Flare Capital Partners, a Boston-based venture capital firm investing in healthcare technology, has raised $255 million for its second fund.
Co-founder and general partner Michael Greeley says his focus had been to keep the new fund in the mid-sized range, large enough to make follow-on investments into companies’ later rounds, but not too large.
“As early-stage investors, we want to have a sense of being on the margin and being constrained” about investment decisions, Greeley tells Xconomy. “We are big adherents to this more mid-sized venture fund.”
Flare Capital closed its inaugural fund in April 2015 with $200 million and has made investments into 17 companies from that fund, including Aetion, Bright Health, Circulation, HealthVerity, Iora Health, Somatus, and VisitPay.
The $200 million mark was the initial goal for the second fund too, but with the maturing of the healthcare technology sector, there was far more interest in the fund, Greeley says. The firm boosted the hard cap to $250 million, then went higher still to accommodate a few strategic investors, he says.
Greeley sees a few changes in digital health from when Flare raised its first fund.
First of all, there’s much more investor interest in the sector. Investors poured $2.1 billion into digital health companies in 2013 and $4.1 billion in 2014; last year, there was $8.1 billion invested in digital health companies, according to a digital health funding report from venture firm Rock Health. Second, some of the healthtech companies that had promised to deliver lower healthcare costs and better outcomes have a longer track record behind them, Greeley says. Companies like Livongo Health, which was founded in 2008 and develops devices and software to help patients manage chronic conditions, are heading to the public markets.
“There’s an increasing confidence with investors that with the system at large that these entrepreneurs are building products and services that actually matter,” Greeley says. “There’s a more accepted sense that there’s an inevitability to this sector.”
Greeley says he expects the firm to close its first investment out of the new fund later this week.
