Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic from Bloomberg Radio. Listen, folks, we
Speaker 1: have talked a lot in the past year about the
Speaker 1: renewed dare I say, a really new real emphasis on
Speaker 1: things like health and wellness and all of its forms,
Speaker 1: Investors really committing a lot of money to the area.
Speaker 1: Just recently, you might recall we mentioned that Blackstone Group
Speaker 1: leading a hundred million dollar funding around in on demand
Speaker 1: mental health company Ginger. So back with us to talk
Speaker 1: about VC investments and things like health and wellness and
Speaker 1: those beyond those traditional areas often sought out by Silicon
Speaker 1: Valley and Silicon Alley is Camer Newton, founding partner and
Speaker 1: CEO at Relevance Ventures. Back with us on the phone
Speaker 1: from Nashville, Tennessee to Cameron, how are you. I'm doing great, Carol,
Speaker 1: thanks for having me back on Well, it's nice to
Speaker 1: have you back before we get into some of your
Speaker 1: thoughts about what's going on in VC and investing. Um,
Speaker 1: how's Nashville. Nashville is great. You know, we've had a
Speaker 1: couple of days a really good weather here after having
Speaker 1: you know, the of some flooding and so forth, which
Speaker 1: was unfortunate, but we've come out of that, and uh,
Speaker 1: you know, it's a great place to be. I often
Speaker 1: get to ask why I chose to locate in Nashville,
Speaker 1: and you know, it's really easy answer. It's it's a
Speaker 1: business friendly area, business friendly state, no state income tax.
Speaker 1: And probably one little known fact about Nashville to most
Speaker 1: in the country is, uh, within a six hundred mile
Speaker 1: radius is you know, over fifty of the U S population.
Speaker 1: So from a geographic perspective, it's a it's an ideal location.
Speaker 1: It's a windward It's one place I have not been
Speaker 1: in the country, and I'm dying to go um for
Speaker 1: so many different reasons. You know, it's interesting you brought
Speaker 1: up no state income tax, and tax policy definitely shapes
Speaker 1: what companies do, what individuals do. What do you think
Speaker 1: about some of the initiatives that the Body administration are
Speaker 1: talking about, especially when it comes to corporate income tax. Well,
Speaker 1: I I tend to stay out of, you know, the
Speaker 1: discussion about the taxes at the federal level. I think
Speaker 1: when you get granular on it, though it certainly affects
Speaker 1: emerging ecosystems in the venture space. I would consider Tennessee
Speaker 1: and Nashville to be, uh, you know, very business friendly
Speaker 1: with a public policy geared towards the business friendly environment.
Speaker 1: And that's encouraging businesses to move to Tennessee. That's encouraging
Speaker 1: entrepreneurs to leave other areas that perhaps of public policy
Speaker 1: arrangements or tax arrangements that are not as compelling. Uh.
Speaker 1: And I think that that's lending to this kind of
Speaker 1: rise of the rest that you're seeing throughout the country
Speaker 1: where you're having entrepreneurship and the entrepreneurial spirit just rage
Speaker 1: in areas that you know are not historically areas where
Speaker 1: you would see companies being started at, including the Southeast
Speaker 1: and Midwest. Well, okay, so interesting, and I do wonder
Speaker 1: as you see, you know, some of these new companies
Speaker 1: that are ultimately being started. I mean, I know you
Speaker 1: guys are looking for things that are different when it
Speaker 1: comes to investing, uh in the VC world. Um, what
Speaker 1: in particular, I know we've talked with you about health
Speaker 1: and wellness. What more are you seeing on that front? Well,
Speaker 1: I think you mentioned earlier in your comments about the
Speaker 1: Ginger round, so we're very bolish on the mental health space.
Speaker 1: We have two investments in that space, one on the
Speaker 1: health system side and one on the outpatient side. When
Speaker 1: we just did in January actually in New York a
Speaker 1: company called Talkaiatry, which is really bringing you know, mental
Speaker 1: health services to the masses. Uh. You know, it's an
Speaker 1: industry that has historically been kind of anchored by a
Speaker 1: cash pay system and somewhat of a taboo. People didn't
Speaker 1: want their insurance companies to know they were going to seek,
Speaker 1: you know, someone to talk to. And I think that
Speaker 1: is falling away, and I think insurance companies now are engaging,
Speaker 1: and I think it's a prime time for that space.
Speaker 1: I think you're just going to continue to see massive growth. Yeah,
Speaker 1: when you look at your health and wellness. We've talked
Speaker 1: about some of its sun Basket. Um, you mentioned Crew, Diet,
Speaker 1: I d the Good Patch. Um. What is it that
Speaker 1: guide you in terms of, you know, where you want
Speaker 1: to commit money. What is it that you're looking for. Yeah,
Speaker 1: that's a that's a good question. So you know, Carol,
Speaker 1: we're a Native American owned adventure and so that's who
Speaker 1: we are, doesn't necessarily definance that's who we are are investing.
Speaker 1: Ethos is really anchored around this philosophy of harmony, which
Speaker 1: is certainly derived from our heritage, and harmony at his
Speaker 1: basic level really is increasing the connection with oneself to community, family,
Speaker 1: in nature, while providing a balance that's kind of mind,
Speaker 1: body and spirit. And so how do you take that
Speaker 1: and overlay it in the health and wellness space and
Speaker 1: look for companies that kind of meet or fulfill those criteria.
Speaker 1: So for us, it's really seeking out companies that reduce
Speaker 1: the the reliance on the traditional health care system, which
Speaker 1: and our view really is is geared towards treating symptoms.
Speaker 1: It doesn't really get to the root calls a lot
Speaker 1: of times of people's deficiencies or illnesses. And so as
Speaker 1: we look across the space, we look for companies that
Speaker 1: are doing just that. There's really kind of falls in
Speaker 1: that preventative care space. So self fulfillment, self help, uh,
Speaker 1: food is medicine. Food, lifestyle is medicine. All of those
Speaker 1: things kind of go in and uh into what we
Speaker 1: look for in that particular space. Hey, Kerin, I'm curious
Speaker 1: to um. You know, health wellness is certainly an area.
Speaker 1: Fintech is another area that you guys are in. What's
Speaker 1: your typical hold time for a company, and I'm just
Speaker 1: curious about exit strategies right now or if you're looking
Speaker 1: to do it in this market environment. Yeah. Well, for us,
Speaker 1: you know, we are Series A and Series B investors,
Speaker 1: so we're not the first check in the first check
Speaker 1: you've seed in precede rounds are typically eight till twelve
Speaker 1: your holds. Uh, you know that that's on average what
Speaker 1: we experienced for us. We're we're really investing in companies
Speaker 1: with an eye to to look to liquidation somewhere between
Speaker 1: three and five years. Uh. Sometimes it runs longer, sometimes
Speaker 1: it doesn't. I think what has emerged in the market, Uh,
Speaker 1: is just this massive amount of money in the in
Speaker 1: the later stage of DC or private equity world, which
Speaker 1: is has been butterst by you know, your corporate VC
Speaker 1: arms and also your sovereign wealth funds and so. Uh,
Speaker 1: you know, there is an attractive option for early investors
Speaker 1: actually sell secondary shares into larger, you know, later stage
Speaker 1: BC rounds. I think you know everyone's watching this back
Speaker 1: market to right, everyone's kind of watching the I P
Speaker 1: O market. Uh. It feels uh, you know that things
Speaker 1: are a little tighter, but you know, deals are still
Speaker 1: getting done for good companies, and I think at the
Speaker 1: end of the day, that's really the important point, right. Um.
Speaker 1: You know, these Denovo companies with five years of projections
Speaker 1: and everything happening in year five, uh, you know, probably
Speaker 1: are not going to be getting access to the market
Speaker 1: as easy as they did, you know, three or four
Speaker 1: months ago. But I do think for good companies that
Speaker 1: have real revenue, real cash flow and good positions in
Speaker 1: their respective markets, that market will remain open. So you're
Speaker 1: looking to do exits this year, next few months, I'm
Speaker 1: looking to do exits every year. If you're not going
Speaker 1: to give me anything more, are you. Well, if I
Speaker 1: could wave wave my magic wand and uh without getting
Speaker 1: in trouble, I I would certainly share. But but yes,
Speaker 1: I think that there's going to be an attractive market
Speaker 1: for for exits this year, and you know, even it'll
Speaker 1: be a little bit tighter. I think in the public
Speaker 1: market's an I P O and spack market especially, and
Speaker 1: not so much on the spack side, but probably on
Speaker 1: the pipe, you know, the pipe side of the equation,
Speaker 1: it's going to get a little tighter, more competitive. Why
Speaker 1: why do you say that on the pipe side, Well,
Speaker 1: you know, look, you've both read the stats about how
Speaker 1: many spacks have been formed, how many billions of dollars
Speaker 1: in the facts. Well, because of the mechanics of a spack,
Speaker 1: you really need a quality pipe to come in beside
Speaker 1: your spack investment. And so, uh, you know, it's one
Speaker 1: thing to go raise money as a blank check company.
Speaker 1: It's another thing to go to the market, to the
Speaker 1: you know, the real money managers of the world and say, here,
Speaker 1: evaluate these hundred SPACs, which one do you want to
Speaker 1: put your your money in? And and so it's just
Speaker 1: becoming a more competitive situation. Yeah. We we have actually
Speaker 1: a great story in the Bloomberg. It's among our most
Speaker 1: read some three hundred acts debuted in the first quarter
Speaker 1: of this year, creating an oversupply with at least three
Speaker 1: d and two that hadn't bought anything yet, and we're
Speaker 1: trading for less than the cash raised in their public offering.
Speaker 1: They're also facing an eventual deadline to liquidate if they
Speaker 1: don't come up with a deal. I mean it is
Speaker 1: there feels like a lot of money sloshing around looking
Speaker 1: for something. You got it, there is no go ahead please?
Speaker 1: Oh I was just gonna say on the spack side
Speaker 1: of the equation. I think there's there's sample people that
Speaker 1: would want to talk to you, and really any size company,
Speaker 1: which is probably not not the best scenario. But I
Speaker 1: think the ones that are real, the real companies with
Speaker 1: real size and real market positions, real revenue and real earnings,
Speaker 1: I think they'll they'll still continue to get it done.
Speaker 1: Is it driving up though some of the funding rounds
Speaker 1: because of this, because of all the money that's around, Well,
Speaker 1: it's interesting, we um, we haven't really experienced that. So
Speaker 1: in our experience, there's really a bifurcation in the market.
Speaker 1: There's in the spack market, in the IPO market, and
Speaker 1: then there the kind of later stage p adventure funding rounds,
Speaker 1: and there's a there's a considerable gap I think still
Speaker 1: between the valuations there. I think that is starting to close.
Speaker 1: So I think over time you'll see that tall more
Speaker 1: in line and uh and that anomaly will will no
Speaker 1: longer kind of exist. It's certainly not in the way
Speaker 1: it does now. You know when you talked about health
Speaker 1: and wellness, because I do feel like you know, Cameron,
Speaker 1: that there was and I know we've talked about this
Speaker 1: a little bit before. There really feels like there has
Speaker 1: been a gut change when it comes to health. It's
Speaker 1: not just about our physical well being, but it really
Speaker 1: is about our mental well being. Um and I feel
Speaker 1: like it was such a taboo subject has been for years,
Speaker 1: but it's you know, even as we've evolved, it still
Speaker 1: felt like nobody talked about it. This year we kind
Speaker 1: of ripped the band aid off. What are you seeing
Speaker 1: in terms of the investments that you've made. We're just
Speaker 1: the metrics at some of these companies that you're investing
Speaker 1: in where you're seeing it's really taking off. Yeah, I
Speaker 1: would say that particular space, especially on the telehealth so
Speaker 1: delivery psychiatric surface services via telehealth, it's just red hot.
Speaker 1: And so you know, you just see a lot of
Speaker 1: interest in the space. You know, we we invested in
Speaker 1: Talchiatry earlier this year, I believe in January. That's a
Speaker 1: New York based business. We've already onboarded thirty providers, which
Speaker 1: was you know our target for the year. Uh And
Speaker 1: we've already onboarded that many providers and that has led
Speaker 1: to an immense amount of interests in the VC community
Speaker 1: with that particular company. And we just printed the series
Speaker 1: day in January, and so, um, I think everyone is
Speaker 1: looking at this space trying to figure out how to
Speaker 1: play it, and I think, um, you can play it
Speaker 1: from the provider side, which you know is has a
Speaker 1: little bit more difficulty to scale because you're building a
Speaker 1: business on the back of physicians, or you can build
Speaker 1: it from a wellness coaching perspective, you know, delivering wellness
Speaker 1: coaching to corporate America or things of that nature with
Speaker 1: tender scale easier. But at the end of the day,
Speaker 1: the real shortage in the mental health industry is on
Speaker 1: the provider side. They're just they're just on enough psychiatrists.
Speaker 1: And so we've taken the position that we want to
Speaker 1: bet on that. Uh, that arbitrage interesting you say red
Speaker 1: hot in this whole area. Um, is it red hot
Speaker 1: to the point that we're going to have a lot
Speaker 1: of companies and then ultimately there'll be some major players
Speaker 1: or will it be kind of a fragmented market going forward? Well,
Speaker 1: I think it depends on how you define the space,
Speaker 1: because as I mentioned earlier, it can be very broad.
Speaker 1: What you consider me to be mental health focus. I
Speaker 1: think on the provider side, I mean, look, there's only
Speaker 1: so many psychiatrists in the U s. There's a shortage
Speaker 1: of psychiatrist, so there can't be too many companies because
Speaker 1: at the end of the day, there's just not enough
Speaker 1: folks to work at them. So, uh, you know, telehealth
Speaker 1: is enabling h the service of a limited number of
Speaker 1: psychiatrists to be delivered to the masses, and so that's
Speaker 1: where we've kind of placed our bets is saying, well, look,
Speaker 1: you know, we know that there's a shortage here, and yes,
Speaker 1: there are some problems with scaling this quickly, but you know,
Speaker 1: if you get it right, when you get it right,
Speaker 1: it's a very very valuable business because you control the
Speaker 1: most valuable asset, the physician. Yeah, no, it's a good point. Hey, listen,
Speaker 1: just got about forty five seconds here, um left when
Speaker 1: you look at this year, this upcoming year. I love
Speaker 1: talking to leaders investors just about what the visibility looks like,
Speaker 1: what it looks like from this vantage point. Again, just
Speaker 1: got about forty seconds. Well, I we continue to see
Speaker 1: great deal flow right, and I've been very encouraged about
Speaker 1: what we're seeing in the Southeastern United States in the Midwest.
Speaker 1: Were continue to see things on both coasts very mature companies,
Speaker 1: you know, north of a million dollars of a r R,
Speaker 1: which is unique, and we're continuing to see that as
Speaker 1: a general kind of thesis. Ten years ago, maybe fifteen
Speaker 1: percent of the companies that access the Series A had
Speaker 1: revenue now, so it's uh, yeah, it's just a it's
Speaker 1: a great environment. So I think we're a positioned very
Speaker 1: well and we're pretty excited about what what this year holds.
Speaker 1: All Right, We'll looking forward to talking to you. Excuse me,
Speaker 1: I got choked up there. Looking forward to checking in
Speaker 1: with you again to find out how those investments are
Speaker 1: playing out. Camra Newton, he's founder and chief executive officer
Speaker 1: at Relevance Ventures, joining us on the phone from Nashville, Tennessee.