Alternate View: The Podcast Guide for Alternative Investments

Healthcare Investing: A Pulse Check with Matt Hellauer from PTX Capital | Episode 007 | 12-11-25

• Matt Andrulot • Season 1 • Episode 7

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In this episode of the Alternate View, Matt Hellauer of PTX Capital takes us inside the heart of healthcare venture capital, breaking down how deals are sourced, how founders are evaluated, where valuations are heading, and why healthcare innovation is exploding.

Whether you’re an RIA, sophisticated investor, or just alternatives-curious, this conversation pulls back the curtain on how real venture investors think, from due diligence to portfolio construction to identifying founders who become outliers.

We cover:
• How PTX Capital identifies high-impact healthcare companies
• Why founder psychology matters more than pitch decks
• What LPs misunderstand about venture investing
• The shift from growth-at-all-costs to capital discipline
• How Baltimore’s emerging startup ecosystem is changing the game
• Practical insights for advisors and investors allocating to alternatives

00:00 – Intro
00:45 – Matt Hellauer on PTX Capital’s mission
03:10 – How founders are evaluated
06:25 – The state of venture capital
10:40 – Where healthcare innovation is heading
15:55 – Risk, portfolio construction & LP expectations
21:30 – What advisors should know about private markets
27:00 – Baltimore’s rising startup ecosystem
33:45 – Final takeaways

If you’re looking to deepen your understanding of venture capital, private markets, and the future of healthcare innovation, you’re in the right place.

🔗 Links
All Episodes at: https://AlternateView.FM
PTX Capital: https://www.ptxcap.com

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https://youtu.be/3qMyyiooxFo


Matt Andrulot:

Hello everyone. Welcome to the Alternative View Podcast, where we demystify the world of alternative investments. I'm your host, Matt Andrela, managing director of Verdance Capital Advisors and head of private capital market due diligence. Whether you're a seasoned investor or you just want to expand your knowledge of alternative investments, you're in the right place. Each episode I'll be joined by experienced guests who will bring a wealth of knowledge. Today we'll look at the world of healthcare venture capital. But before we get started, hit that subscribe button on your YouTube or your favorite podcast platform or go to alternateview.fm. So let's get started. Today we have a special guest, uh Matt Hallower from Man, the managing partner of PTX Capital. Uh so Matt, thank you for uh spending some time with us today.

Matt Hellauer:

Thanks so much for having me.

Matt Andrulot:

We're gonna talk a little bit about your professional background as well as uh the healthcare venture space.

SPEAKER_01:

Yep.

Matt Andrulot:

So before we get started, we tell us a little bit about yourself, a little bit about PTX Capital, and then we can kind of dive into kind of demystifying the uh the venture healthcare space.

Matt Hellauer:

Lots to talk about. Lots. So Matt Hallower, I'm managing partner and the founder of PTX Capital. Uh just a bit about myself first. I was born in Baltimore at St. Annes Hospital, right down the street, and uh studied math undergrad at Georgetown and uh grew up um in the greater DMV area my whole life. Um after Georgetown, I went up to New York and worked at a firm, Allen and company, from 2011 until 2021. Um and in the middle of those 10 years, I did my MBA at Harvard Business School, I joined to be at the Kennedy School, and then was back at Allen for that first decade of my career. Um and Allen was a really special place to grow up professionally. Um in 2020, during the pandemic, I wrote this white paper on the idea to come back home to Baltimore and start a private equity venture capital fund, primarily focused on healthcare and life sciences. And that has grown from an idea into a uh now uh durable and standing fund. And so I'm proud to um be back home and to have a fund that I first flagship fund that I raised last year after a pilot fund in 21 and 2022. And we invest across the healthcare life sciences spectrum. So primarily do early stage investing, though so seed, series A, series B. Um, and we try to find great revenue generating, potentially cash flow generating businesses and across the healthcare spectrum and grow them into large enterprises.

Matt Andrulot:

So what drove you to the healthcare space? The vet sp specifically in venture, I guess, right? Yeah. It's really early stage entrepreneurs. I mean, that's uh, you know, coming out of school. I mean, you're from the Baltimore area, so we do have John Hopkins here, right? Which is a and university medical system, Maryland medical system, and we have UNH and or um, you know, the healthcare system out of out of the government as well. So you know, what drove you kind of to get into that space specifically around healthcare?

Matt Hellauer:

I mean, the for the fund, there is an advantage being here. There's a lot of white space to have a healthcare life sciences focused fund in the greater Baltimore, D.C. area. And it all started personally, though. What at Allen and Company, I primarily focused on healthcare. The firm itself does healthcare, life sciences, technology, media, sports. Uh the majority of what I worked on after graduate school was in the healthcare space. And I really enjoyed helping founders and entrepreneurs grow their businesses into something scaled that would help a lot of people. The best thing about our portfolio is if any one of the companies r succeeds into the best of its ability and vision, it is affecting millions of people positively. And that is that's important to me as an investor, that we can make a lot of money for our limited partners and also do good in the world through supporting our companies. Um and even better to be able to do it in the place where I grew up, too. So it's kind of all come to fruition in a wonderful new professional chapter for me in starting this fund.

Matt Andrulot:

Yeah, it's fantastic. I mean, to do something that you love and then relate it to something that you're kind of your job, right? It's it ends up being uh pretty positive in both sides of the equation, right?

Matt Hellauer:

Get the question a lot. Are you this must have been a huge, dramatic, stressful leap for you? And it just doesn't feel like that. I I just felt like I was born to do something like this. So it just feels kind of natural for me.

Matt Andrulot:

So yeah. Well, the healthcare life sciences space is pretty enormous. Yes, right. Uh we have a lot of different variables with regards to what inside of that. So let's try to deconstruct some of it and talk a little bit about the environment itself a little bit today. Yep. Um, dig down into some of that, and then we'll get more into the investment side. Perfect. Uh, which I think will be helpful for our listeners and understanding what healthcare venture and life sciences are with regards to an investment piece of that. Certainly. But let's start on the macro side of things. I mean, I don't want to go into the political side too much, but you know, the the market environment for healthcare has has changed pretty significantly over the last number of years.

SPEAKER_01:

Yeah.

Matt Andrulot:

Um you want to talk a little bit about kind of how you see the world of healthcare life sciences, I guess let's call it five to ten years ago when you almost when you started your fund, um, as well as what you perceive it to be today and what you think it might be going forward.

Matt Hellauer:

Yep. Uh we at the fund do a lot of first principles thinking about big problems in healthcare, problems that are intractable with the current tools that we have to solve them. And whether it was five years ago or today, those problems are are still there. And so I don't think that changes the big demand for innovative technologies, services, and products in healthcare that can start moving those problems into solutions. And so, I mean, a few that we think about a lot at the fund are um by 2050, the percent of the population that's gonna be 65 or older is about to grow 40 percent. That leads to a lot of questions on how we're gonna manage chronic conditions in an aging population, and a pretty frail infrastructure currently to support that rapidly growing population. So that's a theme across our investment portfolio. Um, other themes across the portfolio, too, are how we use data now in life sciences to become the infrastructure for fast-growing areas of therapeutics or medical devices to really improve patient outcomes. So we don't necessarily invest in the therapeutics or the medical devices themselves. We're doing a lot of infrastructure work that's supporting those big areas of life sciences that are coming up. So those kind of first principles are pretty constant over the last five years. The last five weeks or five months have changed the funding environment. I think a lot of um if we kind of compartmentalize the healthcare and life sciences investment space, some are more affected than others. Yes. And um I think we're relatively insulated from that chop at the fund. And we can get it get into that um of some of the strategic decisions that I've made in designing the fund. Um but it's a um it's a challenging time for some funds out there.

Matt Andrulot:

Oh, I I can I can imagine. I mean, we're not gonna get into the political aspect of all of this, but I mean, the the actual fact of there's been some huge changes with regards to funding. Yeah. I mean, how do you think that's gonna affect entrepreneurs? Uh you you mentioned your your white paper as well, which I'd love for you to touch on just for a brief minute and how that all plays into um the existing environment and the opportunity set for entrepreneurs and investors.

Matt Hellauer:

Absolutely. Yeah, I just look at the facts of what is to come in the biomedical research world. I mean, 40% of NIH funding is proposed to be cut over the next year. Um, and that's gonna have some material impact, especially on capital-intensive research projects. And what that means is most likely drug development projects, big medical device projects, um, those that need and really depend on the research dollars to get from zero to one or have validation for them to actually go in the clinic and affect human lives and to see if they're viable technologies to um to help patients. We don't necessarily invest in those big capital-intensive projects. We are mainly investing in enabling technologies to support those projects. So biotech funds that focus on just kind of pure play therapeutics, they have a really high reliance on these grant funding projects to help support their risk dollars to get these technologies from the lab to the clinic. Um we are kind of more infrastructure, think railroads, not the cargo themselves, as we think about life sciences investing.

Matt Andrulot:

Got it.

Matt Hellauer:

Yeah.

Matt Andrulot:

Makes a lot of sense. I mean can you talk a little bit about how the universities are necessarily going to be affected? And what are those entrepreneurs coming out of those universities relative to the hospital component as well? Yeah. Right? Because there's a lot of funding differentials taking place there. Yeah. And what does that look like for you guys? Is that a hindrance? Is it an opportunity set? Yeah. Um it seems like both to me. Yeah. Um but I would love to hear kind of how you guys are seeing it and um you know how that's impacting your portfolio companies or just opportunities as it relates to sourcing.

Matt Hellauer:

So definitely. I mean, we're seeing it cut a few ways right now at the fund. Um one is that there are labs at big universities that we have relationships with that aren't getting the research dollars that they were expecting this year. However, really name-brand, high-quality PIs and scientists, their funding um is unchanged. And we have recurring relationships with some very entrepreneurial-focused in scientists and PIs at large universities and health systems across the country. And the ones that we have closest to the fund, there, thankfully their research has been protected, and that's um kind of normal course for them right now. Um but the companies themselves, we are um they they're looking for for dollars to support them, and we are one of the few funds in the game right now that are well capitalized, and our deal flow has meaningfully increased in the last few months because that sure thing research grant that was there a year ago not necessarily is there. And so we are um have a lot of bargaining power on our side and just influence to be able to pick and choose what is the most interesting projects right now to go solve those big problems I talked about a few minutes ago. So it's a it's a it's an advantage time right now for us. I do feel that. Yeah.

Matt Andrulot:

Do are are entrepreneurs a little bit hesitant about bringing out their new products and solutions and strategies related to this just because of the lack of funding? I mean, the medical space, especially coming out of universities, have very been grant driven, yeah, as well as hospitals uh with their coming out of their their their their kind of research divisions as well, yeah. Have been very grant funded. Are there just lack you think there's gonna be a slowdown of kind of opportunities? There are people not willing to kind of bring their solution, is that to the to the space?

Matt Hellauer:

On the life sciences side, things will be slower. Um I I definitely think that is that is true. But on on the um on the healthcare side, uh we talked to a lot of health systems out there and they are still constantly um bringing and testing new innovations in the hospital. Um and I think that's part of the portfolio too that we're constructing, is that we're across the healthcare like healthcare life sciences spectrum broadly. And so we can lean more on the healthcare side if we think that there's a life sciences side that's slowing.

Matt Andrulot:

I've got to ask this because it's just a big broad topic anyways, but uh technology just in general. Obviously, you guys are investing in a lot of technology related to healthcare and life sciences associated to that, and we hear the big AI boom kind of going on with regards to the the market environment. Is that creeping into your world uh in terms of leveraging generative AI as part of solution sets or applied AI as it relates to healthcare and life sciences?

Matt Hellauer:

Yeah, absolutely. Uh we're seeing that a lot. I mean, one, uh Baltimore itself is becoming a hub for AI and healthcare. I mean, Techstars, one of the largest accelerators in the country, has chosen Baltimore as its flagship healthcare AI city for all AI technologies that come into the Techstars portfolio. That's sponsored by Johns Hopkins and CareFirst. And so, from a payer and provider perspective, it is a big focus in healthcare right now. Um we're also investing in kind of the frontier of AI in uh both diagnostics and clinical care. Um a good example in our portfolio is a company called Delphi Diagnostics. Came out of the Kimmel Cancer Research Center at Johns Hopkins. It is a workflow that takes blood samples, it looks at fragments of DNA in those blood samples, and that is a smoking gun to lung cancer. And um only 6% of eligible patients who should get screened for lung cancer actually get screened, and this is a way of bringing liquid biopsy into a clean workflow in the clinic to get these patients screened. Um and it is all AI-based looking at the molecular biomarkers in blood to see if patients have lung cancer or not. And um, this is a really big problem, and it's a homegrown company here from Hopkins that we're investing in, and it's gonna it's it's a wonderful company.

Matt Andrulot:

Sounds fantastic. Yeah, I mean um as for like uh you know, this is a very interesting market environment from a global macro perspective, yeah, especially on the healthcare, as we kind of just outlined in a number of different variabilities to that. Um what do you think are there any subsectors that you're looking at to say, okay, I see the impact of all this funding? Yeah, like where are those opportunities presenting themselves to you, like whether on the side on the healthcare or the or the life sciences side that could benefit from some of this? I mean, is it more on the technology side? Is it more on the you know the services and healthcare side? Is it like where does it show up for you guys with regards to this environment or what we perceive to be an environment moving forward, at least for the next four years?

Matt Hellauer:

Yeah, definitely. Um I mean, one is looking at chronic conditions for healthcare patients. Okay. So five percent of the US population causes 50% of U.S. healthcare spending. A lot is through chronic conditions that are unmanaged. Um so we invest in a company called Pair Team, which was founded by a former nurse from UCSF and a remarkable um software engineer um out in San Francisco who worked at a company called Forward Health. And they have brought a concierge medicine model to patients that are in that 5% population group with severe chronic conditions and helps manage their care. Um and that is proven to be um a remarkable company. It's one of the fastest growing healthcare companies in the United States right now, and it's been terrific partnering with um Neil and Cassie and um building Pair Team. Um that's one on the healthcare side. On the life sciences side, we are really interested in autoimmune diseases. Um there are no known cures for autoimmune diseases. It's a focus of the administration, it's a focus of the FDA. We helped take a company out of Johns Hopkins, we were the first money in and helped build a flagship lab here in Baltimore that is focused on identifying the source causes for autoimmune diseases and helping de-risk therapeutics focus on autoimmune diseases. It's a company called Infinity Bio here. It came out of the lab of precision immunology at Hopkins. And um, yeah, we in in its first year of commercialization. Last year it's one of the larger Hopkins spin outs by revenue and was JDN generating free cash flow. And that's just a great story for us as an investment team.

Matt Andrulot:

Yeah, sounds fantastic. I mean, that's usually not what you think of uh pre-seed seed venture capital, just in general. Yeah. So I'm gonna shift a little bit from onto the investment side of things because people hear venture and they think like binary, yeah.

SPEAKER_01:

Right.

Matt Andrulot:

And then they think healthcare, they think biotech, yeah, right. And they're like they just think of binary results of either this is gonna be extremely good or extremely bad. Yes. And I I think that's something that we want to you know demystify, take away from and explain a little bit kind of your guys' approach relative to uh the healthcare venture side and what people might perceive versus what you actually look at, because I think you take a different approach to things relative to what I call the spray and pray model of venture capital.

SPEAKER_01:

Yes.

Matt Andrulot:

Uh, which is lots of at lots of dollars spread out across multiple, multiple companies, yeah. And hoping that the you know the one or two the batting average is high enough to necessarily outperform and you know make everyone money in that scenario, but there's a lot of failure that goes on in between that. So I I'd love for you to just to talk a little bit about what you guys, how you guys work with this and then you know what the impacts though those are.

Matt Hellauer:

Definitely. And yeah, I am drawn to the old school version of venture capital rather than the version that has become in vogue over the last two decades. And I was drawn to this first when I was doing that white paper that I mentioned and looking at what venture capital was in the 1950s and 1960s. It was a really cottage industry at the time. They venture capital was a form of pooling money from some really civically focused family offices and institutions, and pooling that capital together and investing in technologies on the ground with founders and helping them in person grow their businesses in a really kind of textured, homegrown way. And a lot of the portfolio at PTX looks like that. I think of models like ARD, American Research and Development Corporation up in Boston, the early days of Greylock up in Boston, um, Kleiner Perkins back in the 60s and 70s. That that's the model that I love. Um and I think that is true to generating alpha in venture capital. It requires a really long term partnership view. It requires, I think, a Uh kind of homegrown partnership model with the founders themselves and just trusted relationships that are built over years. And that's kind of the feel of the early days of PTX here. And so what that means is in the healthcare life sciences world is we are investing in companies that can be durable businesses pretty early on. So the fund doesn't invest in pure play therapeutics or pure play medical devices. Biotech funds with a lot of scale and a lot of expertise, scientific expertise, that is their lane and wheelhouse to absorb that kind of binary risk you talked about. We are investing in companies that are revenue generating on day one. They have a path to free cash flow in the next 24 months that we can manage towards. And on the healthcare side, that means that they are these technologies or services are already being used in the hospital. And we can talk to clinicians of their experience using this technology, software product, new service, and see if they are zealously advocating for this new technology in their hubs. Or on the life sciences side, we can call up labs at Johns Hopkins or big pharma MA groups that we have relationships with and say, hey, is this truly a therapeutic enabling technology that you're going to use in a sustainable, recurring way in-house? And we can scale that revenue from a few million dollars to$10,$20 million plus in a few years. Like that is the screaming yes for us. And so it's a more concentrated portfolio than a kind of law traditional traditional fund, but uh it is a different than what's been the in vogue the last 20 years.

Matt Andrulot:

Yeah. Well, and so talking about that, like how do you find those entrepreneurs, right? Yeah. How do you find those businesses?

SPEAKER_01:

Yep.

Matt Andrulot:

You know, I don't believe you're a a physician by any by trade. Right? You you're you're much more on the the math and financial side of things. Yes. So how how do you how do you find these folks and then why do they work with you?

Matt Hellauer:

Yep.

Matt Andrulot:

And why do they work with PTX?

Matt Hellauer:

Sure. Um I think a lot about our intelligence gathering systems at the fund. Yeah. I think if you're a world-class intelligence gatherer, you need to have relationships at the highest level of where you're trying to surveil, the medium level, and then on the ground. And that's the way the fund is designed. At the high level, we have recurring calls and relationships with the most innovative universities, health systems, and incumbents, incumbent companies out there. So that's the relationships that I like to maintain. On the middle level, we have a bench of venture partners here who are all clinicians and scientists themselves. They are workers at the fund and wonderful partners. At the fund, we meet every Monday together in investment committee down in Baltimore Peninsula, and they're also practitioners. So they are leading labs at their universities, they are leading hospitalists at their health systems, and they are on the ground and knowing what decisions are being made about new technologies and services in procurement at their hubs. And then we have some students who are medical students, biomedical engineering students who support the fund, and they are on the ground writing research grants for their bosses within their hubs, and then also feeding us intelligence of what is the up-and-coming trends that they are seeing on the ground floor of their big hubs. And so between these three layers, we are getting a lot of intelligence at the fund of what is being used. And I think that's one of the unlocks in healthcare investing, is once you reach that kind of fulcrum of demand and people using new technologies and services, it is quite durable. And because it's being taught then across the board. There's a high bar for physicians to adopt new technologies, but as soon as it becomes in vogue or the new thing, then it's codified. And we benefit from that as long as we kind of tip over that fulcrum as we assess technologies.

Matt Andrulot:

Got it. What about the governmental approval processes relative to drugs, um, devices, things like that? Like how do you foresee that as you know, those can slow things down and be obstacles relative to the delivery? And I I fully agree with you that there's a high bar for change necessarily in in the medical space to get someone to take over and do something people are entrenched in their ways, right, for the most part. Exactly. Um, you know, but curious to kind of how you guys think about um you know dealing with those government entities and the fact that our government changes all the time, which is even crazier. But you know, in essence, there's a process that a lot of whether drugs or or devices have to go through to necessarily be approved and then sold and utilized, right?

Matt Hellauer:

Yep. And I think that's part of the agility of the portfolio now is the life sciences companies that we invest in, they are technologies that are relevant across therapeutic areas. So if the FDA has a new view on vaccines, we aren't, we don't have single therapeutic area risk. Our technologies that we're investing in are supporting a broad range of therapeutic areas and we're benefiting from that. I mean, therapeutics are always needed. There's a constant demand for new biotech companies and assets that are coming through the pipeline, and if we can have an umbrella view and umbrella exposure across those assets, then I think that's a healthy portfolio.

Matt Andrulot:

Yeah. And how are you determining the good from the bad, right? Like the you know, where does that line cross over where you're like, okay, we think we found a great entrepreneur.

SPEAKER_01:

Yeah.

Matt Andrulot:

We think we found a great solution, service, product, device, you know, drug, whatever, yeah, whatever it might necessarily be. Yeah. And then translating that into them being able to grow, adopt, and then ultimately exit of some form or fashion to someone.

Matt Hellauer:

And that's part of risk capital. You know, we have this um uh this tool at the fun, we call it the FAM, but it's the first assessment matrix, and it looks at some metrics across the big things that we really care about as we invest. And we think about ocean, boat, captain. Ocean meaning are is this a really big issue in healthcare or life sciences? No. Is are the are there tailwinds in our sails? Is the tide in our favor here? So is this a big problem? Then we also care about the boat. Do we have a technology and service within a company that has elegant margins? So it's typically 60% plus margins we invest in. Okay. Is it revenue generating right now? And we can we have a conversation about free cash flow. And are we at that fulcrum of tipping over into recurring durable demand in healthcare? And then finally, are there good captains here? Does the captain have experience on both the user side? So do they have scientific and clinical acumen? And is there a business team supporting him or her that is going to really make great decisions in helping steer this boat in good waters and bad? And if all those five things line up, it is a um it's typically a good story for us. So but we're really rigorous in knocking things out if they don't um follow through on one of those five criteria.

Matt Andrulot:

Yeah. And then where does PTX fit in on the boat or the captain or you tell me on the captain? Um I'm curious, like so the entrepreneurs they're probably get access to capital, and if they're meeting all those criteria, they're probably quite attractive to other venture capital folks as well.

SPEAKER_01:

Yeah.

Matt Andrulot:

What is the value-added component that PTX is delivering to them that might be different than other firms or groups or people are delivering to them?

Matt Hellauer:

Sure. So I think uh one on the team side, I think the the those venture partners I mentioned, they have authority uh in within their hubs. And so we are a strategic kind of commercial partner for these companies as we invest in them. We have the um ears of uh various health systems and universities, and it can really help companies navigate uh procurement decisions and conversations. So there's a there's a customer and commercial aspect to the relationships at the team right now. And then I think on the strategic side, I really lean into what um I did and how I was trained at Allen Company. Um Alan uh I was in the mergers and acquisitions group there. I benefited from seeing um dozens of excellent companies come through the Allen and company world when I was there and what excellence looks like in an IPO scenario, in an MA scenario scenario. And I can bring that pattern recognition to companies at the early stage and help them professionalize really early on. And that's my value, I think, in the seed and series A worlds is helping professionalize and make them look like billion-dollar companies on the inside and in the first few years.

Matt Andrulot:

Aaron Powell And they don't traditionally get that, do they? Like from the venture capital space itself.

Matt Hellauer:

It's kind of the Wild West. And so if I can say, hey, this is what this blue chip company did in year two to make them really stand out, let's bring some of these practices early on here. It's uh it's a meaningful conversation with that founder.

Matt Andrulot:

Oh, I bet. I bet it is. All right, I'm gonna f I'm gonna flip this a little bit and and talk about let's talk about we've talked about all the positives, let's talk about some of the risks associated to that, because there are plenty of risks. Yeah. And then how do you how do you identify those particular risks? If those some of those things go in the wrong direction, like how do you deal with those things, especially in the venture space? Um you know, we understand that you're deploying capital to own a piece of a of a particular business. Um but you know, what were the some of the hiccups or issues that you've had in the past? You don't have to identify you know what they were. Yeah. Um but you know, talk about some of the risks associated to investing in this particular asset class. And then uh obviously you talked about dealing with some of that, but then you know, as things move on, like where do you stop or you know, how do things progress from there?

Matt Hellauer:

Yeah. One um kind of risk that we think a lot about in healthcare is there are long sales cycles. Um as we talked about earlier, there is a high bar for adoption of new technologies and services and offerings. And sometimes those customer conversations feel really promising at first, but there is a kind of really long procurement process potentially at a big pharma or at a hospital. And so we need to think through hey, if we think this is a three-month sales cycle, it could be nine or 12 months. And um, especially with big regulatory changes that could prolong that sales cycle. So we need to think through is this early customer base extremely zealous? Can they be advocates for these new technologies and services, not just in-house, but to their other peers and competitors out there? Because if Eli Lilly is using this new technology, then Amgen might need to use it as well. And so we try to make sure that um this is a momentum story in sales and not one of kind of low conversion, long sales processes, because it is a risk in healthcare investing.

Matt Andrulot:

Yeah.

Matt Hellauer:

We think about that fulcrum a lot.

Matt Andrulot:

What about the I always find it's the people for the most part? You're coming from physicians, clinicians, like science people, not necessarily business people. Yes. Right? Like how do you how do you deal with that?

Matt Hellauer:

Yeah. Um it is a a rare unicorn where you get a scientist or clinician who is um they're typically they are typically world-class at their field.

Matt Andrulot:

Yeah.

Matt Hellauer:

And then it's their need to develop world-class business muscles to build a great company. And um so we all we really think about building partnerships with those scientists and clinicians, but then also making sure that they're complemented by a seasoned team of business people around them that can be their sounding board uh or or take that boat to um really accelerate the technology and service themselves. Um so that that's a prerequisite for us that there is both that scientific and clinical acumen and then expert business people around the table to um to help the company.

Matt Andrulot:

Do you have to find some of those outside business people to pair with those entrepreneurs?

Matt Hellauer:

Yeah, typically. Um so there's uh typically a founding team of two or three that exists. It's ne it's usually not one single founder. We like to see a co-founder bench of a really well-rounded uh team. Think about uh, you know, you're putting together a starting five basketball team. You don't want all, you know, five foot nine point guards. You need some good centers and power forwards to complement some real big stars bringing up the ball.

Matt Andrulot:

Nice.

Matt Hellauer:

Yeah.

Matt Andrulot:

Excellent. Um, as as the healthcare environment continues to kind of project, you find a lot that the you know, obviously there's you have government involved in Medicare, Medicaid kind of components to that. Are you evaluating those type of things of what gets paid for by that versus outside solutions in terms of cash flow? Yeah. I mean, that's stuff again. Yes, unfortunately, we have this political issue that that comes into play that can move in and out of favor relative to that. How do you look at those type of things?

Matt Hellauer:

Yeah, I mean I just go back to those first principles, questions, and problems that all our companies are trying to solve. I mean, we with that big aging population um can't cut funding off for um Medicare, Medicare Advantage um uh uh uh populations, especially with a growing population like that. Uh we invested in a company that is providing providing software and services to surgery centers. Um, a wonderful entrepreneur here in Maryland, um, she's built this amazing book of business um supporting surgery centers up and down the eastern seaboard. And those surgery centers are only getting it more busy as that aging population swells. And um, yeah, Tina is an amazing captain in that boat in uh her company, Custom Surgical Partners, and that the insurers are not going to turn away funding and dollars to um support their patient populations getting surgeries in an outpatient setting. It's a win-win for clinicians, for patients, and we like those bets. Um so we we try to find bets that are durable in in um regardless of the regulatory and funding environment.

Matt Andrulot:

Yeah. And what does an exit look like for her in your perspective? I mean, we'll use her as an example because we're just talking about it. But you know, what's what's the end outcome?

Matt Hellauer:

Yeah. Um I mean, she's got a really elegant uh business she has built of about 90 plus contracts. Um she's running um in a high margin business, and it is attractive to a lot of exit scenarios. And that's kind of core to the fund, too, is that we can have conversations with larger private equity firms who are interested in these cash generative businesses that we've built from early stages into growth stages. Incumbents and existing industry partners are um gonna be interested in a company like this. And then if things really take off, we have some very interesting growth strategies that we're about to implement, then um the public markets are an option as well. And I like that flexibility and agility in exit markets that we're not just reliant on having to sell to one of four you know blue chip incumbents. Um that is not a uh a winning strategy. We like to have competition on the exit markets and build towards that competition. Yeah.

Matt Andrulot:

Well, the market environment seems to be very positive in your favor, although there's some negative news around you know a government perspective, but the growing demonic demographics relative to the population and the need for healthcare and services and uh a variety of other things around that space is is quite compelling.

Matt Hellauer:

Yeah. Um definitely feel that. I mean, hell year to date the healthcare index and the S P 500 is is up. It is the second best performing sub-industry in the S P 500, and and I feel that in the portfolio. Um last year our 75% of our companies in the portfolio were cash generative. And I think that's a different story than most venture capital funds out there, and I like to keep building off of that.

Matt Andrulot:

Well, there's a very big difference between the companies in the SP 500 as well as the you know, the except the companies that you're trying to, you know, access. Yes. Yes. I mean, that's that's the biggest differential, the private capital market environment relative to the public capital market environment. I would say is completely different uh in terms of that. But uh obviously, you know, things ebb and flow in different manners. But what you're finding is hopefully the next company that will be in the SP 500, not not the one that's currently there.

Matt Hellauer:

Yep, exactly. We are building the the next generation, we think.

Matt Andrulot:

Well, it's fantastic. I mean, you know, investing as well as helping, like is uh is always very beneficial. We're all entrepreneurs in some form or fashion or want to make make money at some point in time investing our our hard-earned money. Uh what a what a better way to do it than to actually you know support something that's uh hopefully will benefit the global population in and make some money doing the same.

Matt Hellauer:

Feel that, feel that every day. It's uh a really enjoyable line of work to be supporting these companies and founders, building these the the next generation of technologies.

Matt Andrulot:

Well, Matt, thank you for uh thank you for joining us today, and I appreciate your time and all the information and uh your ability to kind of demystify a little bit of the healthcare venture side of the world for for our listeners.

Matt Hellauer:

Thanks for having me and thanks for all the partnership, Matt.

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Matthew Andrulot

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