Octopus Ventures’ investment strategy includes ‘taboo’ healthcare startups

Subjects once deemed too sensitive to discuss have huge potential markets

With $1.3 billion in assets under management and a $280 million early-stage fund that closed in 2018, Octopus Ventures is carving out a niche for itself in healthcare investments in the U.S., the U.K. and Asia.

One of the key members of the Octopus team is Will Gibbs, an investor with the firm since 2013, who has been one of the architects of the firm’s “Future of Health” investment strategy.

Like many healthcare investors these days, Gibbs sees major opportunity sets for investors in the space that cut across a few different disciplines. Beyond that, there are a few specific categories where he and the team at Octopus are paying special attention.

For Gibbs, three areas of interest revolve around the increasing personalization and digitization of healthcare (with patients taking more control over their diagnoses and treatments); the mobilization of technology to address issues of antimicrobial resistance and the development of new treatments for humans and animals; and, finally, the application of artificial intelligence to the practice of healthcare.

We’ve broadened health to include animal health,” says Gibbs referring to opportunities around anti-microbial health and investments in animal health. In some instances, like the application of gene therapies to healthcare, opportunities in animal health are more near-term than consumer health, he says. It’s also where Gibbs believes that the anti-microbial tech will be felt first. 

These are all multi-billion dollar markets for companies that can successfully develop technologies to address the obstacles that patients, clinicians and healthcare systems are forced to overcome.

Within these thematic areas there’s another premise that undergirds how Gibbs and his colleagues are committing capital — what the firm calls “taboo” investment themes. It’s a label that Gibbs says his portfolio companies have embraced and it covers a range of healthcare subjects that were once deemed too sensitive to discuss but that have huge potential markets.

“Taboo areas are segments where there has been institutional bias around it, and where there have been low levels of innovation and high levels of demand,” says Gibbs.

Sadly, one segment of technology development in the healthcare industry that has remained taboo, according to Gibbs, is women’s health.

That’s an area where Octopus has already seen a significant amount of success for its nascent healthcare portfolio. The firm led the first big institutional investment round in Elvie, the women’s medical device technology developer behind a hands-free breast pump and a pelvic trainer and kegel exercise device.

The company, which has raised a total of $53.8 million in venture funding, has been a runaway success for Octopus Ventures.

“Personally, I think you could build a whole fund around ‘taboo’ [healthcare investments],” says Gibbs.

Elvie may be the most successful company tackling healthcare taboos head-on in the Octopus Ventures portfolio, but it’s far from the only company looking at the area. Gibbs and his colleagues are also investors in mental health company Big Health, which he considers another area that’s traditionally been too sensitive for public discussion and investment.

Both companies fall within the broader theme of personalized medicine and the ability for technology to place more control over diagnosis and treatment in the hands of patients. Meanwhile, Medisafe, another Octopus Ventures portfolio company, provides medication management services for patients and their insurers.

“These are the most personal areas of health,” says Gibbs. “This is a moniker that a lot of these companies have adopted.”

The firm has also placed some early bets around Gibbs’ thesis on the use of machine learning and automation to speed up drug discovery, the delivery of patient care, and the diagnosis of conditions.

Antidotes and MyTomorrows are two companies connecting potential patients with new therapies for clinical trials and inform patients of new therapies (respectively).

“The opportunity for AI and health is even larger in less glamorous areas,” says Gibbs. “Like, how do we understand from our patient performance who is most likely to be a no-show?”

These are huge areas within healthcare and there’s a lot more ground that Octopus Ventures would like to cover in each. But Gibbs also has a specific wish list of particular technologies where he’d welcome the opportunity to hear pitches from entrepreneurs.

The first is menopause. Fitting with the “taboo” thesis, and women’s health, Gibbs says that the right company looking to help treat or ease the symptoms of a condition that effects millions of women around the world would be a welcome addition to the firm’s portfolio.

Another specific problem area is at-home medical testing. Like many investors, Gibbs says that the idea behind Theranos was a good one — it was the company’s inability to bring that vision to fruition and the compounding fraudulent behavior to mask its mounting failures that were the company’s downfall.

Companies like Healthy.io and Scanwell have made progress in other diagnostic areas and are beginning to provide urinalysis tests at home for a number of different conditions. Gibbs would like to see startups extend that work to phlebotomy and blood testing.

The final two specific technologies that Gibbs would like to entertain pitches around are sperm selection for in vitro fertilization and family planning and chronic sight loss. They’re very different, but both pertain to areas where Gibbs sees potential for future investments.

“If you look at where the money has been spent, it’s been optimizing the female side [of family planning],” says Gibbs. “But 50% of the problem is around sperm. Building the intelligence and sophistication of tackling sperm and egg and building technologies around that is a super, super, super-important field.”

Meanwhile, eyesight is part of a whole slew of treatments that are going to be applied to aging populations as the number of elderly patients in healthcare systems across the world begins to expand.

“We’ve seen a lot of businesses looking at longevity,” says Gibbs. “The challenge is not how do you keep people alive for as long as you can, but how do you manage chronic conditions?”