SwissHealth Ventures, the corporate venture capital arm of Swiss health insurer CSS, has doubled the size of its digital health investment fund from CHF 50 million to CHF 100 million, thus greatly increasing the fund’s ability to support high-growth start-ups that use digital technologies to transform healthcare. The expansion of the fund is supported by CSS and is a reflection of the growing confidence in the long-term potential of digital health in Europe.
The fund is an evergreen fund, which means that all the resources resulting from exits and portfolio growth are directly plowed back into the new start-up opportunities. Besides, the additional capital is allowing SwissHealth Ventures to plan twelve new investments in the coming years, focusing mainly on companies that create value for health insurers and patients.
According to Jonathan Fraser, Head of Corporate Venturing at SwissHealth Ventures, the digital health field is on the verge of a rapid expansion phase. “We see the digital health sector to speed up its growth trend in the coming years and to become even more attractive within the healthcare industry,” he acknowledged. “In fact, the decisive factors are technological innovation, artificial intelligence, and the transition to outpatient treatment models.”
SwissHealth Ventures aims at making strategic investments in two to three Swiss digital health start-ups annually, which will be its go-to market partners. The fund’s main advantage lies in its relationship with CSS, which allows not only for capital infusion, but also for portfolio companies to have direct access to the healthcare ecosystem in Switzerland e.g., regulatory know-how, reimbursement pathways, and payer networks.
The investment strategy, thus, benefits CSS in two main ways: it yields attractive financial returns and offers early access to innovative healthcare solutions that can be easily incorporated into the insurer’s service portfolio. Consequently, CSS can pilot, test and scale new digital services that improve patient care, lower costs, and increase system efficiency.
Strong portfolio growth and real-world impact
Since its inception, SwissHealth Ventures has invested in twelve start-ups, four of which are based in Switzerland, as well as two dedicated digital health funds. And the impact of these bets has been quite sizable. Together, the twelve portfolio companies have created more than 3,200 jobs and have had robust financial performance, thus proving the commercial viability of their business models.
Moreover, the portfolio companies’ offerings are already having a measurable positive impact on patients. Fraser points out that over 330,000 CSS policyholders have availed services of the companies funded by SwissHealth Ventures. The innovations involved include digital therapeutics and remote monitoring tools to data-centric healthcare management platforms aimed at improving outcomes and cutting unnecessary costs.
One prominent example is Flow Neuroscience, a Swedish digital therapeutics company specialising in non-invasive treatments for depression. Flow’s therapy was the first one to be reimbursed by CSS, a global health insurance provider, which is an important milestone that led the solution quickly gaining acceptance in the clinical field. Flow’s remedy is currently being employed at 16 clinics across Switzerland, thereby demonstrating how venture-backed innovation can quickly lead to improvements in real-world care.
Investing in efficiency as well as patient outcomes
SwissHealth Ventures is after digital healthcare companies that are in the growth stage and usually have monthly revenues of at least CHF 100,000. While there are solutions that directly serve patients; the fund also places substantial emphasis on those that can lead to the healthcare system becoming more efficient.
Lyfegen, a platform from Basel that supports price negotiations between insurers and pharmaceutical companies, is a good example of this. “The platform is helping us negotiate reasonable prices with pharmaceutical companies,” Fraser said. “We have saved CHF 3.5 million just this year alone as a direct result.” The savings in some of the areas where money is spent ultimately result in benefits for both the insurers and the policyholders.
Positioned for Europe’s next digital health wave
The digital health innovations are increasingly being viewed as essential solutions to the problems that the healthcare systems in Europe face, such as the ageing populations, the rising cost of treatments and the shortage of the workforce. One of the most aggressive corporate VC players in the European healthtech space, SwissHealth Ventures is on the move by doubling its fund size.
There are different developments i.e., the expansion of outpatient care, the AI reshaping diagnostics and treatment pathways, and the payers looking for more data-driven efficiency that SwissHealth Ventures can capitalize on to shape the next generation of digital healthcare. SwissHealth Ventures, backed with CHF 100 million, is playing a critical role in shaping the next generation of digital healthcare while at the same time, bolstering CSS’s position as a tech-enabled insurer.