Xconomy | Hospitals Back New LRVHealth Fund To Forge Alliances With Startups

By Jeff Engel | The healthcare industry has a reputation for being slow and resistant to adopting new technologies. But more hospitals are starting to collaborate with—and even invest in—high-tech startups.

The latest example is a new Boston-based venture capital fund announced Monday. LRVHealth, formerly known as Long River Ventures, said it’s planning to raise $100 million for its fourth venture fund, which will back early-stage companies spanning healthcare IT, tech-enabled health services, medical devices, and diagnostics. Founded in 2000, LRVHealth’s previous investments include GetWellNetwork, Phreesia, MedVentive, and LifeImage.

LRVHealth has raised an undisclosed amount for its latest fund, and its leaders hope to hit the $100 million goal by late summer or early fall, according to an e-mailed statement from a spokesman.

The money isn’t the most interesting part here. What’s notable is that LRVHealth’s investors and partners in the new fund include hospitals, health insurers, and other industry players. One of the fund’s investors is the Innovation Institute, a for-profit venture owned by six non-profit hospital systems that operate in 20 states. The institute invests in and incubates healthcare startups, connecting them with doctors and other healthcare companies.

Collaboration between startups and the healthcare organizations they’re trying to sell to is a key feature of the new fund. LRVHealth said the plan is for hospitals and other healthcare groups to scout and test its portfolio companies’ products and services. The initiative will also set up “fellowships,” through which, say, investors would advise a portfolio company for a defined period of time on a specific “innovation area,” according to a press release. LRVHealth and its partners said they also plan to create and scale up new ventures. More…