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Armed with an educational background in computer science and biomedical informatics, Amit Garg switched to venture capital after a long, successful career in the corporate world, which included stints at companies like Google and Samsung.
And that’s just the way he never planned it.
That’s right, the almost-doctor didn’t intend to get into venture capital, and he certainly never planned on starting his own fund. He was drawn in by his innate need to build things, including relationships with people. He partnered up with his officemate from Norwest, Sanjay Rao, and the two started Tau Ventures in 2019, an AI-first, early-stage fund focused on healthcare, enterprise, and automation.
Amit tells us about his very targeted approach to investing, which is different from the “spray and pray” method we’ve seen from friends of the pod and other investors in general. We also get to hear first-hand accounts about the importance of building trust with your investing partners and your founders. Plus, Amit gives us his take on the state of healthcare and AI and why – despite all the challenges – he’s hopeful about where it’s headed.
Amit primarily invests $500K in Seed-stage healthcare, enterprise, and automation startups and occasionally in Series A, B, and C through Tau Ventures.
Highlights:
- Amit turned down a spot in medical school and pivoted his original ambition to become a doctor by first joining Google, pivoting to VC, and then becoming a digital health founder.
- He got into the corporate side of venture capital after business school, but he never had any interest in starting his own fund. That is until his friend and former officemate convinced him that an AI-first venture fund was a great idea in 2019.
- Amit explains that the “why” behind his investing does come from a place of self-interest – which is much different than selfish. He feels that when he pursues and realizes his own self-interests, he can help others to the same.
- Why a founder shut down a company in his portfolio and why Amit decided to back him again basically the next day.
- How he sees the interplay between angel and institutional investors and why they’re both necessary
- Amit’s frustration with healthcare and how it fuels his passion to make it better. Plus, he explains why he keeps his focus on the three legs of the healthcare tripod.
- (00:00) - FIFU 11 - Amit
- (02:30) - Amit’s journey into venture
- (06:08) - Why Amit likes venture capital as someone who wants to make the world better
- (13:01) - Memorable moments from the first conviction-driven investment: Iterative Health
- (19:18) - The machine gun vs. the shotgun style of investing
- (21:05) - Lessons from the worst investment
- (24:34) - Be careful who you partner with, optimize for good investors
- (28:22) - What the best investment with a $450M exit taught Amit
- (32:57) - Investing is about humans believing in humans
- (35:42) - The state of healthcare and AI today
- (46:39) - Venture vs. angels in the healthcare space
- (51:12) - Outcomes in the digital healthcare space are starting to behave like tradtional SAAS software outcomes
- (58:13) - Lighting round
- (01:01:51) - Takeaways
Creators & Guests
What is First Funders?
Learn from angel and seed investors bold enough to write the first check.
How do they decide which startups to invest in?
How do they gain conviction in founders and ideas?
How do they add value to their companies?
Shaherose Charania and Aamir Virani are operators turned investors. They chat with their friends investing in early-stage technology startups and learn about their strategies to fund the best founders and startup companies.
If you are an angel investor or seed investor, you'll hear how others operate.
If you are a startup entrepreneur, you'll hear how investors filter and decide on writing that first check.
FIFU 11 - Amit
===
Shaherose: [00:00:00] Welcome to the First Funders podcast.
Today we have Amit Garg here, who's the founding GP of Tau Ventures. He is a former founder. Also, he was a corporate venture capitalist and a venture capitalist at Norwest before starting his own fund. I wanted to start by sharing how we know each other. , and then you can share how you might remember when we first met, but my memory is we met through mutual friends.
And at the time you were at Norwest and then we would often run into each other at cultural South Asian events. And it was always nice to see a fellow person in tech who also loved Tabla as much as I did.
Amit: I, I think, first of all, very honored to be here. [00:01:00] Thanks for having me. Hi to everybody listening.
I think you said everything except for one, one detail, very important detail, ball of energy. That, that's what I remember when I met you, I was like, Oh my God, so much energy in a good way.
Shaherose: And
Amit: that has stayed true for, gosh, 12, 14 years that we have known each other now.
Shaherose: Persistent.
Amit: Yeah. You're, energy is infectious and I think it helps the ecosystem, helps your co investors, helps your founders. So carry on whatever you're doing, eating and drinking, carry on.
Shaherose: You're amazing. And. You say that, and I had the same experience of you, whenever you and I would meet, you were full of ambition and energy.
And every turn you took from NorWest to founder to CorpVC to starting your own fund, every time we would reconnect on those moments, you had the energy, but the clarity. And you had the thoughtfulness and the focus on all of your [00:02:00] decisions. And I really just admire that because there was a clear message from you in every turn of your career.
Amit: Wow. I'm hiring you as my marketing. That's very nice of you.
Shaherose: Yeah. And look, you've always been also very direct and thoughtful. And so whenever I've come to you asking questions about my journey, you've been very generous with your time. And so I'm excited to expose all your learnings today through the podcast.
Amit: Thank you. Very kind of you. Appreciate it.
Amit’s journey into venture
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Shaherose: So with that, I'd love for you to introduce yourself and share the journey of how you got into investing.
Amit: Well, so I guess adding to what you just opened, right? Shahi um, I joined venture after business school Norwest Ventures brought me on board and I'm very grateful that they did.
I was not considering venture at that point in time. They said, no, no, no, come over. we know that you want to start something, but come over to this side and spend a couple of years with us. And then you can go and do whatever you want.
Amit: [00:03:00] You'll get to see things from the other side of the equation.
And I do think that VCs and startups, you can be very adversarial. You can, Destroy value, you can hurt each other, but what's more exciting is when you work together, when you cooperate, when you build value together, are diverging interests, but there's an overlap and you can play in this overlap.
That's what I'm trying to do here also with what I do now, but at Norwest, I really got to understand that better. And a lot of the folks at Norwest are, we are very close to still my co founder for Tau, which is what I do today, is my office mate from Norwest. He and I met there. We kept each other sane or insane, depends on your perspective.
And I really credit Norwest for birthing Tau. It's really true.
Amit: in terms of the knowledge, the experience, the network, and just the co founder that I found was through NorWest. did leave NorWest to start a digital health company. It's a whole nother journey. And then I got recruited back into [00:04:00] VC, ex colleague of mine.
I was sitting down for a coffee and he said, Hey, you're hiring. So I got convinced and I'm very grateful I took that turn. That's how I ended up in corporate venture capital. To your point, I worked for a fund that today the name is Samsung Next Ventures. They were focused on early stage and the team was based here and the promise and the potential was that you could leverage.
The power of Samsung. It's a very, very large corporation that does a lot of things. And I'm happy to go into detail if you're curious. So I got to learn how to leverage a platform. And that was the key learning that I got from there is that what can you do for your founders to help them succeed?
And after spending a few years there. I had been having conversations with Sanjay, my ex colleague from Northwest, for quite a while, and we said, okay, we're ready now, let's go do this. We were in our late 30s had the courage or the stupidity, depends on your perspective, to go build our own fund.
And we are both [00:05:00] technical folks we coded we Can still code, and we saw the rumblings of AI. We saw how AI was really coming more and more infused into companies. And so this is 2019 at this point. So we started a, an AI First Fund. Before it became a buzzword that everybody knows. Before ChatGPT.
But we believed that AI would really be transformational and help companies do things faster, better. Cheaper to a degree that we had never imagined before. So I focus on digital health and I look at computer vision for detecting cancer or machine learning for drug discovery. And Sanjay does enterprise and he looks at things like how to protect your data in social media and how to detect fraud in payments and things like that.
The AI journey has been faster and bigger than we expected, even. We knew it was going to be big, but it became bigger quicker than we expected. So today we have 62 [00:06:00] companies in the portfolio. We're managing just about 90 We're doing one investment a month. AI first is still very much so .
Why Amit likes venture capital as someone who wants to make the world better
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Shaherose: Yeah. And I do want to dig into the AI First conversation and we'll, we'll move that into the end of the convo when we talk about what you're doing today. So I absolutely want to hear that. I'm sure the listeners do too.
But maybe if you can just comment quickly on, did you always know you wanted to start a fund? And, when you thought about starting a company and , going into corporate VC, like what were the sort of, Thoughts in those moments. And , was the end goal always, I want to be the GP of my own fund?
Amit: The answer to that is very, very easy. Nope nope and nope, nope, nope, and nope. I'm, I'm, I'm flattered that I seem to exude or project clarity. But the reality of it is very much the messiness of making decisions. What looks obvious in hindsight. is rarely the same way. It's obtuse and [00:07:00] obfuscated by the present of making that decision.
I didn't know what VC was in a real way until I was in business school. I mean, I, I'd been in Silicon Valley For many years before that, I, I went to college here. I went to grad school here. I worked for Google for many years. So the word venture capital was very much infused in my dictionary, but I didn't really know what it meant until I was a little bit further along, especially in business school.
I didn't think I would become a VC. I thought I would be a founder. And I think the larger principle I have here is that the way you instantiate , your dreams and your visions that may be different, but the dream and the vision that has stayed constant, like I knew I wanted to start something.
I knew I wanted to build something, but whether that was a startup or whether that was a fund or whether that was perhaps a product within a larger company. I think those are all [00:08:00] instantiations. materializations of the principles that are held. So
I didn't think about building a VC fund to be honest, until I had actually tasted the experience of being a VC and tasted the experience of being a founder of a startup. And then I was thinking, Oh, you know, what would be really interesting is to put these together. , I've worked helping other founders.
And, with maybe the 10 or 20 companies that I've worked most closely with, helping them succeed and being in some ways a coach and helping other players bring their A game and playing a better game this way. I've also actually played the game myself by being a founder, but what if I were to put these two together?
I get to run still something from scratch, just like a startup. But what I'm doing is helping other startups. So that idea has matured over time. It didn't happen from one day to the other and the form that it has taken today from Tau Ventures, we're five years into business. Now we have, as I mentioned, 62 companies.
We do invest in A's, B's, and C's also through a [00:09:00] separate opportunity fund, but our goal is to invest in seed of 80%, 75 percent of what we have done is seed. And it is at the stage where we're really going from zero to one. And that is really exciting. It's a privilege to be able to talk to lots of other folks who are incredible in their own ways.
and Be Able to be a part of their journey. How this takes form in the next five years. That may change how that takes form in the next 50 years, that will change. But I think the principles will stay the same.
Shaherose: Yeah. I love that clearly you are a builder and someone who has an internal mission and vision.
And so you're kind of alluding to it, but what is your why right now with being an investor? What is your purpose for being a VC?
Amit: I will not deny that it's to be successful absolutely. That is perhaps very self interested I don't call it selfish because selfish doesn't imply that I'm aligned necessarily.
Self interested implies that when I pursue my self interest, I can [00:10:00] also help other people pursue their self interest. So, absolutely I want to be successful. Absolutely I want to be financially successful. I'd be known for having made a difference, etc. But I don't think that's the only motivation.
I really don't think so. Honestly, if, life was only about making money, there's easier ways to do that. Many easier ways. I'm doing what I do now because I think I can do more. I can do more with my life. how is my lever? And if I put the lever, I can move the world. So I get to talk right now to hundreds of other founders. I'll give you my numbers. We look at 6, 000 deals per year. Obviously we can't follow up with every single one of them, but for the 12 companies that we invest per year, one about a month we get to be partners with them for a long time, for 10 plus years, maybe. We get to be part of this journey and things that are super exciting and their success is my success, but [00:11:00] I would like to think it's also success for the world.
I'm investing in things that do make the world, I would hope, better. Healthcare is inherently about reducing paperwork, helping with diagnostics, helping with treatment, helping provide people with a better quality of life. And I would like to say that you can make a lot of money doing that. I, want to make a lot of money, but.
You can also , do a lot of good. So , my whole view is that if you provide value, you get validation. And if I operate my companies with values, having a core to myself, having a mission and a vision, then when shit hits the fan, you will stick to it and you will keep people motivated because building a company is a roller coaster.
Absolutely. You are at the precipice of failure and the next day you are at the peak of expectations and you have to be able to navigate all of that and stay, even headed, keel headed. So that is my why, I guess, Shahi. [00:12:00] It's to do the biggest possible thing I can do with my life. If it's just about making money, I can do many other things.
Shaherose: Yeah, I hear you. People don't realize how hard it actually is to make , significant amount of money in venture. It's really, it comes from the carry and the carry comes from the success of your portfolio, which takes time to materialize. And so I think you're right. You could be probably an executive at a corporate job making a good amount of money.
But here you are building your fund, which I love.
Amit: Well, thank you. And Shaher, I could say the same about you. Like, why else would you be doing what you're doing? It's because I can't compare myself to a founder. Founders are taking a huge risk and. Putting day in and day out, but I try to do the same here.
I do put in all my energies, everything I got to make Tau successful and to help the founders to be back also successful and create that flywheel. I'm working harder now than I've ever worked in my life, other than when I was building my own startup. And I do look at Tau as a startup.
Shaherose: Absolutely.
Amit: it's [00:13:00] comparable basically.
Memorable moments from the first conviction-driven investment: Iterative Health
---
Shaherose: I can see that, I can feel that from you all the time. So let's rewind the clock. When you think back to the first time that you made a venture investment, I would love for you to share what it was and like, what were the lessons you had in that early days, right? It was like the beginning of your journey and there's always something memorable about writing that first check.
And so I'd love for you to share with the listeners, the journey and some of the lessons you got from that first investment.
Amit: The first investment here, I could look at it in many different ways. It could be the very first investment I was involved in, because when I started my venture career, I didn't deserve to be a decision maker.
I was working with other people who were far more experienced, and I was supporting them and I helped make that investment. I could think of the very first as being the investment that I made Of my own volition at the second step of my VC career. Or I get to think about the first investment I made through Tau when I'm running my own fund.
And if it's okay [00:14:00] with you, I would like to take that third one. Because that third first is when all the responsibility, or not all, but the major responsibility falls upon you. It's not only that you made the investment, but you also raised the money to make that investment. So it's a double sided responsibility.
It's the full extent, I think, of being a VC. I couldn't have done that in the first step or the second step even, but on this third step of my VC journey. The very first investment like that officially through Tau is a company called Iterative Health. It's a company that uses computer vision to detect colon cancer.
And for those of you listening in, if you know much about this issue, the polyps are hidden in the folds of your intestine. They're very small. You can't use, at least with today's technology, non invasive methods to detect it. You can't use an MRI to easily detect everything. You have to do a colonoscopy, and it's an invasive process.
And even the best doctors miss out because it's just too hard to see them, like, to the degree [00:15:00] of 25 percent misses. And I'm simplifying things a lot here, but these guys were able to train the algorithm with 20, 000 videos from 40 hospitals at the time, and able to get to 99 percent detection. And once again, I'm simplifying things a little bit here, but that is game changing.
If you're able to detect early, you can treat people early, and you can save their lives. And they had a bigger vision than that. They had not only about detecting, but also eventually helping with treatments, AI guided treatments. They did fulfill their promise, by the way. They have gone way beyond cancer now.
They're doing ulcerative colitis and Crohn's and all kinds of GI issues, and they're helping with treatment. But going back here to those days in 2019, September, when we took the bet, we were just one of two VCs that took the bet. And there were many VCs who had seen the deal. I didn't know that at the time.
And they, took a step back for various reasons, not bad reasons, because they wanted to see regulatory approval, they wanted to see [00:16:00] more commercial uptake, they wanted to see more proof points in general, but we were willing to take the bet despite very few institutionals coming in because we believed in it.
And I think that speaks to being a contrarian out of conviction, not to being a contrarian out of, Just the sake of being a contrarian, but first principles, we did the diligence. We talked to experts and we listened to their concerns and we validated. And we also said, okay, those concerns are not necessarily applicable because of X, Y, and Z, or if they are applicable, this is the level at which they will be applicable.
And it helped that we had seen other companies in this space before. And it also certainly helped our backgrounds. And I will put that as a credit to us at Tau that we invest in things that we understand. I've been focused at this intersection of tech and health and AI for my entire career. My master's is in biomedical informatics.
My undergrad was computer science with a minor in bio. I almost became a doctor. I got in, decided [00:17:00] not to go. So I'm investing in things that I've thought of, that I've worked at, , that have been within my mind for the entirety of my adult life, probably even before that. And when we saw iterative, we saw that it validated a lot of models that we had.
And we took the bet. So the biggest lesson for me was to not be afraid to take a risk. As long as you validated that risk the company has done phenomenal. It has raised about 200 million. It is more than a 10 X for me. So it is, game changing for me also as a fund.
And the founder who deserves the bulk of the credit here and the people he brought on board. He has been an incredible partner to us. To the point that he has introduced us to other founders that we have considered backing, introduced us to LPs that we have considered backing, that have backed us, I should say.
So I think that goes to show we did a lot for him, he did a lot for us, and that's what I really want when I'm working with a founder. It's a true partnership. You end up Working with these folks for the duration of [00:18:00] one company, but it turns out you end up working for them for the duration of your lives.
I'm hopefully going to stay in touch with so many of my founders till the end of my days.
Shaherose: Yeah. I love that. Thank you for that wonderful story. It's, been coming up for me a lot as well that, you know, there's different ways that people invest. Some people say, Hey, I didn't know anything about this.
I took a bet on the founder and it worked out or it didn't work out. And in other cases, people are bringing forth their, like you said, validated models in their mind, where it sounds to me like you had information advantage, insight advantage, just sort of like a built over time understanding of the space, such that But when you finally did see something after seeing many deals, you were able to like really hone in and say, this is the one.
Take that risk when others wouldn't because you had that information advantage, right? And I think that's so great to highlight that sometimes angel investors, seed investors think, well, how can I invest? A great way I think you're sharing is look at your own [00:19:00] life experience. Look at your own interests.
Where did you study? Where have you worked? And where can you piece together? Sort of a hypothesis or some sort of investment thesis that you believe is going to become true with technology or with some type of founder that comes together to create an outcome. And so
The machine gun vs. the shotgun style of investing
---
Amit: I appreciate that. I think you're alluding to this.
There's not a single one way of investing, but I'm a believer, very much so, that I will invest in things that I understand or that I can understand and where I can actually add value.
Shaherose: Yeah.
Amit: So I'm not taking the machine gun approach. Yeah. Like, let me just spray and pray and see if it works out and that whatever works out, I will add more money later.
I'm thinking that more of the shotgun approach where. I will look at a lot, but I'll zone in, in those things that really make sense.
Shaherose: Yeah. , and by the way, Spray and Pray is a strategy. It is. It is. Yeah. And I think it like, at least, as I've been spending time in the industry over the years, I kind [00:20:00] of was like, Oh, poo poo to that approach, but it's just an approach.
Right. And I think as an investor, whether you're doing your own money or you're investing at a fund, what you're referring to is your investment strategy and your investment thesis.
Amit: Indeed, and the other strategy, and there's others, there's not a single one, but the other strategy works well when you have a lot of capital and you can afford to take a lot of bets with a high degree of failure whereas versus for a seed fund, , typically, you want to take a more, maybe not concentrated necessarily, but a more focused approach.
That's what we do here. So we're taking 25 to 30 bets per fund and we, try to do as much as we can to move the needle. So it's not just giving capital, but actually doing something here, helping them get more customers. For instance, like we have a big network. If you count all of our channels, it's about 1.
6 million followers. We leverage that network. To help you get more payers, more providers, more pharma, more CIOs, more [00:21:00] cybersecurity experts, whatever you need, we will do that for our portfolio companies.
Shaherose: I love that.
Lessons from the worst investment
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Shaherose: Let's talk about less rosy experiences. Obviously investing has ups and downs and we've had everyone on the show share quote unquote, your worst investment or just a really standout, challenging moment that left you with some important lessons.
If you can reflect and think about one of those, we'd love to hear the story. What happened and what did you learn from it?
Amit: Oh man, there's so many. But one in particular that I'm thinking is Can I share a few? One that I'm thinking is very good founder had done companies before, raised an early round, tried the idea, tried another idea, tried another idea, and it wasn't sticking.
All the experiments that they were doing weren't working. So. They decided themselves to shut down the company and return the money. So that happens. , I've had that happen a couple of times in my career. [00:22:00] And that is tough because you do want the founders to try different things to see what works, but at what point do you go like, okay, no matter what the experiments you do.
It's just not working. Let's just shut it down and then perhaps start a completely different thing. Right. At what point do you make that decision? Throw in the towel or just continue trying, right? It's very tough I don't think there is an algorithm for that.
Shaherose: And whose decision is it? Is it the decision of the founder? Does the investor step in at this point? Like, how does that happen?
Amit: It depends. And the reason I'm saying it depends is because legally speaking, if the board has more ownership than the founders at that point, then the board has the purview that typically happens after series B.
Earlier than that, at a seed stage or even pre seed stage, legally speaking, the founder has control because of their higher ownership. But [00:23:00] I think practically speaking, it should be a decision of the founder. Informed by the board, the board has a fiduciary responsibility. If there is a board, if there isn't a board, then the investors have a fiduciary responsibility , to challenge in a good way.
Uh, The CEOs say like, look, I don't think this is working. How do we make this work? Is the answer that maybe we, close this chapter and then you go on and start a new one. I've had a founder, by the way, who shut down the company and. Literally the next day, start a new one. And my reaction was absolutely, let's go chat.
let's see if we can invest in you again and let me open up more doors for you. Right? So how it's done is very important, not just what it's done. And I do think that a founder is not an island. They are the most important person by far, but there are other folks around the table.
There's advisors, there's management, there's employees, there's investors in [00:24:00] general, a special subset of those investors are board members. So aside from the legal side, , the legal purview in a practical way, The founders should be listening to all these opinions to come up with the best decision.
I'm equating founder and CEO to be the same thing here. They are actually different. At the end of the day, it's actually the CEO's decision
Amit: because CEO is the person in charge. Almost all the time at an early stage, the CEO is a co founder, but not always.
Shaherose: Thank you for sharing that uh, before I move on, are there other challenging lessons you want to share?
Oh yeah,
Be careful who you partner with, optimize for good investors
---
Amit: sure. Sorry. Yes. I promise to share more. I've had a case study where since we were talking about founder and CEO, if founder brought in an external CEO and that always has a risk and a reward because it frees up the founder to focus on other things that they're really good at. But at the same time, the CEO may have other views on where they want to take the company.
And that's what happened here. The founder and the CEO eventually at one point started not seeing [00:25:00] eye to eye and the company fractured. And what could have been an incredible company ended up not being a great exit. So lesson I have here is Whoever you bring on board, especially people that you're bringing on board that will have a large influence on the company, be very thoughtful about it.
And obviously you can't predict everything that happens, you cannot, but you take the best decisions you have with the information that you have and you make those decisions very, very carefully. I would advocate. That is being the single most important decision you bring. Who do you make a CEO of a company?
Because the CEO, even if they are not the biggest shareholder, they will have the biggest influence in where you take the company.
Amit: Another one of our companies hired an external CEO. The founder is, Over the moon because of who they brought in. They're like, ah, I'm so happy I don't have to do this. I can focus on the tech, on the product.
And that has worked out really well. So it can go both ways. But we pay a lot of attention. If we see a founder talking about bringing in a [00:26:00] CEO, then we try to diligence their diligence on how they will make that decision. And I would advocate for the same principle : a CEO or founder should be diligencing their investors. And not everybody has the luxury of being able to choose their investors, I get that. But if you have a choice, a good investor is worth its weight in gold and bad investors stay away from it. I'm actually gonna advocate for that, like, if you have the choice of taking money from a bad investor, don't take it. Like, don't do it. if you think you're going to run out of money, get the money in a different way. Get a loan go to a strategic, get a grant have your clients give you advanced revenues, lower your burn Do layoffs if you must furlough if you must uh, change salary for equity, like whatever you need to, but don't sign up with an investor just because of the money.
Sign up with an investor because you believe they will be a good partner for you long term. It's really hard to hire someone. It's really even [00:27:00] harder to fire someone. Like how do you fire an investor? You got to get somebody else to buy them out.
Shaherose: Yeah. I mean, there's actually no way out really. And that buyout process is not a simple one.
Amit: It's messy. You got to get somebody else to buy them out.
Shaherose: It's probably even more complicated than getting a divorce, I would say.
Amit: Perhaps actually, yeah, I, I, I have this as a joke. I hope it doesn't land poorly, but a typical company at the seed stage, you're signing up with an investor for 10 years.
That is two X the average marriage in the U S. So,
Shaherose: yeah, and I coach founders on this all the time, right. And how do you know is always the question. And so when I'm telling founders, like, you'll know. in the first 30 minutes of talking to an investor, if there's someone you want to spend the rest of your like company life with, right.
And if there's any inkling of doubt, or there's something that you think, doesn't jive know that that'll happen 10 X more times, right. In the journey with, being [00:28:00] there investee. Right. And so like be very careful.
Amit: Absolutely. , and. Yellow flags are okay because you can work around them, but, walk in with your expectations, manage around it, but red flags walk away, right?
Red flags, , I think, integrity issues, for instance, walk away, not worth it.
Shaherose: Exactly, exactly, yeah.
What the best investment with a $450M exit taught Amit
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Shaherose: Okay. Let's switch gears. Let's talk about your best investment or investments. If you'd like to share a few where ideally you've realized an outcome. What was the deal? How did you find it? And what was the return and what did it look like?
Amit: In my previous life Invested in the seed of a company called Newtonomy.
They were doing self driving cars. The tech had come out of MIT. There were a couple of professors involved. They also had a fantastic COO who had come out of McKinsey. They were deploying this in Singapore, which is in many ways the best place in the world to do self driving cars. It's a small city, [00:29:00] country, city state.
It's very organized. If you work well with the government, you can actually get traction. So this is what the company was proposing to do and this is what they ended up doing. They raised it to Series A and then they got sold. And I believe the number is public.
Amit: 450 million. And this was a two year journey for me to go from the seed to a 450 million exit. The founders did well. some of the early folks are now LPs in Tau, so I have a very selfish goal. If I can get my companies to have great exits they will be successful.
It will accrue benefits to me too, in terms of reputation and then hard cash. And I think the reason this company succeeded to the degree it has, , is because they were also able to time it well. At that point in time there was this, perhaps, Not clear. Should you continue building by yourself, raise more money, or should you join another home and build it within that home?
And that's the [00:30:00] choice that Nutanomy ended up making. Let's actually sell. Uh, I do think in hindsight, it was the right timing the right decision. Could they have done it by raising more money and succeeding? Sure. I'm sure it would have been harder.
Amit: Eight years have gone by.
Amit: Since that decision, I think it shows that building it solo would have been very uphill battle. Could they have done it? Absolutely. They were, they are very good operators. But that joining something was the right choice. And I think that's a very important message/lesson for me and for founders in general is at what point do you go in order to succeed to continue building this further, I have to join hands with somebody else, right?
At what point do I exit? Founders almost by definition are people who have persistence, have grit. And selling a company is not a sign of giving up. It's a decision to be able to do something more perhaps with what you have built. It's a very [00:31:00] difficult decision. And once again, I do think that founders, with all the people that they have around the table, can make the best decisions. You talk to your investors, you talk to your advisors, you talk to obviously key members of management to come up with that decision. Investors do tend to see it more often because I have a portfolio right now of 62 companies.
I see M&As and IPOs more regularly than any founder will probably see. So there is an asymmetry of experience and knowledge there. And I think most founders will say, yeah, I did consult my investors. It is at the end of the day, the decision of the board to be able to sell. And usually the founder, the CEO who is the chairperson of the board is the single most important voice, but it is a collective decision of, perhaps a, focused group of people who should have the best interests of the company at heart.
Shaherose: Absolutely.
Shaherose: And so this sounds like a really wonderful exit for you. Was this [00:32:00] when you were at Norwest?
Amit: No, this was afterwards, a couple of lives after. So I was at Norwest and I did my own startup. And then after that, I joined another VC, Samsung Next Ventures. This was at Samsung Next Ventures.
Shaherose: love that. And what was the markup based on the valuation that you came in at?
Amit: I think I can share this at this point. Uh, It's been enough years that fund has gone and closed. So it was a 7X for us.
Shaherose: Very nice. That's amazing. And in that timeframe, like we've had a few other investors share a similar thing where it's, a seed investment.
And before we know it, two, three years later, the right time in the right place, a bigger company takes on this business, pays the value that it's truly worth and can take it to the next level. And so your discussion on whether this is the right or the wrong decision, it's so circumstantial. It's so dependent on the scenario and the market and the opportunity.
And I guess. Is there any advice you'd give to founders as they're thinking through something like this?
Investing is about humans believing in humans
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Amit: Well, make sure you have built a lot of [00:33:00] trust with the people who will be Giving you the advice. Yeah. Because if you're relying upon getting an advice from somebody and you don't have that trust built in, even if their advice is actually really good advice, you might not take it because you just don't have that trust built in.
So, I think the overall principle is true for all human relationships is make sure you build trust because when there are , difficult decisions, You won't have enough time to be able to debate and discuss and build that trust. Make sure you have that foundation already built in.
Shaherose: Oh, I love that.
I think it's easy to forget in the building or the investing that these are human relationships at the end of the day, because we think about all the technology we're making. But really the focus is on the people that are coming together, taking risks together, both sides of the table. And without trust, in such a rollercoaster experience, never will it be a smooth calm ride, [00:34:00] right?
We're all gunning for big outcomes and with that comes an unexpected journey. And so the, the reflection and the focus on trust, I think it's easily forgotten and only remembered in difficult moments. And so your advice is important because trust begins, right? The minute you select someone to work with, whether they're your co founder or your investor , and builds over time, only time really builds trust.
Amit: Trust and respect is usually a function of recurring engagements over time. Can you build that trust quickly? Yes. I mean, we are, people are people, right? Like, if you're at the same wavelength, perhaps very quickly you build trust, but other times it takes a little bit longer. And in the case of, let's say we were talking specifically about an M&As and with the board, You got to build trust and respect between the board, like all the board members and you as, the CEO founder there will be dissension, there will be disagreements if you have the trust and the respect, you will come up [00:35:00] with the best decisions.
In fact, this happens in any partnership, but I'll give an example of how. Sanjay and I have worked together and we have known each other well, and we're now co founders for five plus years. We don't agree on everything. Absolutely not. We just take it outside and then, just duke it out.
But no jokes aside, we I will think A, he will think B and we'll come up with C and turns out that C is a better decision, right? So that's, my hope is that. In some cases, everybody will think the same and that is the right decision. And in some cases, everybody will think differently and maybe the right decision is a subset of that.
That is the more common case where not everybody agrees.
The state of healthcare and AI today
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Shaherose: Agreed. I love that. Thank you. Let's talk about what you're up to today with Tau. And your focus on AI and healthcare. And I would say for myself, having done corporate incubation at Nike, we had a huge focus on the future of [00:36:00] wellness.
And that different from digital health, but it started to knock on the doors of healthcare, digital health, all the things that, I think you are investing in. And now that I'm at Cake Ventures, I have now made some investments in this space and I'm just starting to map it and I'm noticing a few things, but you've been in it a long time.
I'd love to hear like, what is exciting you about. The intersection of AI and healthcare. What are you investing in today? And like, what are your hypotheses about where this is all going?
Amit: Healthcare is in many ways, our single biggest white collar industry. It's about 19 percent of our GDP in the U.
S. We're talking about 4.3 trillion dollars, just to put a number here. They're talking about 10 million people in one shape or form that are involved in it. It is massive. Yet, we have Worse outcomes than developed countries. I'm comparing ourselves only to countries that are at the similar social and economical level as the [00:37:00] US. In fact, we spend 2x more than the average of the OECD, which is the benchmark I'm using here.
It's basically the collection of developed countries. And we have lower lifespan, and I would argue lower healthspan than many of those countries. Now, it's a very complex question because of our size and because of the diversity of folks that we have in the U S. But I think maybe the single biggest variable is because of our healthcare system is bloated.
It has so much bureaucracy, so much paperwork, so many conflicting interests. It's so misaligned and everybody who is in healthcare, I think, recognizes this, but everybody is trapped into this Frankenstein that we have created. And every single government that comes up tries to fix it and there are interests that are against those and we can't find a way forward, we end up patching it.
We end up [00:38:00] patching and patching and patching and patching. And we've done so many patches at this point that we've created truly a monster. And I mean, this is absolutely no disrespect to anybody who is in healthcare because most of those people are heroes. They try to make it work despite all the challenges.
But I think it's a nightmare that we have created in this country. Absolute nightmare.
I'm afraid for my own life because if I have to put myself to the healthcare system, I worry about very large bills, very, very large bills. I worry about how much help I will get. And I share this worry with everybody that I talk to who, who understands the healthcare system.
I've shared this worry with our founders and where I'm going with all of this, with this dire picture is I think our healthcare system very much needs help that policy and culture And our decisions as a society, that is the ultimate things that will change, that will move the needle.
But, after all this background, I do think you can create [00:39:00] companies that can help move the needle. You can apply technology to help make things more efficient. You can. Reduce the paperwork by 10x. You can improve the diagnostic by 10x. You can help with the treatment by 10x. You can make sure that access to healthcare , is more equitable.
And many of these are for profit entities. And if I look at my portfolio, I have iterative health that's helping with, using computer vision to detect cancer, help you with the treatment. I have Alafa Health that helps apply machine learning to detect fraud, waste, and abuse in healthcare payments.
to pick another example, Siftwell Analytics, which uses big data and increasingly machine learning to help payers, insurances, understand their populations and help provide better services for them. We have a company called Hank that is building communities of elderly to help them be more active and engaged and solve this big problem of loneliness that is a pandemic , in the [00:40:00] world and hopefully avoid a lot of polychronic conditions.
Hopefully avoid that heart attack or that stroke. And should you get those, we have a company called Rene that helps you manage your own healthcare so that you can navigate through the system in a more effective way. We have a company called Banjo Health that helps streamline the pre auth process and applies AI to this process.
So pre auth is basically when you go get a medical test, you need approvals, and there's a whole bunch of paperwork that goes behind the scenes, and if you can streamline that, you can make things much better for providers, payers, and for ultimately patients. We have a company called Signos that uses a continuous glucose monitor to help you lose weight.
When you eat, drink, exercise, or sleep, they'll help you identify what's going on in your body in real time, and for you to be able to take better decisions. I can go on and on. We have so many more other examples, but I get excited about all these case studies because they are founders who really [00:41:00] believe in what they're doing, and they're executing it well, and they're creating a tech mode.
They're applying AI in a meaningful way to drive to these results. Either you reduce costs, Or you make things more efficient, or you provide some kind of benefit, you know, in terms of features that you couldn't do as easily or at all. And I think AI as an underlying theme is very powerful. I actually believe you're just seeing, I'm very much of the school of thought that AI is right now at the second inning, maybe third inning.
AI has existed as a concept for 50 plus years. We've gone through a winter and a second winter, and now we're truly living through spring. And there is a summer ahead of us metaphorically and literally, where AI will become infused in so many different ways. If we do it responsibly, if we do it well, [00:42:00] we can actually kind of build the world that we want to live in.
There's a big risk reward here with AI. Absolutely.
Shaherose: Yeah. And what I'm gathering, and I'd love your perspective on this, is that, in healthcare, there is so much data and AI is a tool that really makes sense of data in many ways. And so whether you're applying it to preventative situations like you talked about, or maybe more holistic, because the body is such a complex system, right?
When we talk about holistic health, like we could finally actually collect the right data points to provide that. So we're getting at root cause and it goes back to prevention, I think. But that's sort of what I'm starting to see is like the real application here is because We need the data because the body is a complex system, but we also need the data to measure outcomes.
And when you think about the system, the system is an insurance based system and we need data to make better decisions to keep costs low. [00:43:00] Is that what, like in terms of like the sort of like high level opportunities, is that sort of how you're thinking about it? Or tell me what you're seeing here.
Amit: I think that's fair. I think everything you said is fair. think of healthcare as three buckets for us as an investment thesis we look a lot around oncology,
There's more data now than ever before, and there's a bigger understanding of cancer than ever before, and cancer is unfortunately touches almost all of us, right?
Whether or not us directly, but somebody we know a loved one, a friend somebody you've met. It is increasing in incidence for various reasons, but this is also the least worst time in history to have cancer. We can do so much with that data. So much more computational power is available to us.
We have come up with treatments for cancer that didn't even exist two or three years ago. So I have. I have a dream here that in my lifetime, cancer becomes a manageable chronic disease. I'm under no illusions that we may not be able to cure it or prevent it, maybe some types of cancer, [00:44:00] but if we can get to a place where cancer is not a death sentence, where it's a manageable chronic disease, that would be wonderful.
So one, one tribe, one leg of our tripod. The tripod being of our investment thesis is oncology. The second one is what I call chronic diseases for the lack of a better word. It's heart disease, it's stress, mental health overall, it is diabetes, obesity, it's all the diseases that affect all of us. So, worldwide at this point how do you empower the patient?
How do you do remote patient monitoring? How do you extract signals from noise? How do you identify that arrhythmia that went undiagnosed, which it is in two thirds of the cases, and then help the patient make the right choice and the right management route? And how do you detect Alzheimer's, perhaps even before there are symptoms, and then help you make life modifications?
So you Maybe even avoid the disease, or at least mitigate its impact, right? All of these are real examples of real companies. And then the third bucket for me is the one that is perhaps least obvious to [00:45:00] most people is what I call the back end of healthcare. It's all the things that go behind the scenes.
Processing your claims providing your benefits, managing your benefits. It's the paperwork, it's doing the pre auth, it is doing payments, it is providing the analytics for payers and providers to be able to manage their populations better. It is absolutely insane, amount of work Money and paperwork that we have in the U S Healthcare is actually the least efficient industry that we have by so many different metrics because we have so many people in it. And part of it is because we have to have it. Yes. There's a human component to healthcare that you should always have, but part of it is just because we have created monsters, Frankensteins.
We've created regulations to try to do the right thing, and there's many loopholes in these regulations, and people exploit those loopholes. It's unbelievable to me in this day and age that I have to fax my results. It's unbelievable to me in this day and age [00:46:00] that I have to get a CD with my results and I have to ask for it and I have to fill an eight page form and it takes 10 days for it to come to me.
It's unbelievable to me that in this day and age I, I need a primary care and I get an appointment four months out. It's like, it's because people are overworked and it's ironic. We have too few people in healthcare and at the same time, too many people in healthcare. We have created too many layers of administration and the actual providers get five minutes with you, right?
Like, so I think technology can help with a lot of this. It may not be able to solve everything, but it can help tremendously with all of this.
Venture vs. angels in the healthcare space
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Shaherose: So , for the listeners, right, whether they're venture investors in digital health or healthcare or even angels, obviously you had a long sort of history in the space, starting from what you were, when you were studying to some of the, even your startup was in the space and some of the places you've invested in over, over the years.
But if someone is truly [00:47:00] like, A patient in the system. Would you encourage them to think about being an investor in the space simply from that personal experience, or do you think leave the investing to the professionals like you?
Amit: Uh, The answer is complex and , I know it's a little bit of a cop out but investor is a big word.
There's many flavors of investors. There's angel investors, as you mentioned, and there's institutional investors like me, and you absolutely need both. So if you are thinking of being an investor, and you want to be an angel investor, my blessings! Go for it! If you are a founder and you become an angel investor, here's what happens.
You get to support other founders. You get to know more investors, more VCs. You get to expand your network. You get to learn more about other areas. You get to do something that's super exciting. And hopefully you make a lot of money in the process. It is higher risk if you're making an angel investment.
But the principle I would have for [00:48:00] anybody considering being an angel investor is either invest in people, well, Or areas, well, or both. Don't take random bets here and there just because you saw a shiny object. Unless you know that that's what you're doing and you're comfortable with that risk.
Now the second part, which you mentioned is about being an institutional investor. That is a career. It's not something you can do on the side while doing something else, and you should, if you're considering that. Make sure you think through that carefully because it's a very rewarding career. I have the privilege of being able to talk to hundreds of people.
Day in and day out, learn so much. I'm paid to learn. I'm a lifelong student and I get to work with these folks and it's a small number at least of them and I would like to hope that I make an impact that way. But there's the flip side. If you are running your own fund, you have to raise it and that is no joke.
It is an exercise in perseverance. It will take you a thousand meetings over a year, [00:49:00] typically to raise a fund, and you'll have to day in and day out. And if you're running your own fund, you'll have to do it for the rest of your career.
Shaherose: Right.
Amit: You'll have to build a team. You'll have to manage. There's so much paperwork here also accounting, finances, taxes, everything.
And it is taking a risk. You could fail, very easily fail. You have to believe in what you're doing. So that's one flavor of institutional investor, running your own thing. The other flavor is you join someone. That is what 95 percent of VCs end up doing. And if you are considering that as an option for you, once again, it depends on what stage of life you're at.
You could be fresh out of college. You could be early in your career, you could be coming out of a business school or a grad school, you could be mid level in your career, or you could be late in your career, and what you're looking for and what you might be getting from that experience will be different based on those choices.
So it's very hard for me to answer that question in general, but I've written some articles about this and if anybody wants to take a look, it's off [00:50:00] my LinkedIn. But I would argue that if have had no institutional VC experience and you want to get some and , have conviction that it's worth it, go for it.
Be prepared for the fact that after a few years, you may change your mind. And if that happens, understand what the consequences of that are. Maybe you decide, no, I just want to go back to being an operator or a founder, or maybe you decide, yeah, I love this VC stuff, but I want a different role within VC.
I want to work with portfolio. I want to be the CFO I perhaps get excited about some other aspect of venture capital, right? But I would say being an investor overall is. At the end of the day, us as human beings believing in other human beings, right?
It is, how we've gotten from caves and wheels made out of rock to sitting right now in front of this Zoom and recording this, right? It's because people believed in people, and they helped each other. And we built, that way we built tribes, and then we built cities, and then we [00:51:00] built countries and nations, and now we're building a global society.
It's how we build corporates and startups. It's how anything that's worth doing in human endeavor happens. It's people believing in people and working with people.
Outcomes in the digital healthcare space are starting to behave like tradtional SAAS software outcomes
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Shaherose: I love that. Let's go back to the conversation on investing in healthcare. One question I've had for you since we last caught up and you told me this focus that you're investing in founders who are really sort of like taking a swing at this Frankenstein.
The traditional VC is often invested in the software or SaaS or consumer enterprise space. And as I've stepped into venture capital, I've noticed more and more, tech founders even saying, I'm going to start something for digital health or healthcare. And it feels like a wave. It feels like a lot more people are pouring in and saying, I want to innovate in the space, but it's not the same industries as we've traditionally known as a VC.
And so how do you, and how do your [00:52:00] LPs think about outcomes, exits in healthcare, are they still to be determined? Do you believe that your portfolio strategy is not really aligned with the traditional power law, but rather different profiles of outcomes is the timeframe the same?
Like, how do you think about outcomes?
Amit: so a lot of people have this conception that healthcare is slower and harder. And I think there's some truth to it, but once again, healthcare is a large word both word and world. I'm not investing in med devices or therapeutics. There's a whole set of dynamics that go on there.
I'm investing in software. I'm okay if there's a little bit of hardware, a little bit of regulation, but I'm primarily a digital health investor. And digital health at this point operates very much like the rest of software. We have had seven exits. Four of them have been in healthcare. Digital health.
Right. So for anybody questioning is, Oh, it's never happens. It takes so long. I go like, ah, look at my data.
Shaherose: So tell me about that. Who's buying these companies and what does their return profile look like?
Amit: I've had fantastic exits , [00:53:00] with Digital Health. I had one company that got bought by larger company and that company went to IPO literally the month later.
And these numbers at this point are public. So the sale was. We had done just the first round and got sold for a hundred million. And then the IPO at the time was for 2. 1 billion. Then we had another company that we invested also at an earlier stage and got sold. And once again, these numbers are all public.
It got sold. There was some terms around the sale. So that there was an amount that got paid later. And the total amount ended up being 180 million. And then that company that acquired got acquired by CVS. And that was a 10. 3 billion acquisition, 10. 3 or 10. 6. I don't want to misquote myself. 10 billion plus.
Shaherose: so to debunk the myth, what was the timeframe on these?
Amit: I've had exits, these, both these exits were within two or three years of my investment.
Okay.
Shaherose: Um,
Amit: So now that is not typical by the way, because you want your companies to go to a series A, B [00:54:00] or C, but the myth that I'm debunking here is that there are exits that happen post seed, either because of the technology, because of the people, because of something like that happens.
That was not true necessarily a few years ago, but digital health now does operate much more like software.
Amit: I'll give you another example. I did a secondary in one of my companies. So we took shares and sold it back to the CTO of the company. And secondaries were unheard of in digital health a few years back, but now they happen.
People want to buy and sell. I bought out like 30 plus angels. I have increased my investment in some companies. So where I'm going with all of this is that digital health is fungible. It's not a monolith that will take 12 years for an IPO and M&As. There are areas of healthcare where that happens, but not all of healthcare behaves that way.
And right now, the markets are tough for everyone, for IPOs and M&As. Our economy is doing great, but we don't [00:55:00] have as many IPOs and M&As for a whole host of reasons. Healthcare included and life sciences, which I don't put the same as healthcare, like biotech, even more so. But having been working in Silicon Valley or studying or being here for 25 years at this point it's a cycle.
is at the moment for some reasons harder, but it will come back. It will perhaps escalate and then we'll go back down. It goes ups and downs and ups and downs for various reasons. And so I have full confidence, absolute full confidence for a very basic reason that all of us need healthcare.
But for even just aside that reason, I have full confidence that healthcare will continue being healthy.
Shaherose: Yeah, great. It's, and just to sort of help with listeners who, might want to invest in this space. There's like two words that come up for me that, that I'm now, just hearing a lot from founders, which is like, hey, we're about to get our FDA regulatory approval, and B, we just did a clinical trial.
For the listeners, when founders say that, right, it's not something that's a typical consumer enterprise software founder will say [00:56:00] we're undergoing da, da, da, but it's a hundred percent part of the journey. Talk to me about the role of both regulatory approval, what it does, why it matters and clinical trials.
Amit: Sure, sure. So, we don't invest in things that have a high regulatory barrier. And when we do, it's a very low level of regulation. It's like class 1 or 510k. Within six to nine months, you get the approval. In fact, if I look at our portfolio, we have three companies that have required an FDA approval.
It is very important. There is a universe of investors that focuses on those areas. And you'll find as a founder that if your company FDA approval, you'll have very few investors interested. Pre FDA and a lot more post FDA. It's usually an inflection point that happens around your Series A. But where you're going with your question, Shahi, is validation, right?
FDA is a validation. I look for validation. If you don't need an [00:57:00] FDA approval, great, but what kind of validation do you have? If you're selling into providers, show it to me that the providers are interested, show me your pipeline, show me the fact that you're getting a contract, maybe a pilot, maybe recurring revenues even, I mean, that's amazing.
Show me that you have KOLs, which is just a fancy word for saying, Key Opinion Leaders, aka people who will vouch for you, who are promoting you, right? If you're building a technology and you have the head of Rhinology at Stanford vouching for you, which by the way is a real example, he vouches and he's a co founder for a company called SoundHealth that clears up your sinuses within 10 minutes by personalizing sound and music
to your skull. And it's a non pharmaceutical way of treating allergies, right? If you have the head of rhinology at Stanford vouching for it and a bunch of other ones, I go like, yeah, this is real. So you can provide that validation with your scientific advisory board, with other QP leaders, with your advisors, and especially with your customers.[00:58:00]
If people are putting money on the line. Obviously reputations also, but money on the line that shows to me that there's a commercial interest that validates to me that, yes, this can succeed. It's not just a science project.
Lighting round
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Shaherose: Love it. Okay. Let's do a speed round of questions
how do you get better at investing besides putting in more reps?
Amit: The process behind the scenes is always be learning, always be reading
always be talking, always be sharing. So we write a lot, we share with people of our thinking, we learn in the process, we engage with other folks. I talk within my team, I listen to other opinions, I am willing to be corrected. My frameworks sometimes need tweaking. What I believed yesterday may actually need to be updated, right?
So learning is very important and unlearning is also very important. We are not particularly good as humans to do both. Sometimes people are pretty good at learning, but not unlearning, right? So I have to be sure of my convictions, but [00:59:00] also open to changing those convictions, right? And it's kind of like level five leadership.
You are able to believe that it will work, but you are also willing to know that it could fail. And teetering at that very, very fine line is how you also become not just a good executive, good operator, good founder, but also a good investor.
Shaherose: I love it. In 10 years you're on the Midas list. What got you there?
Amit: I did the right things. I found good founders, I helped them. I help them succeed and everything else follows from that.
Shaherose: Who is another first funder you admire?
Amit: So many. I mean, I worked very closely with Farzad Suleimani from 1984, Mark Ligar from InnoSpark, Scott Barkley from Insight. I admire a lot my previous bosses I'll think especially of Brendan Kim at Samsung Next.
I'll think of Sergio Monsalve at Norwest. I admire all of them for many different reasons. I learned from them. I learned from my co investors. I could go on and on. It's a very big list. [01:00:00]
Shaherose: What's a book or piece of media that's had a major impact on how you invest?
Amit: Oh, that's a tough one. I don't know if I can pick a single one, but Ben Horwitz wrote a great book, The Hard Things About Hard Things.
There's a single one that I can think of, maybe that one, probably competing with all the books that Reid Hoffman publishes. Reid Hoffman has been an incredible founder and investor, and he talks about so many different things, but one of his books that I really liked is the startup of you.
So how basically you have to manage your own life and career also using the same principles of a startup.
Shaherose: Love it. Zoom, phone, or in person meetings.
Amit: Both uh, I do a lot of Zooms. Admittedly, I do far more Zooms than in person but there are things you can't do over a Zoom as well or at all. So I do appreciate meeting folks in person I just can't do it all the time.
So the principles I apply is, If I'm focused on [01:01:00] information exchange, Zoom is more efficient for everyone. If I'm focused on building trust, relationship, then Zoom can do a good job, but it doesn't do all the job.
Shaherose: Agreed. I love that. Social media platform of choice.
Amit: LinkedIn.
because I can connect with people professionally.
I do use the other ones also, but LinkedIn for me is especially useful.
Shaherose: Thank you, Amit Garg, for joining us today. Where can people find you online?
Amit: As I mentioned, LinkedIn uh, but we are also in other platforms and the message I have here is any founder wishing to connect with us, send us something.
We always take a look. We may not be able to follow up with everyone. We get too many things, but if it is within focus for us, we'll certainly follow up.
Shaherose: It would be lucky to have you on their cap table. Thank you so much for your time today.
Amit: You're too kind. Thank you, Shahi.
Takeaways
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All right. Welcome back. Really enjoyed interviewing Amit [01:02:00] today. Thank you. Amit for joining us that I share a few things that I walked away with. There was plenty in that episode, it's always hard to be concise, , on things that are swirling from a really great conversation. , but when the, , I wanted to highlight that we've talked a lot about where the different strategies and investing and, Amit brought up, Hey, I only invest in things that I know I have experience with.
Shaherose: I was pre-med. I've mostly invested in digital health. I've been a digital health founder. And so I invest in primarily digital health. , and particularly AI as applied to digital health.
And that's an approach, right? That's a specialist approach. That's also one that says, Hey, Unless I know something about this space. I'm not going to invest. And we've had plenty of successful investors on the show who don't do that. They say I'm a generalist.
I invest in the founder and the founder's vision. I let the founder lead and tell us what's going on. We talked to to Amit. A different Amit. We talked to Amit Kumar from Accel, we [01:03:00] talked to Meca from First Round. Jenny from Everywhere Ventures, Charles from Precursor. Eric Ries. Most of our guests so far have been generalists who invest primarily on the founderand their own quick assessment of the space. Whereas here Amit starts with the specific space. And really doubles down and says, do I have a unique perspective as an investor? Given my previous experience? And then that just shows you that there are different ways to invest and people choose a strategy.
They stick to it. And over time they'll know whether or not their strategy was the right one. So keep that in mind as an investor, whether you want to be someone who is a generalist investing across multiple spaces. Not necessarily an expert in a particular space. Or if you want to be a specialist or an expert investor who invests in a limited number of spaces with your own set of experiences, insights and understanding. That you can bring when you're assessing the company. So for myself, I'm [01:04:00] currently in the camp of a generalist to some degree where. I tend to be investing in founders and in their vision. Where I will do a quick assessment of the space.
And in some cases I do have some previous experience in wellness, digital health, some consumer. Marketplaces. Those are all areas I have worked in or advised companies in. And so, I have some areas, but overall I lean as a generalist and I invest across a lot of different spaces.
And both strategies work, right?
Charles says, stick to whatever has already brought you success. So if one. If you do set up, if you do start with one particular strategy. My advice and Charles is to, has been don't change it. Because it can take nearly a decade for things to play out. Okay, second takeaway, which was really fun for me because investing in digital health is relatively new for me.
And I'm still building my understanding of the space, where are the opportunities and where's the activity? , and for me, I really loved [01:05:00] hearing from Amit that, you know, it's a myth that healthcare is quote unquote, slow. . Yes, of course.
The buyer is often slow. Whether it's payers or hospitals or providers. But businesses are being built and outcomes are happening and it's starting, starting to behave like software is what he said. You know, there are some cases where companies. Do reach an M&A in two to three years. And while that's not the ultimate goal, that kind of activity gives you a sense that value is being created and values being created in a way that other companies are willing to pay for.
He talked about secondaries happening. And he kind of reminded me that yeah, regulation has a role to play and I brought it up thinking, oh yeah, that's right. Regulation, digital health. But it's true. Not all digital health companies, even in the ones I've invested in. Are slowed down by regulation.
And so those types of companies can behave like software. And it's really, it's going to be really interesting to see how all this plays out. , so that was a really [01:06:00] great takeaway for me. Just giving me a better sense of the space as I continue to make investments in it. and, and a tangential, sort of reflection and takeaway for me was, you know, he had his, areas of, investment around oncology and chronic disease in the back end of healthcare, and , that is one way that you can slice and dice the space.
So for those of you listening, who may already be investing in healthcare, looking to invest in healthcare and you know, there's different parts of the elephant there's digital health, there's biotech, there's life sciences. There's a wellness that's sort of tangential to healthcare.
And even in digital health, there's pure software plays and then there is more diagnostic plays, hardware place. Anyway, the point is there's so many different parts that let's just say, touch health, that technology. could and would play a role in and a good amount of those can get so big that it makes sense for venture. And so, [01:07:00] as Amit talked about, he invests in things that he's had experience with. I think it's super important for us to all remember, we all have touched healthcare in some way.
And so what hypotheses do you have about opportunities and how big do you think they can get? It's the same question you apply to any space, but what's interesting about healthcare is we all have our own personal experience in it. And so, I find myself investing more naturally in things that are in the women's health space, because I go through that experience all the time. So, I think there's so many different ways to think about investing in healthcare. And I'd love to hear from those listening who might be investing in the space, how you look at the space, how you shape it up, how you look at opportunities in it. And the last takeaway was really a lesson for founders, Amit referenced, you know, I'm going to be in touch with these founders for the rest of my life. And we've talked about being in touch for a long time, but rest of my life, that's a. That's that can be very true.
Right. [01:08:00] Even if you start one company, you might start another and you might be in touch with the same investors. And so he was very. Passionate about being thoughtful about your investors that, bad investors just aren't worth the money. And so for him as he's building his fund, really as a former founder, it's important to him that he remains collaborative and not adversarial. And I think for founders to know that there are investors out there, I would say every one of them that I have selected for this show have the intent to be collaborative. Have the intent to create value and have the intent to show up as good people. And I think in all of the Twitter chatter,
Political or nonpolitical. BC's can show up with a loud voice and in a way that makes you not want to participate in the industry. And. With a deep sigh. I say. There are all types of investors with many different [01:09:00] intentions, some have financial only intentions, some have shallow intention, some have deep intention, some are values driven. All types of people make up the investment industry. And to be honest, one of my main motivations of doing this podcast was to highlight investors that I believe are here to drive change. Realize alpha. And show up as good people. And show up as good people to founders because the founders are the ones that are taking the risk, doing the hard work. Yes, we all work hard here too. But the real heroes to me and to the people that I interview on the show are the founders and you hear it in their voice.
And so. If you're a founder and you're listening, know that there are options. And there are plenty of top tier investors. That want to put money into your [01:10:00] company and who will show up as good humans. With a lot of value to add. And hopefully you get that sense from the folks we've interviewed. All right with that. we'd love to hear from you, if you have any feedback, any thoughts, we have more interviews coming. And we have ideas for how to bring you all together in person at some point. Stay tuned. Until then... I hope you're enjoying your summer! [01:11:00]