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The show featuring luminaries from across the world of private equity.
Carried Interest Ep. 1 - Healthcare Private Equity Dealmaking | Vladimir Andonov, Martis Capital
English (US)
00:00:03.880 — 00:01:01.590 · Sam Andersen
I'm Sam Andersen, the host of Carried Interest, the show featuring luminaries from across the world in private equity. Today's episode is a conversation with Vladimir Andonov, managing director at Martis Capital. Martis is a healthcare focused private equity firm with offices across the United States.
Since joining Martis at its inception in 2011. Vladimir has been instrumental in turning Martis into a leading middle market healthcare investor, with over $2.2 billion raised across four funds. Vladimir leads Martis' business development efforts and plays an active role with the firm's investor base.
He's been involved with numerous portfolio companies across healthcare services and technology, including Altruista Health, Banyan Finance, HeartFlow, and Care Hospice. Vladimir speaks five languages, holds an MBA from the University of Chicago's Booth School of Business, and is a CFA charter holder.
And now Vladimir Andonov. Vladimir. Thank you so much for coming. We're so grateful that you were willing to sit down and have this conversation and join us here on Carried Interest. Thanks.
00:01:01.710 — 00:01:03.590 · Vladimir Andonov
I'm happy to be here. Absolutely.
00:01:03.630 — 00:01:20.150 · Sam Andersen
Um, here on Carried Interest, we focus a lot on relationships that sit behind deals. The interpersonal mechanisms that help these deals come to pass. So I want to start by asking you, what is one deal in particular that you're proud of during your career?
00:01:21.590 — 00:01:40.070 · Vladimir Andonov
We can talk about a company we partner with back in 2016 called Centria. Yeah, they work with autism, autistic kids in the home. Very cool. It was very much a story of relationships to get to the finish line. And then obviously once we made the investment. So I can talk about some of those.
00:01:40.110 — 00:01:46.350 · Sam Andersen
Yeah, that'd be great. So Centria, when did you first meet the company and how did those relationships start?
00:01:46.390 — 00:01:49.550 · Vladimir Andonov
So we first met the company in 2015.
00:01:49.870 — 00:02:17.260 · Vladimir Andonov
Uh, as we'll probably speak more about today. We are very thematic as investors. And so that was one area we had spent time developing our point of view. How to work with kids that have autism. It's a spectrum, so it could be light or heavy. Yeah. And then during the phase of building conviction, at some point you start meeting companies.
This particular situation was one where we came across through a small local broker that was representing the founder.
00:02:17.300 — 00:02:19.420 · Sam Andersen
Got it. They were wanting to sell the business.
00:02:19.460 — 00:02:54.340 · Vladimir Andonov
They wanted to bring on a partner. Um, initially it started out as a control situation, so they thought they want to sell more than 50%. And as we'll go through the details, by the time we ended up making the investment, it was actually a minority deal for us because we often like situations where a founder has great conviction in their business and they'd like to actually stay on as a control investor.
And so we got to know the group over the course of about six months. We had a meeting, we had an initial sort of term sheet we put forth. We were competitive with a few other groups. Uh, what's interesting is that.
00:02:54.420 — 00:02:54.860 · Vladimir Andonov
Another.
00:02:54.860 — 00:03:40.140 · Vladimir Andonov
Party ended up getting closer to a transaction, but ultimately, which is not uncommon in our world. They did reiterate we're very disciplined investors and what we put forth, we stand behind in that group. Then the founder then said, look, I'd love to speak again to the Martis folks. And what was going on in the meantime is that first, his business was growing very rapidly, and he was running actually out of cash because he's getting paid by the government Medicaid many times, and he was actually hiring new people and therapists faster than he was getting paid.
So he actually extended a temporary loan to the business. We knew that would not be the investment. Yeah, but it really showed him already a partner that was willing to solve his problems.
00:03:40.180 — 00:03:42.180 · Sam Andersen
Yeah, and a commitment a commitment.
00:03:42.220 — 00:03:47.580 · Vladimir Andonov
Right. But all with the eye towards okay, we're going to make an actually an equity investment eventually.
00:03:48.260 — 00:03:48.860 · Vladimir Andonov
Also in the.
00:03:48.860 — 00:04:16.489 · Vladimir Andonov
Meantime, as he was growing many of these bootstrapped companies, he had not taken outside money. They run very much by the founder's sort of intuition at times. And he had at that time not hired a chief medical officer, which in health care is often very important. And so we used those months of getting to know him and to also be helpful on that side.
So we actually helped him recruit CMO, who was previously CMO with another portfolio company of ours and happened to be in the Detroit area.
00:04:16.530 — 00:04:17.810 · Sam Andersen
All before the investment.
00:04:17.810 — 00:04:18.930 · Vladimir Andonov
All before anything was.
00:04:18.930 — 00:04:34.210 · Vladimir Andonov
Inked. We would say, and you hear this today as well. Like we we think these relationships start well before our transaction gets done. And if you don't do a transaction, maybe it's somewhat of a sunk cost where you invest in the relationship. But I think we believe that's what it takes.
00:04:34.250 — 00:04:43.730 · Sam Andersen
Yeah. You said that you did it for six months. What is that relationship building process that. Obviously you're looking into legal items. You're looking into. You know, the
00:04:44.970 — 00:04:56.920 · Sam Andersen
the thesis and whether or not that's going to play out. But on the relationship front, how are you building that relationship? I mean, you mentioned you helped him recruit. But even on the interpersonal front, what are the types of activities that are occurring.
00:04:56.920 — 00:04:57.960 · Vladimir Andonov
In this particular.
00:04:57.960 — 00:06:11.429 · Vladimir Andonov
Situation? And it's a minority of situations we work in. But there was a broker, as I mentioned. So there's a little bit of a manicured interactions. You can only speak so often with the seller. Yeah. But I think we we were on site in Michigan a couple of times. We also had a former CEO, and we'll come back to that as well of one of our other portfolio companies that we had since exited, who was local.
And he was a highly regarded entrepreneur in his community. And this founder happened to actually know him. And I think part of it as sort of the sort of references that you can get without sort of formally asking for them. I think he got the chance to understand us better as a, as a partner. And also this founder was in his early mid 30s of Centria versus the previous.
The other individual, he was probably in his 50s. So a little bit of a mentor figure and the way we continue to evolve the relationship was very much one of. If we work together, this individual that we partner with in the back in the day could be very much a mentor to you, right? And I think when you're somebody that has had success on your own, but, you know, you've reached your limits and you're looking for a, for a partner, that that type of
00:06:12.470 — 00:06:22.950 · Vladimir Andonov
narrative is very appealing. Right? Because the capital is the capital and others have that as well. But it's like, how can you help me really grow the business, which is different from just the capital in the bank?
00:06:22.990 — 00:06:38.750 · Sam Andersen
Yeah. And it sounded like initially he approached it with the idea of, hey, I'm going to sell the business. I'm gonna exit at least partially. And something changed. So how did how did it go from an exit scenario for the founder to more of a let's build this together partnership?
00:06:39.230 — 00:07:30.700 · Vladimir Andonov
It's very much like you said it. It was I think there's this perception of the business is worth X today, and obviously the math can be run on that. But then the question is can I, together with a partner, triple that? And maybe I own a, you know, a percentage of that, but I'll be a bigger pie. And so we convinced him that it's actually better to own more of that second bite of the apple, as we call it, in our, in our world.
And I think we also made it clear that we are backing him. That's the other thing we'll talk about today. Like when we like a company, it's certainly the fundamentals are there, but it's also the management team that has gotten it to where it is today. We don't really bring an army of operators that kind of displaces the existing team.
We can augment it selectively in the right places. But he knew that he would be there kind of still, as a CEO post close versus not sure about his future. Right.
00:07:30.740 — 00:07:38.940 · Sam Andersen
Got it. You do the deal in 2016. How did the relationship evolve and change once you were operating together?
00:07:38.980 — 00:08:43.610 · Vladimir Andonov
I mean, there's some very objective sort of practical ways when you have the meetings every quarter, the board meetings. But it's really all that happens in between the meetings, right? Rolling up the sleeves and working alongside the founder. At the time when we made the investment, Centria was helping about 700 kids census.
By the time we exited three years later, it was about 3500, so it was very rapid growth. One of the bottlenecks in this space is just hiring these behavioral health technicians or therapists. There's not enough graduates every year coming out of the schools. And so what we did is we developed, um, sort of apprenticeship and sort of internship programs with some of these universities in, um, in Washington state, in Texas.
We had a few of those. So we basically would get a cohort of graduates that already knew they'd be working for our business. Um, we also helped pave the way with some insurance relationships, pay our relationships. So that was kind of state by state because the reimbursement regime was different. Initially, he was only in two states, his own state, and maybe one of the neighboring states.
00:08:43.650 — 00:08:56.770 · Sam Andersen
Got it. Is there anything you learned from your relationship with that, with that executive or that founder that you carry as you evaluate in diligence other deals or as you work with other operators for sure.
00:08:56.810 — 00:09:30.450 · Vladimir Andonov
I mean, in this situation, we ended up being minority, as I mentioned. And for us, that means, um, we have some type of structure to make sure we have some downside protection. So maybe one times liquidation prep. So that's something we've done elsewhere as well. And then on the governance front which is important, we have approval rights on budget and M&A leverage some of those things.
So that's been a bit of a playbook for us in other minority situations. And then from a relationship standpoint, this individual subsequent of that became an LP with us. So we love that sort of full circle. Let's make money together and let's then continue to work together.
00:09:30.490 — 00:09:42.890 · Sam Andersen
Is there anything in particular that you're looking for when you first meet somebody who's looking to sell a business? What are the traits that stand out to you as, hey, this is likely the type of person we want to be working with.
00:09:43.050 — 00:10:26.720 · Vladimir Andonov
Well, certainly there's a lot of character around somebody that's willing to listen and is coachable, open to feedback. I think oftentimes entrepreneurs, they have achieved a lot, but they may have a big ego. I don't think any of the ones we've partnered with has exhibited that profile, but a lot of people in the Valley here maybe carry that sort of DNA.
The other one is somebody that is very passionate about the business and obviously believes in it, which is pretty much expected. But it's good to see that they it's not somebody that has achieved and wants to punch out. It's somebody that wants to keep growing and bring on a partner to help them get to the next level.
That's something that's very consistent across all of our investments.
00:10:26.760 — 00:10:43.470 · Sam Andersen
Got it. And you don't have to name names, but has there ever been a founder where in hindsight or you've thought about, hey, that's something we should have noticed that later surfaced as a problem for us, something that we've learned to look for in our first conversations, because maybe something down, down the road went wrong.
00:10:43.830 — 00:11:42.780 · Vladimir Andonov
One example. Maybe it actually worked just fine, is that there was a situation that we invested in, out of our second fund in a company that had actually two co-CEOs, and they were both founders. And during our sort of mutual period of getting to know each other, they were assuring us, this will work out fine.
Close, close. We'll kind of figure out who's going to be CEO, who's going to be maybe president. We sure enough, close the deal. But then at the first board meeting, one of the conversations was you have to pick one or the other. We can't really we figured out we won't really be able to do this, uh, as we used to like, kind of on equal terms.
And so it was a very actually amicable and constructive decision where one of the two founders decided he wants to be more of a of a board member and still contribute to their business, but more on an advisory capacity as opposed to operating capacity. Obviously, that's a more of a rare situation, but I think it's just a little bit that pattern recognition that, you know, there's a founder that has built a great business but is receptive to bringing on a partner.
00:11:45.740 — 00:12:05.220 · Sam Andersen
When Martis first interacts with the founder and when you're first, I don't know. Pitching the fund is the right way to frame it, but you're first giving that overview. What is the the takeaway you want a founder to receive? Like what makes Martis different? What is a a company? What should they expect besides just money?
00:12:06.940 — 00:12:08.220 · Sam Andersen
Yeah we are.
00:12:08.980 — 00:12:56.450 · Vladimir Andonov
We are a thematic investor. Healthcare is a 20% of the economy, so you have to pick your spots. But even that is still high level. If I say post-acute care it could mean hospice, home health, other care into the home. So one is we really do a lot of work in advance to a meeting with a founder to understand their end market, not just why it's attractive, why we should be excited about partnering, but what are some of the headwinds and challenges that this founder may be facing so that when we do sit down, we don't ask them to explain an acronym that what it means in their industry, but we actually talk about how they're dealing with some of these issues, right?
Everybody has them, even though they may not be directly talking about those headwinds or just challenges of growth. And I think for us, the main takeaway wanted to have is that this is somebody I like to be around the table that I love to
00:12:57.610 — 00:13:19.690 · Vladimir Andonov
want just the knowledge, right. The domain expertise. And then two is that partnership mentality where alignment is absolutely key. And even though it's a quick meeting, maybe the first one, I think we want them to have the feeling of somebody that they can be open with, that can be that somebody that will really, um, look to them to lead the business, as I mentioned earlier, but still be supportive when they need the help.
00:13:22.690 — 00:13:39.520 · Sam Andersen
So obviously you are a specialty investor in healthcare, and that means there's not an infinite universe of deals for you to do. Can you talk to me a little bit about how do you find deals? How do you originate the ideas that eventually become Martis investments.
00:13:39.600 — 00:13:53.280 · Vladimir Andonov
First, I'd say there actually is plenty of opportunity, in part because healthcare is so fragmented and local and literally we've invested in a lot of these end markets where there's thousands of small mom and pop providers on the services side in technology, still fragmented, but less.
00:13:54.320 — 00:15:19.040 · Vladimir Andonov
Our motion is similar across regardless which end market is which is to our prior conversation. So very thematic. So it starts with us every few months, thinking through new areas where we haven't spent time in the past. Let's just say one of the areas is pharma services. We like that. We've done it in the past.
We own today a company that does clinical trials for the big pharma companies that want to bring a drug to market. So we have a portfolio. But like what else. Right. And so and this is usually obviously pre FDA approval. There's a great opportunity once the drug has been approved post FDA how to accelerate commercialization.
So there's various vendors and other marketing agencies strategic communication that enable a drug to accelerate its revenue. And so as we discern that as an opportunity, we we do invest desktop research. We have some conversations with industry, you know, executives. But the main next note is trying to get in front of operators, not necessarily because we will back them or they're looking for a partner, but because they have the they experience the gray hair to talk about their industry.
And that's better than doing any research on your own firsthand. It's just asking questions and getting it from an operator. These individuals often then work with us in the capacity of a river guide, or somebody that helps us with diligence. They may come to management meetings all the way to at times they may join the board.
00:15:19.120 — 00:15:27.520 · Sam Andersen
So even if you're not investing in the company, getting these operators as advisors to future investments or existing portfolio companies.
00:15:27.960 — 00:15:35.349 · Vladimir Andonov
They will in most cases be advisors to us post close. If there's a role, maybe they will they will become a board member, or
00:15:36.390 — 00:16:33.380 · Vladimir Andonov
they may even become. There's one instance where we had an individual we knew would be a future CEO of ours, right? But the idea is that it's very people related. You can only do so much, obviously, on your own sort of research while we do. Why we climb the curve on getting conviction about the opportunity.
We also want to have a better sense for how many targets are there in this end market. Right? It could be, to your point, maybe there's another market. There's only ten, right? There are some that are very small, but by and large it's a good hunting group. But we want to verify that hypothesis. So we may, you know, do some internet search or some database that we have just okay.
There's 500 companies generally speaking, within this geography, within this end market. And then the question is how many of those at what point do we want to maybe start outreach towards all the while while on the BD side, and then the leadership of the firm? As we talk to brokers and bankers, we educate them on some of our new interests.
And so we start seeing flow of opportunities.
00:16:33.420 — 00:16:43.660 · Sam Andersen
Have you seen any changes in the way private equity funds approach healthcare over the last ten years? Or are generalist funds doing things differently than they would have a decade ago?
00:16:44.100 — 00:17:02.420 · Vladimir Andonov
I think the most notable one is just hiring teams that do that. I think there's very few people that just do one healthcare deal because it would be very, I think, risky. And I think that's the point about self-selection, because people that do healthcare deals, they probably have done at least one. If they do one, maybe they won't do a second one if they're
00:17:03.460 — 00:17:39.290 · Vladimir Andonov
if it doesn't go well. But there's very, you know, well, well-regarded private equity firms that are sort of north of where we are in terms of size, where they just have a team focused on health care for people that are more middle, low and middle market like us. I think there's fewer of those that are just doing 1 or 2 healthcare deals, right.
I do think to answer your question, the specialization has permeated private equity, right? Yeah. So the smaller firms have become either internally specialists or the bigger firms have now 2 or 3 silos. This is my healthcare team. This is my industrials team.
00:17:39.330 — 00:17:51.090 · Sam Andersen
And that specialty exists within the team. Yes. Yeah. Speaking about healthcare, what trends are you seeing in the market? What are you seeing? Take hold. That is interesting to you. Where are you spending time?
00:17:51.330 — 00:19:16.600 · Vladimir Andonov
Maybe a couple of things to highlight. I mean, not exhaustive, but we are. Two thirds of what we do would be in healthcare services, which is a massive space. Of course, it encapsulates post-acute care. So home health, hospice. It encapsulates pharma services and then also a lot of the physician services, but also outsourced services.
Like we would not invest in a medical device company, but we like contract manufacturing like specialty components or molding for a medical device. And so one example today would be on the again, I mentioned on the pharma commercialization site, helping a company post a FDA approval to scale. And there's certain issues within that.
Even so, one is strategic market communication. There's also market access how to basically penetrate a certain type of physicians that will be prescribing that drug. So there's a lot of opportunity. And what's driving that is just that there's a big pipeline of new drugs that is coming to market. And there's a big patent cliff in the next three years, 3 to 5 years, and there's about a couple hundred billion of patents that are coming off.
So the big pharma companies are looking for. Yeah, they have a need to refill the pipeline. So that's one area and then another one just to kind of balance the services. That is we we always like HealthKit. And I think if anything healthcare is a is an industry is well behind any other industry in terms of technology adoption, regrettably, which presents opportunities for groups like Martis.
00:19:16.640 — 00:19:17.280 · Sam Andersen
Yeah.
00:19:17.840 — 00:19:55.590 · Vladimir Andonov
I'd say one area today we're spending time is um, is in the revenue cycle management, as I said, as I realize it's it's fairly popular. But I think the way we would approach it is I'd say we like a company that has today some technology, but it's at its core still with people driven business, so that when we come in we can help develop further the technology and also improve the margins where we move it less from a people independent business to more technology led.
If we were to look for a perfect asset today, it would be probably just out of reach from a valuation standpoint. Yeah, but that's an example.
00:19:55.630 — 00:19:58.710 · Sam Andersen
So technology becomes a lever for value creation.
00:19:58.750 — 00:20:05.910 · Vladimir Andonov
Yeah that's right. And then we haven't talked about AI. Yeah we may eventually. But that's an area that I think has some real potential.
00:20:05.950 — 00:20:34.550 · Sam Andersen
It's my next question. So there are a few trends in healthcare, I think, or maybe even more broadly that apply to healthcare AI. I think there are questions about regulatory shifts, and I think just general questions around access to care for individuals across the income spectrum, how how they gain access to care in today's environment.
What are you seeing in terms of those macro trends and how they're influencing the market? We can start with AI.
00:20:34.830 — 00:20:42.109 · Vladimir Andonov
Yeah. One at a time. Yeah. AI because we're not an early stage investor. We don't view it as we are investing in one AI
00:20:43.150 — 00:21:03.030 · Vladimir Andonov
technology. That by itself, that's the product. That's the business for us. It's a company that's been around for a while. But AI may accelerate the growth or improve the margins. Yeah. And it's always good to give an example. Um, one business we invested many years ago is called HeartFlow. We're still actually with the investment the company listed three months ago.
So now it's.
00:21:03.030 — 00:21:04.110 · Sam Andersen
Congratulations.
00:21:04.150 — 00:23:34.360 · Vladimir Andonov
And it's one where in the early days, there was no AI. And what the company does is, um, if you have any concern about cardiovascular disease, it's good to take a look. It's not pleasant to get a wire run up your artery, and it's very costly. You have to spend the night also in the in the outpatient setting. HeartFlow came out of Stanford almost 20 years ago as a technology.
But what it does is you go for a CT image so that we get from a third party, and then the HeartFlow technology is basically an algorithm that's run on top of the CT to see how the blood flow is going through the heart. Initially done manually through radiologists to report what they see. As you can imagine, this is a perfect place for AI, right?
It can learn on its previous sort of instances to date. HeartFlow has probably done well over half a million cases. So the AI is getting better and better. And so it basically does a few things. One is it speeds up the turnaround time. And we started again in 2011. It was about 18 hours. You don't want to wait for that long.
Now it's about 45 minutes or so to get the results back. So nothing like it used to be. Second for a business and ultimately for an investor like us, for HeartFlow itself, the margins really improved, right? You need fewer people and you're obviously able to do more and more, more weeds. so that's good. And then I do think ultimately, probably eventually the accuracy is better.
Right. Only for some very specific cases. We may still have a human read it, but so that's a very concrete example where technology that started 15 plus years ago did not have the AI. So the use case, but it really is benefiting from it. And I think when the company went public and its kind of prospectus in the roadshow, that was something that really resonated with investors because it wasn't just a hypothetical we're going to probably leverage.
I know you can see it today. And actually, they won in 2023. The award from the New England Journal of Medicine for the most widely adopted medical technology that has AI interest. So it's real. Um, other cases could be, I think, today where it's just enabling large quantities of data to be just synthesized and to drive some intelligent conclusions and recommendations for the clinician.
I think maybe the next stage in a few years is actually maybe acting or having the AI do something directly to the patient, because it's just a higher stakes environment. But for us, we love those situations where it will be a business that is just again, accelerating because of AI. Yeah. So that's that trend.
I think on the I think as reimbursement or.
00:23:34.560 — 00:23:40.520 · Sam Andersen
Regulatory kind of I mean, government is becoming a bigger and bigger part of the health care market here.
00:23:40.560 — 00:24:24.870 · Vladimir Andonov
Yeah for sure. I mean, regardless of the last 11 months, which have been a lot of news, I think no matter who's at the leadership of the country, I think it's cyclical, right. And there's there's evolutions in healthcare. I think we are staying. We have staying power as an investor. We've been doing this for for many years now.
But I think for us it's just making sure we have the right connectivity with some of these decision makers. For a few years back in 20 1819, we were a member of a of an advisory board that the Department of Health and Human Services put together, where they have five private equity members, five from industry and five from venture, to help really bridge the gap between how can HHS really help companies?
00:24:27.510 — 00:25:33.660 · Vladimir Andonov
Overcome hurdles around regulatory. And there was some examples we can talk about, but we have plugged in very closely into those circles. And so I think for us, we're trying to just see through the noise and the smoke because we think there's some very long term trends. One example is value based care, which everybody hopefully has heard about.
Unfortunately, it's not here yet, right. It's slowly coming, but we know that the current system is unsustainable, where you just pay for service as it's delivered. You need to have some outcomes orientation. And the question then is for somebody like us, how do we what are the best opportunities within that.
Right. And we have an investment in a company that does exactly that. They work with physicians that, um, mostly, um, provide primary care to 65 plus population today. Fee for service. But we're helping them transition to some form of risk. And I think you really are able to select the providers that are.
Have that mindset of, okay, I want to be I'll make more money eventually because they actually stand to gain more. And I also do a better job for the patient because I can do a more holistic treatment.
00:25:36.180 — 00:26:02.980 · Sam Andersen
You've been with Martis since its inception, since the beginning. You as an individual have risen through the ranks. Um, that means you've seen so many cycles, whether it was, you know, zero interest rate policy, kind of the boom and bust of the late teens, Covid, etc.. What has changed in the industry?
What have you learned across those different moments in private equity?
00:26:04.860 — 00:26:06.660 · Vladimir Andonov
Uh, less so healthcare, but just.
00:26:06.700 — 00:26:08.100 · Sam Andersen
Yeah, just generally.
00:26:08.900 — 00:28:56.320 · Vladimir Andonov
Well the, the the teens or even through Covid to 21, I think it was it was a period of incredible growth for, I guess, all of the US, not just healthcare. So private equity benefited from that. I think to quote a wise man, when the tides is up, you know the tide is rising. All boats will do well, right? I'm paraphrasing a little bit.
Yeah. I think what you're seeing now is much more back to basics. And business building is it's meant to be, um, operational aspects, um, technology systems. I think when you bought something for, let's say, 8 or 9 times and you're able, you knew you're going to sell it for like 12 or 13 times, they need to do some of that work was was there but much less of a of acute sort of requirement right now.
If you don't do that, you're certainly not going to do well as an investor. And I think LPs are much more perceptive about that. And I think we, as a result of that, have been proactive about building our own value creation team because we work very closely with the companies. But I think the beauty of healthcare is that no matter what happens, it's there.
It's through cycles. It's resilient. We usually say GDP plus sort of growth profile with pockets of much higher growth profile. But as a as an end market itself, it's just it feels pretty stable. There's more noise coming a little bit out of D.C. and just in general. And so even for us, we have to just work through that.
For LPs, I think they look for somebody that can be a steady hand and help them, but it also means, um, healthcare is just a bit more scrutinized. I think in general, like there's there's been a bit more press around, some things that may have now gone as well, especially when there's physician relationships involved, and there's plenty in healthcare, which is not in those areas.
But we as a community on the private equity side in healthcare are trying to build our narrative where we say, look, we're doing good work. Um, we're on the right side of healthcare. We are improving access outcomes, lowering costs. And we on the market side, we actually published once a year report that captures all those kind of metrics, if you will.
And it's very much a matter of fact. We kind of asked the companies, can you tell us how you improved, you know, participation in clinical trials and who was in those trials? Was it all white people, or did you have, you know, underrepresented patient population, which is not a objective that's just altruistic.
It's actually an objective by the FDA because the clinical trial has to be representative of it. Yeah. So I think it's just become everything is much more specialized. And I wasn't investing in the 80s, but back then were barbarians at the gate. Right. It was a very different private equity environment.
Leverage was all it took to kind of have a good. Now it's very much about operational involvement with the companies, and that's kind of what we're selling really as a as an investor at Martis. Right. We don't run the companies, but we absolutely are there every step of the way.
00:28:56.360 — 00:29:13.590 · Sam Andersen
And you mentioned LPs, obviously, you know, the the word of the day is liquidity from a lot of investors that I've worked with. How has that conversation with LPs evolved throughout your time at Martis and in different phases of the economic cycle.
00:29:14.470 — 00:29:45.910 · Vladimir Andonov
It's like you said today, it's on most people's mind. I think we had a little bit the opposite in 2019, 2020, where we exited a good number of our companies at those valuations, had a great couple of years, and we joked with a few old people like, hey, I don't know what to do with that money now. Reinvestment risk.
Um, but what was happening at the time actually, was that a lot of GP's were investing in the capital very quickly, so they were back in market within 2 to 3 years. We had that as well. Happened to us between fund three and fund four. And so.
00:29:46.230 — 00:29:47.150 · Vladimir Andonov
There was a little bit of a.
00:29:47.150 — 00:30:34.220 · Vladimir Andonov
Logjam between 2021 and 2023, where there was just a lot of GPS in the market. There was liquidity, but it was just a lot of people in the market. I think since then, plenty of people in market, but I think allocators are just trying to manage, um, their sort of budgets a bit more. Right, because of liquidity, because, you know, public markets, how they've moved the denominator effect, some of those things.
But I do think at the end it also matters a little bit. You have sort of more institutional investors, um, like pension funds, insurance companies fund the funds and then they're more programmatic. Yeah, they kind of know we're deploying every year 50 or 100 million plus in a private. And then there's families there a little bit more.
They have more leeway in what they do. And maybe their liquidity needs are different. Right.
00:30:34.460 — 00:31:00.380 · Sam Andersen
Um, you have been at the same firm for now, 14 years. What advice would you have to somebody who's just starting their career? They're joining either an established fund or a new fund at the entry level investor type ranks and have ambitions of becoming a managing director or at least growing in this field.
What tips would you give them?
00:31:00.980 — 00:31:30.090 · Vladimir Andonov
Some are very practical, I think. Others are hopefully principles. We all aspire and practice every day. But I would say one just caveats that everything else will kind of follow is try to find a place that's growing, right. It's the obvious point to say, I think it was the case, I think with the family office.
Obviously with Martis, it was by definition the case starting from from zero. But I think that's where a growth can happen very rapidly. And also from a personal standpoint.
00:31:30.330 — 00:31:31.090 · Vladimir Andonov
When you have a team.
00:31:31.090 — 00:33:06.239 · Vladimir Andonov
Of five, everybody's running around doing pretty much everything until you need to hire the next level, and then you have the ability to accelerate your own trajectories. But on the practical side, I have like four principles. I love to kind of mind myself. So one is be curious. I mean, you said this a couple of days ago when we chatted naturally that way.
And so I think just internally asking questions sometimes I hope my kids feel that way as well. One is better than the other, but just asking questions. I think in this day and age, the younger generation with social media maybe a little bit more self-contained, but the drive to ask question the other one is loneliness.
There's no shortcuts. So hard work, right? You really have to put in the hours. Banking is not a requirement by any means, but I think just working really hard in your 20s can pay off over time just because you have the discipline. You, you, you know what it takes to kind of get the work done. The third one I think is most relevant for this conversation today is build relationships.
Right. And they take time as we know. Right. It's not overnight. And you always you shouldn't think about what it's in. What's in it for me? That's my principle. It's more about how can I be helpful to this individual. And there's some unwritten rule that hopefully, eventually something comes back that benefits you.
And the last one, I think is just, um, tied to the previous point, but just have a long term orientation. I think it's easy. And I talked to a lot of young people these days. Even earlier this morning at 530, I did, which asked me for career advice. Yeah. They're about to have an interview and say, how can I help me?
What should I do? But I think
00:33:07.360 — 00:33:41.680 · Vladimir Andonov
the current job for somebody right out of college. They shouldn't sweat too much about the job. I think they should hopefully think about it as a stepping stone to the next job and what skills they can develop, maybe relationships as well. Like I said, but I always when I talk to business school students that are a little further along in their career, I say, look, I know you have maybe some debts and high stakes game, but don't worry.
Most of my peers out of business school like myself, they've changed 2 to 3 jobs. It's very common. And so just make sure whatever it is that you're learning and you're growing and that you're logical about why you're doing it right.
00:33:41.720 — 00:33:57.800 · Sam Andersen
Well, Vladimir, thank you so much for spending the time with us for the conversation. I really enjoyed it. If anybody out there wants more conversations like this, please follow Carried Interest on YouTube, Spotify, Apple Podcasts wherever you get your podcasts, and make sure you follow Affinity on LinkedIn.