Same Math, New Market: Inside AHA Ventures with Lisa Suennen

0:03StartUp Health: Every one of us carries our cell phone around and we're quick to look at it when we're bored, you know, and what grabs you and makes you put it down a great storyteller, a great speaker. And so I think it's not just about your idea being good. It's also about communicating. Well, if you're not the world's best communicator, like find somebody who is to help you train to be better at it. It's so important. If you can't tell a good story, nobody can hear you.

0:35Lisa Suennen: I'm Logan Plaster. I'll be your host and the managing director here at Startup Health. And welcome to today's expert AMA with Lisa Sunan, managing partner of the American Heart Association Ventures. Excited to get into her story and her lessons learned and how people can get more involved in AHA Ventures. So AHA Ventures runs multiple funds overseeing roughly$200 million in assets. Beyond AHA, Lisa's CV is lengthy. I won't read it here, but it spans 35 years, multiple venture funds, operational roles, co-founder of C-Sweetener, which was acquired by HLTH. She even chairs a scientific advisory board at NASA and teaches at Berkeley.

1:19Lisa Suennen: So we could get into a whole separate conversation about how you manage your time, Lisa, but maybe we'll save that for a different AMA. But we're very fortunate to have you. So Lisa, welcome and thanks for coming.

1:31StartUp Health: Hi, thanks everybody. It's so nice to be here. I remember meeting the founders of Startup Health when they were thinking of founding it. So I have been connected for a long time to this organization one way or another. And so it's nice to be back.

1:46Lisa Suennen: Well, speaking of the Wayback Machine, you weren't always in venture and you started out as an entrepreneur in a health tech startup like so many folks on this call, which is a great connection point, as a way of getting to know you a little bit better instead of reading a long bio, take us back to that experience. Tell us a little bit about what it was like and maybe a bit about how it's informed how you invest today.

2:08StartUp Health: So I started off not to be in healthcare. That was not my plan. I was in tech back when tech was really pretty boring. I mean, I know probably hard to believe for some of you, but it's pretty internet and I was pretty bored. not an engineer i'm not a tech person by background and i got introduced to the founder of a really was a health services company if we're being honest with ourselves tech was not a big part of it back then and it was focused on mental health and substance abuse really the first company to do a carve-out program to focus on better care for that area of need at a time when there were almost no health benefits for that in a benefit plan not that they're so great now and very little focus on that, but it was the fastest growing cost in medicine at that time, which is the late eighties.

2:56StartUp Health: Before a lot of the drugs that we know now and use to help people. So it was really about therapy and treatment at different types and places and managing care effectively and cost effectively. And I joined the company when it was about a$5 million in revenue startup and running marketing and sales. And I was there as it grew. I took over parts of the operations. The company went public and then it got acquired. We still grew it. It kept growing. We bought ourselves back and went private. And then by the time I left, it was a nine-year stint. We had about 800 million in revenue. We're covering about 35 million covered lives.

3:34StartUp Health: Most of it fully capitated at risk. A thing we don't even hardly do anymore the same way.

3:40Lisa Suennen: Quick pause. 5 million to 800 million. Was there a secret to your success? What were some of the things that helped you to scale like that?

3:47StartUp Health: Part of it was right place part time and when it was the fastest growing cost in healthcare at that time. And it was a time when companies and governments like state employee programs, Medicaid programs were starting to drown in the cost of it. And a lot of were starting to carve it out as a separate benefit and subcontract it to people like us. There was a couple other companies that started around the same time. So there was a little bit of competition, which was actually good. I think it helped grow the industry. And also, I think we were just really good at it. The things about that company that really informed my perspective ever since were, number one, we had a massive focus on health economics in that we understood and everybody in the company understood how the money flowed through health care and how intrinsically tied that was to the clinical decisions you make.

4:32StartUp Health: and by being full risk and full capitation for most of these programs, not all of them, but for a lot of them, we had aligned incentives and that was a big part of it. And figuring out how to build that into programs and do the right thing clinically to get the right cost outcome. And it's not easy. It's really hard to do, but we really did it. And that has informed my thinking ever since for sure.

4:55Lisa Suennen: Okay. You've carried those lessons forward versus, is, hey, the systems just change and now it's all new math. You feel like a lot of the same principle. It's the same math. It's the same math. Okay. Well, let's jump right into AHA Ventures. We've got a room full of amazing founders building healthcare solutions. And we want to know what's guiding your investment thesis today. What are your top priorities?

5:18StartUp Health: So first of all, we have four funds at AHA. They are all anchored around heart and brain health and related conditions. So a lot of people don't realize the heart association probably should be called the heart and brain association, but it's not. What can I tell you? And when we think about brain health, we think about it very broadly, not just stroke and things related to vascular, but mental health, which is deeply tied to good heart and brain health overall, dementia, all of it, neurodegenerative diseases. So then we think the next layer around that is things that cause heart and brain problems.

5:53StartUp Health: So So that might be inflammatory diseases, autoimmune disorders, metabolic disorders, kidney disease, you know, all sorts of things. So we think about it quite broadly. As we look now at the four different funds, they each have a different kind of view on that from that perspective. So the first fund is Cardiation. It's a medical device fund, very broad thinking about heart and brain health, but pretty connected to the core. So most of the deals they've done are heart, brain or metabolic. We have a Go Red for Women's Health fund that does devices, digital diagnostics, tech-enabled services. We don't do any therapeutics in any of the funds at this point.

6:29Their view is how things that affect women disproportionately or differentially doesn't mean the companies they support will only do things that are focused on women alone.

6:40StartUp Health: They just have to demonstrate they're solving a problem that is more prevalent or differentiated in women and that they care about that and focus on that as part of the solution. So each of the companies we funded there serve men and women, but they are thinking about things that are important to women. We don't do any reproductive health in that fund. It's all heart, brain and related conditions.

7:03Lisa Suennen: Okay.

7:04StartUp Health: The third fund, social impact fund. So that's investing in social determinants of health primarily. food and nutrition related, access to healthcare for underserved populations of all types. So not just culturally underserved, but rural veterans, children, you know, whole lot litany of folks. And also economic vitality. So things that improve your ability to get stable in your life financially, so you can get healthy or get insurance. And then the last fund is a venture studio to start up new things in any of these categories.

7:38Lisa Suennen: So that's the sort of the menu at sort of the macro level. I'm going to push on you to help us understand kind of the conversations that are happening behind the scenes in terms of trends within those categories that you're getting more excited about this year.

7:54StartUp Health: So I'd say that some of the categories we're particularly interested in, and this is a little bit of a random walk, but we're interested in things that better improve stroke outcomes for people. We're interested because that's hard and it's not been well done. And we're seeing a lot of really interesting stuff in restorative medicine, bioelectric medicine, improving function after stroke, etc. We're very interested in early diagnosis and treatment for heart conditions that are often missed in women. Some of those are imaging things, other types of diagnostics and biomarkers, and also potentially interventional things.

8:27StartUp Health: We're interested in things around endometriosis, PCOS, now renamed PMOS, things that are women's conditions that drive up stroke risk and heart risk by quite a lot. A lot of people don't realize endometriosis has a 20 to 25 % increase in stroke risk, people with endometriosis. We're interested in products and services on the social determinants side that aid people in overcoming what's happening in Medicaid right now and losing access. very interested in things around dementia, if they work. I mean, there's a lot of spinning around in that space that isn't going very far, but hopefully somebody will come up with some good ideas there.

9:07StartUp Health: And we've had a few come by us.

9:09Lisa Suennen: Just to press on that for a second, because we have a lot of folks working in dementia and Alzheimer's. I mean, obviously it must, it needs to work. That's one sort of binary line, but what kind of outcomes are you looking for? Or are there things that you've seen that seem like they are positive on paper, but they don't meet your criteria? Can you give us a little bit more detail there?

9:29StartUp Health: Well, we've seen a lot of diagnostics, and mostly those are not that interesting to us. Because until there's something you can do about it, you know, it's not that helpful. I think that's true across the board for diagnostics, to be honest. Nobody will pay for something that you can find but not take care of. We're interested in some of the services and tech-enabled services that help people manage through those issues. And we're interested in therapeutics. We've seen a couple device therapeutics in the Alzheimer's space, for instance, that are quite interesting and emerging. Okay.

10:01Lisa Suennen: So you talked about at least four different doorways that someone might come through to work with Aventures. How should founders – there might be people on this call who match all four of those. how should they be thinking differently about how to approach the AHA based off of the different doors?

10:18StartUp Health: It's a great question. And the answer sometimes isn't obvious, even from our various websites, you can see them. We each have a website under AHA Ventures website. People can either send me something and I'll forward it to the right person, or they can identify the right person, each of the funds, or they can just, I mean, we all talk to each other all the time. So we, there's no hard lines between us. If you send something to the women's fund, but it should go to the social determinants fund, they will make that happen. It's always better to have a warm intro to a fund anyway. If you can try to communicate with somebody in one of the funds, that's better.

10:52StartUp Health: And you can ask them, you know, if you send me something, I'm probably not going to respond much. I'm probably going to forward it internally to the right person and say,

10:59Lisa Suennen: yeah, I'm thinking about the approach.

11:01StartUp Health: Like look at the website at one level about what's interesting, right? But it is true that it might fit two things and sometimes they work together. But they all work together all the time, but they can fund together too. So you don't have to be perfect on finding the right door. In fact, I think it's a great lesson.

11:18Lisa Suennen: I mean, if you only found the one door and didn't realize that you applied to two or three of your thesis areas, that's really helpful.

11:25StartUp Health: We've had a couple where one fund said, I don't want to do this one, but another fund said, I do.

11:30Lisa Suennen: Let's zoom out a little bit and we'd love to get your thoughts on the funding environment at that industry level? Kind of what are you seeing? What, yeah, what's getting funded and why? What are you seeing?

11:44StartUp Health: Well, you know, AI is getting all the money. I think we're getting closer to a time when AI becomes like talking about the internet. Everybody knows it's there, but you don't have to make it the focus. We'll see. I think there's still a lot of AI for AI's sake and a lot of things that say it questionable as they really are. And whether it even matters.

12:03Lisa Suennen: Is that just you talking or is that like AHA Ventures, is that becoming a tide of folks saying, you know what?

12:11StartUp Health: I mean, I would say it's becoming a small wave.

12:14Lisa Suennen: Because you've got two ends of the spectrum. Am I right? You've got two ends of the spectrum. You've got folks that are still like every pitch needs to have AI, boom, boom, boom. And you've got folks, and I would agree.

12:25StartUp Health: I think that's unfortunately true to get funding these days. Not necessarily from us, but if we're going to build a syndicate, somebody in the crew is going to say it.

12:34Lisa Suennen: Yeah. But it's not your, you're saying that's not necessarily, okay, it's not your focus. You're not saying it's AI is going to be slide two.

12:41StartUp Health: There's not a whole lot of devices that need a lot of AI, although they could benefit from it in some cases. I mean, there's more sensor enabled devices, even interventional or implantable ones now. So I think it's good to have a data story. It's good to have a tech story.

12:54Lisa Suennen: Are there elements to the story that you look for that maybe are a little counterintuitive, things that are on Lisa Sunan's mind based off of your 35 years of experience? Yeah.

13:04StartUp Health: I'll answer for myself. It might be a little bit different for some of the people that work for me. I think part of it is I've done this for a long time. I've been an investor mostly since 1998. And I have seen a lot of stuff. So for me, I like to see stuff I haven't seen before. That always intrigues me more. Or stuff that has a little further, gone a little further, because, you know, one of the, you get a lot of pattern recognition over time. And it's not always right, but it is my experience that a lot of the tech, especially tech forward companies, that if they are 1 million of revenue, their odds of getting to 2 million of revenue are less than you'd like to think.

13:41StartUp Health: And so getting a little further along in product market fit, I look for that. To the question about, do we ever fund holistic medicine? The answer is not really. it's got to have a really deep evidence and science base. And that is what the Heart Association prides itself on when we really trade on that knowledge a lot. And most of the holistic medicine stuff doesn't have the traditional evidence backing to it. Not to say it isn't good or right, but it is true. And so I think it would have to have a pretty solid scientific basis to be considered.

14:15Lisa Suennen: Last question before I jump into some audience questions. Tell us a little bit more about Studio Red, the venture studio. Given your experience operationally as an entrepreneur, I'm curious, and maybe this isn't your direct area day to day, but just more holistically, how you're thinking about co-creating a company. Like if you can kind of choose how a company gets built, what are some of the decisions that you're making that might be different from what you're seeing being pitched to you?

14:43StartUp Health: We like to find a couple of companies each year that are very young, that need assets we might have at the Heart Association, knowledge, data, capabilities. We have a lot of them, actually. A lot of things that we have at the AHA that we can bring to bear. And then help. And we also have a team of people who are entrepreneurial and help hands-on development of an organization, build the product, build the company. We have a lot of access. So we'll work with a young company. And like we did when it was a company being formed by another venture studio and a hospital. And we jumped in and, you know, for a decent equity position and contributed a lot of assets and value to that.

15:22StartUp Health: And we're hands on with them. And we're on the board for a while. We're not anymore. But now they're doing six, seven and ARR and they're off to the races company in the technology enabled services area, helping cardiology practices, improve the experience for both physicians and patients. We'll work with people who have ideas that come to us and they want to co-develop the thing, whatever it may be. We actually just funded some research on the clinical research side with the hope of, it's more late stage translational, but it's going to academic, you know, kind of researchers to advance a couple of categories in women's health.

15:57StartUp Health: And if they were going to work with them for a year on the research and translation side, and we're going to pick one at the end to make it to a company, hopefully. That's the goal anyway. Probably open to anything for us. We're returns oriented, but it's got to be in the mission areas. We're open to any conversation about that kind of thing.

16:12Lisa Suennen: That's kind of wild to me that you're taking on just pure ideas and you have this, this way of, of taking something from a great notion into a business. I'm guessing it's got to be a, an amazing idea from like a kind of ideal founder, but what does that process look like? I mean, I feel like people would be pitching that every day, just sending you an idea.

16:35StartUp Health: They are, but we have criteria. It's like a fund in a way of what, for us, it's really about starting with the need. How big is the need and how big is the gap in the competitive marketplace? If there's a big hole in the market and an opportunity and something that has a core asset, if you will, whether it's an actual asset IP-wise or good idea that is novel, we're very interested in seeing if we can add something to that. I saw the question about CKM. We're working on something in that category right now. That's about, you know, managing, more effectively managing medications and things in that space.

17:09StartUp Health: Okay.

17:09Lisa Suennen: That's one more question. And then we'll sort of wrap this up. We just heard from nine or 10 founders. I don't want to call anybody out or put anybody on the spot, but it does make me think about the power of a short pitch to you and you and your team have to instantly filter ideas. obviously you also need to look at a deck and look at data, but what are some of the things that grab you in an elevator pitch?

17:38StartUp Health: Clarity that you're solving a very well characterized big problem. Quality of the team.

17:46Lisa Suennen: Team, clarity. What are some mistakes? What are some things that will kind of run you aground?

17:52StartUp Health: Too unfocused, no clear evidence that it's a good idea.

18:01StartUp Health: lack of understanding of the reimbursement and regulatory market that surrounds it.

18:06Lisa Suennen: How much of a differentiator is it having a great initial pitch? Like you, if you hear a hundred, 150 % of them. I mean, think about it.

18:13StartUp Health: You know, we all like good storytelling and every one of us carries our cell phone around and we're quick to look at it when we're bored. You go to a conference, right? And what grabs you and makes you put it down? A great storyteller, a great speaker. And so I think it's not just about your idea being good. It's also about communicating well. If you're not the world's best communicator, like find somebody who is to help you train to be better at it. It's so important. I have a blog post I wrote about a billion years ago called The World is Made of Stories, Not Adams, and A-T-O-M-S, Adams, because it's not a bunch of facts.

18:51StartUp Health: A lot of people like that piece. You can find it on my Venture Valkyrie blog. It's out there in the world being old, but it's still valid. If you can't tell a good story, nobody can hear you.

19:01Lisa Suennen: I love it. Obviously, that's got to be followed up by a deck that's got all the right data, but in order to get that meeting, you got to have that great elevator pitch.

19:10StartUp Health: 100%.

19:11Lisa Suennen: Amazing. Okay. I'm going to bring Jen back up. Well, first of all, Lisa, thank you for joining us for this hour.

19:17StartUp Health: My pleasure. You're all your interesting things in there.

19:20Lisa Suennen: You shared a lot of gold, great wisdom, and then you handled a whole wide spectrum of questions. Everyone who joined, I thank you. This is what this community is all about, getting on these sessions live, hearing what you're working on. So it's not just about a transaction with Lisa. it's about understanding what the rest of the community is working on. So you can actually get on the app. You can connect with someone that you heard from today and actually move forward faster together. So I would encourage you to do that. Yeah, I do this kind of thing to pay it forward, you know, because sometimes then somebody turns around and helps me.

19:57StartUp Health: So help each other. It's really valuable to help each other and lean on each other as entrepreneurs. It's so hard what you do. And if you heard something today that you can reach out to your colleague and help them do it because they'll help you someday. It definitely comes around.

20:12Lisa Suennen: Awesome. Great note to end on. So thank you all. Awesome. All right. Thanks for having me.

20:16StartUp Health: Thanks again, Lisa. Appreciate it.

20:17Lisa Suennen: Thank you, Lisa. Thank you, everybody. And we'll see you. We'll see you around.

20:24Lisa Suennen: And finally, an invitation to all of the extraordinary health transformers, whether you are a startup, someone building the future of health, or whether you are an investor, funder or buyer of the solutions out there in the marketplace this is an invitation to you to join the startup health member community learn more at startup health.com look forward to hopefully seeing you soon