.760 --> 0:04:04.320 we're a Native American owned adventure and so that's who 0:04:04.320 --> 0:04:07.840 we are, doesn't necessarily definance that's who we are are investing. 0:04:07.960 --> 0:04:11.480 Ethos is really anchored around this philosophy of harmony, which 0:04:11.520 --> 0:04:14.720 is certainly derived from our heritage, and harmony at his 0:04:14.840 --> 0:04:20.440 basic level really is increasing the connection with oneself to community, family, 0:04:20.480 --> 0:04:23.400 in nature, while providing a balance that's kind of mind, 0:04:23.440 --> 0:04:25.800 body and spirit. And so how do you take that 0:04:26.240 --> 0:04:29.200 and overlay it in the health and wellness space and 0:04:29.360 --> 0:04:32.520 look for companies that kind of meet or fulfill those criteria. 0:04:32.960 --> 0:04:36.839 So for us, it's really seeking out companies that reduce 0:04:37.200 --> 0:04:41.920 the the reliance on the traditional health care system, which 0:04:42.279 --> 0:04:45.039 and our view really is is geared towards treating symptoms. 0:04:45.120 --> 0:04:47.120 It doesn't really get to the root calls a lot 0:04:47.160 --> 0:04:51.000 of times of people's deficiencies or illnesses. And so as 0:04:51.000 --> 0:04:53.360 we look across the space, we look for companies that 0:04:53.440 --> 0:04:55.599 are doing just that. There's really kind of falls in 0:04:55.640 --> 0:05:00.280 that preventative care space. So self fulfillment, self help, uh, 0:05:00.520 --> 0:05:04.520 food is medicine. Food, lifestyle is medicine. All of those 0:05:04.560 --> 0:05:07.000 things kind of go in and uh into what we 0:05:07.040 --> 0:05:09.760 look for in that particular space. Hey, Kerin, I'm curious 0:05:09.800 --> 0:05:12.880 to um. You know, health wellness is certainly an area. 0:05:13.000 --> 0:05:15.839 Fintech is another area that you guys are in. What's 0:05:15.839 --> 0:05:18.000 your typical hold time for a company, and I'm just 0:05:18.040 --> 0:05:20.680 curious about exit strategies right now or if you're looking 0:05:20.720 --> 0:05:25.080 to do it in this market environment. Yeah. Well, for us, 0:05:25.160 --> 0:05:27.480 you know, we are Series A and Series B investors, 0:05:27.480 --> 0:05:29.560 so we're not the first check in the first check 0:05:29.600 --> 0:05:32.200 you've seed in precede rounds are typically eight till twelve 0:05:32.279 --> 0:05:34.400 your holds. Uh, you know that that's on average what 0:05:34.480 --> 0:05:38.680 we experienced for us. We're we're really investing in companies 0:05:38.680 --> 0:05:41.600 with an eye to to look to liquidation somewhere between 0:05:41.640 --> 0:05:45.040 three and five years. Uh. Sometimes it runs longer, sometimes 0:05:45.080 --> 0:05:48.159 it doesn't. I think what has emerged in the market, Uh, 0:05:48.440 --> 0:05:50.960 is just this massive amount of money in the in 0:05:50.960 --> 0:05:53.800 the later stage of DC or private equity world, which 0:05:53.920 --> 0:05:57.200 is has been butterst by you know, your corporate VC 0:05:57.520 --> 0:06:00.640 arms and also your sovereign wealth funds and so. Uh, 0:06:00.680 --> 0:06:03.200 you know, there is an attractive option for early investors 0:06:03.440 --> 0:06:07.040 actually sell secondary shares into larger, you know, later stage 0:06:07.080 --> 0:06:10.480 BC rounds. I think you know everyone's watching this back 0:06:10.560 --> 0:06:13.080 market to right, everyone's kind of watching the I P 0:06:13.240 --> 0:06:16.599 O market. Uh. It feels uh, you know that things 0:06:16.640 --> 0:06:18.920 are a little tighter, but you know, deals are still 0:06:18.960 --> 0:06:20.719 getting done for good companies, and I think at the 0:06:20.800 --> 0:06:24.680 end of the day, that's really the important point, right. Um. 0:06:24.720 --> 0:06:27.720 You know, these Denovo companies with five years of projections 0:06:27.720 --> 0:06:31.200 and everything happening in year five, uh, you know, probably 0:06:31.200 --> 0:06:33.520 are not going to be getting access to the market 0:06:33.560 --> 0:06:35.120 as easy as they did, you know, three or four 0:06:35.160 --> 0:06:38.080 months ago. But I do think for good companies that 0:06:38.160 --> 0:06:41.960 have real revenue, real cash flow and good positions in 0:06:42.000 --> 0:06:45.360 their respective markets, that market will remain open. So you're 0:06:45.360 --> 0:06:48.920 looking to do exits this year, next few months, I'm 0:06:48.960 --> 0:06:54.599 looking to do exits every year. If you're not going 0:06:54.640 --> 0:06:57.040 to give me anything more, are you. Well, if I 0:06:57.080 --> 0:07:00.600 could wave wave my magic wand and uh without getting 0:07:00.640 --> 0:07:03.599 in trouble, I I would certainly share. But but yes, 0:07:03.720 --> 0:07:06.160 I think that there's going to be an attractive market 0:07:06.360 --> 0:07:09.080 for for exits this year, and you know, even it'll 0:07:09.120 --> 0:07:11.360 be a little bit tighter. I think in the public 0:07:11.400 --> 0:07:14.320 market's an I P O and spack market especially, and 0:07:14.560 --> 0:07:16.560 not so much on the spack side, but probably on 0:07:16.600 --> 0:07:18.520 the pipe, you know, the pipe side of the equation, 0:07:18.520 --> 0:07:20.880 it's going to get a little tighter, more competitive. Why 0:07:20.920 --> 0:07:24.400 why do you say that on the pipe side, Well, 0:07:24.440 --> 0:07:27.480 you know, look, you've both read the stats about how 0:07:27.480 --> 0:07:30.160 many spacks have been formed, how many billions of dollars 0:07:30.160 --> 0:07:33.800 in the facts. Well, because of the mechanics of a spack, 0:07:33.920 --> 0:07:36.560 you really need a quality pipe to come in beside 0:07:36.560 --> 0:07:40.920 your spack investment. And so, uh, you know, it's one 0:07:40.960 --> 0:07:43.000 thing to go raise money as a blank check company. 0:07:43.000 --> 0:07:44.600 It's another thing to go to the market, to the 0:07:44.720 --> 0:07:47.360 you know, the real money managers of the world and say, here, 0:07:47.400 --> 0:07:50.960 evaluate these hundred SPACs, which one do you want to 0:07:51.000 --> 0:07:53.240 put your your money in? And and so it's just 0:07:53.360 --> 0:07:56.480 becoming a more competitive situation. Yeah. We we have actually 0:07:56.560 --> 0:07:58.680 a great story in the Bloomberg. It's among our most 0:07:58.720 --> 0:08:02.080 read some three hundred acts debuted in the first quarter 0:08:02.080 --> 0:08:04.320 of this year, creating an oversupply with at least three 0:08:04.560 --> 0:08:07.360 d and two that hadn't bought anything yet, and we're 0:08:07.400 --> 0:08:10.080 trading for less than the cash raised in their public offering. 0:08:10.280 --> 0:08:12.760 They're also facing an eventual deadline to liquidate if they 0:08:12.800 --> 0:08:14.360 don't come up with a deal. I mean it is 0:08:14.800 --> 0:08:17.040 there feels like a lot of money sloshing around looking 0:08:17.080 --> 0:08:22.920 for something. You got it, there is no go ahead please? 0:08:23.280 --> 0:08:25.360 Oh I was just gonna say on the spack side 0:08:25.400 --> 0:08:27.600 of the equation. I think there's there's sample people that 0:08:27.640 --> 0:08:30.920 would want to talk to you, and really any size company, 0:08:31.360 --> 0:08:35.560 which is probably not not the best scenario. But I 0:08:35.559 --> 0:08:37.440 think the ones that are real, the real companies with 0:08:37.559 --> 0:08:40.600 real size and real market positions, real revenue and real earnings, 0:08:40.760 --> 0:08:42.520 I think they'll they'll still continue to get it done. 0:08:42.679 --> 0:08:44.680 Is it driving up though some of the funding rounds 0:08:44.720 --> 0:08:48.200 because of this, because of all the money that's around, Well, 0:08:48.240 --> 0:08:52.400 it's interesting, we um, we haven't really experienced that. So 0:08:53.480 --> 0:08:56.640 in our experience, there's really a bifurcation in the market. 0:08:56.679 --> 0:08:59.480 There's in the spack market, in the IPO market, and 0:08:59.520 --> 0:09:04.000 then there the kind of later stage p adventure funding rounds, 0:09:04.120 --> 0:09:06.839 and there's a there's a considerable gap I think still 0:09:06.880 --> 0:09:09.840 between the valuations there. I think that is starting to close. 0:09:10.320 --> 0:09:12.360 So I think over time you'll see that tall more 0:09:12.440 --> 0:09:15.840 in line and uh and that anomaly will will no 0:09:15.920 --> 0:09:18.199 longer kind of exist. It's certainly not in the way 0:09:18.240 --> 0:09:20.400 it does now. You know when you talked about health 0:09:20.400 --> 0:09:22.640 and wellness, because I do feel like you know, Cameron, 0:09:22.679 --> 0:09:24.520 that there was and I know we've talked about this 0:09:24.520 --> 0:09:26.880 a little bit before. There really feels like there has 0:09:26.920 --> 0:09:30.760 been a gut change when it comes to health. It's 0:09:30.800 --> 0:09:33.600 not just about our physical well being, but it really 0:09:33.640 --> 0:09:36.400 is about our mental well being. Um and I feel 0:09:36.400 --> 0:09:40.200 like it was such a taboo subject has been for years, 0:09:40.320 --> 0:09:42.800 but it's you know, even as we've evolved, it still 0:09:42.840 --> 0:09:45.480 felt like nobody talked about it. This year we kind 0:09:45.480 --> 0:09:47.440 of ripped the band aid off. What are you seeing 0:09:47.440 --> 0:09:50.319 in terms of the investments that you've made. We're just 0:09:50.840 --> 0:09:53.200 the metrics at some of these companies that you're investing 0:09:53.200 --> 0:09:57.200 in where you're seeing it's really taking off. Yeah, I 0:09:57.200 --> 0:10:00.199 would say that particular space, especially on the telehealth so 0:10:00.320 --> 0:10:05.200 delivery psychiatric surface services via telehealth, it's just red hot. 0:10:05.559 --> 0:10:08.480 And so you know, you just see a lot of 0:10:08.520 --> 0:10:11.000 interest in the space. You know, we we invested in 0:10:11.040 --> 0:10:14.199 Talchiatry earlier this year, I believe in January. That's a 0:10:14.240 --> 0:10:18.240 New York based business. We've already onboarded thirty providers, which 0:10:18.320 --> 0:10:20.440 was you know our target for the year. Uh And 0:10:20.480 --> 0:10:23.880 we've already onboarded that many providers and that has led 0:10:23.880 --> 0:10:26.120 to an immense amount of interests in the VC community 0:10:26.160 --> 0:10:29.000 with that particular company. And we just printed the series 0:10:29.040 --> 0:10:32.280 day in January, and so, um, I think everyone is 0:10:32.320 --> 0:10:34.520 looking at this space trying to figure out how to 0:10:34.559 --> 0:10:37.760 play it, and I think, um, you can play it 0:10:37.800 --> 0:10:40.160 from the provider side, which you know is has a 0:10:40.160 --> 0:10:42.480 little bit more difficulty to scale because you're building a 0:10:42.480 --> 0:10:45.560 business on the back of physicians, or you can build 0:10:45.600 --> 0:10:49.040 it from a wellness coaching perspective, you know, delivering wellness 0:10:49.120 --> 0:10:51.959 coaching to corporate America or things of that nature with 0:10:52.080 --> 0:10:54.360 tender scale easier. But at the end of the day, 0:10:54.400 --> 0:10:58.000 the real shortage in the mental health industry is on 0:10:58.040 --> 0:11:01.040 the provider side. They're just they're just on enough psychiatrists. 0:11:01.360 --> 0:11:03.160 And so we've taken the position that we want to 0:11:03.200 --> 0:11:07.720 bet on that. Uh, that arbitrage interesting you say red 0:11:07.720 --> 0:11:10.400 hot in this whole area. Um, is it red hot 0:11:10.440 --> 0:11:12.320 to the point that we're going to have a lot 0:11:12.400 --> 0:11:15.600 of companies and then ultimately there'll be some major players 0:11:15.679 --> 0:11:19.760 or will it be kind of a fragmented market going forward? Well, 0:11:19.840 --> 0:11:22.360 I think it depends on how you define the space, 0:11:22.480 --> 0:11:24.920 because as I mentioned earlier, it can be very broad. 0:11:25.000 --> 0:11:28.679 What you consider me to be mental health focus. I 0:11:28.679 --> 0:11:31.000 think on the provider side, I mean, look, there's only 0:11:31.080 --> 0:11:33.600 so many psychiatrists in the U s. There's a shortage 0:11:33.600 --> 0:11:37.560 of psychiatrist, so there can't be too many companies because 0:11:37.800 --> 0:11:39.960 at the end of the day, there's just not enough 0:11:40.080 --> 0:11:42.679 folks to work at them. So, uh, you know, telehealth 0:11:42.760 --> 0:11:45.760 is enabling h the service of a limited number of 0:11:45.760 --> 0:11:49.160 psychiatrists to be delivered to the masses, and so that's 0:11:49.200 --> 0:11:52.080 where we've kind of placed our bets is saying, well, look, 0:11:52.160 --> 0:11:54.640 you know, we know that there's a shortage here, and yes, 0:11:54.960 --> 0:11:58.120 there are some problems with scaling this quickly, but you know, 0:11:58.280 --> 0:11:59.840 if you get it right, when you get it right, 0:12:00.000 --> 0:12:03.000 it's a very very valuable business because you control the 0:12:03.000 --> 0:12:07.200 most valuable asset, the physician. Yeah, no, it's a good point. Hey, listen, 0:12:07.240 --> 0:12:10.120 just got about forty five seconds here, um left when 0:12:10.120 --> 0:12:12.200 you look at this year, this upcoming year. I love 0:12:12.240 --> 0:12:15.679 talking to leaders investors just about what the visibility looks like, 0:12:15.760 --> 0:12:18.400 what it looks like from this vantage point. Again, just 0:12:18.440 --> 0:12:22.160 got about forty seconds. Well, I we continue to see 0:12:22.200 --> 0:12:24.720 great deal flow right, and I've been very encouraged about 0:12:24.720 --> 0:12:27.520 what we're seeing in the Southeastern United States in the Midwest. 0:12:27.840 --> 0:12:31.360 Were continue to see things on both coasts very mature companies, 0:12:31.360 --> 0:12:33.319 you know, north of a million dollars of a r R, 0:12:33.440 --> 0:12:35.800 which is unique, and we're continuing to see that as 0:12:35.840 --> 0:12:39.120 a general kind of thesis. Ten years ago, maybe fifteen 0:12:39.120 --> 0:12:41.760 percent of the companies that access the Series A had 0:12:41.800 --> 0:12:45.839 revenue now, so it's uh, yeah, it's just a it's 0:12:45.840 --> 0:12:47.679 a great environment. So I think we're a positioned very 0:12:47.679 --> 0:12:50.600 well and we're pretty excited about what what this year holds. 0:12:50.720 --> 0:12:53.400 All Right, We'll looking forward to talking to you. Excuse me, 0:12:53.840 --> 0:12:56.400 I got choked up there. Looking forward to checking in 0:12:56.440 --> 0:12:58.760 with you again to find out how those investments are 0:12:58.800 --> 0:13:01.800 playing out. Camra Newton, he's founder and chief executive officer 0:13:01.800 --> 0:13:05.280 at Relevance Ventures, joining us on the phone from Nashville, Tennessee.