Good morning 👋
Today we’re breaking down a conversation with Sean Doolan (@seanwdoolan), GP @ Virtue.
Virtue is the “earliest stage health VC”, they are backed by Cendana, and they just raised a fresh $55.75m Fund II to double down on what’s working.
They want to come in earlier than most, and that requires a differentiated offering than other healthcare funds, quick conviction, a deep understanding of hurdles that healthcare companies will face.
We talk about all of that and more in today’s piece.
Let’s get into it.
P.S. For those of you who like notes and quick takeaways …
Sean Doolan
GP @ Virtue
What’s Virtue’s genesis story?
“For the last decade, I had been fully focused on investing at the earliest stage in healthcare. I was responsible for developing the entire portfolio construction at my previous fund, and that really gave me a lot of fulfillment.”
“By 2020 and certainly early 21, there was a right place, right time to start a dedicated pre-seed healthcare firm.”
“Often there is a certain spark or catalyst required to prove that something is a possible reality for you, and for me, that was two conversations from my then girlfriend (now wife) and one of my founders who encouraged me to do it. That founder became my first check into Fund I.”
One thing that you want to make known on your site is that you have the ability to operate with speed and make high-conviction bets quickly. What’s your process look like to get conviction, and how are you able to move faster than other firms?
“All we do is focus on the healthcare sector… we’re not coming in cold… we’ve probably had at least 10 or 20 pitches in any given area.”
“First call, we are basically coming together as a peer and really get into the nuts and bolts of what they’re building. We can decide from there which direction we want to go, and we spend more time answering the important questions if we are excited coming out of that first call.”
“At the end of the day, nothing beats references. Our reference process is probably more intense than most, but the data you gather from those calls is priceless.”
How do you think about regulatory hurdles in healthcare investing and help founders navigate them?
“Healthcare is a highly regulated sector… we need to factor in direct and indirect regulatory impact. We try to avail ourselves at Virtue as being that co-investor who helps these founders get up to speed on regulatory considerations.”
“Unlike software, you can’t just go all 50 states at once, and there are different licensing and credentialing boards on a state by state basis.”
“Reimbursement profiles of those companies plus the defensibility of rich reimbursement margins absolutely impact our investment decision.”
With Fund II, what’s your roadmap for team development and scaling the firm?
“Our ambition for Virtue is to get really good at pre-seed and seed healthcare… double down on that.”
“I don’t think you need to pay a junior when we can get far better output by subscriptions to a ChatGPT deep research.”
“We’re going to internally invest that much more into fleshing out and cultivating those industry networks.”
“Unlikely that we’re going to bring on a junior in this Fund II… more likely someone a little bit more experienced.”
What’s the worst part about venture that nobody talks about?
“It is so damn competitive right now. We are competing with firms with $30 billion of AUM.”
Who are some emerging managers that have impressed you over the last few years?
“Rick Zullo: He deeply understands the sectors he plays in, and he’s got some pretty killer performance.”
“Nichole Wischoff: She does not stop going, and she’s such a magnet for talent, for founders, for LPs.”
TWEET
Thanks for reading this far and giving us a little bit of your attention this week.
Feel free to unsubscribe whenever this stops becoming valuable to you.
- Clay
"This has had a 100x ROI."
See why some readers are bumping up their reading experience ....
Upgrade todaySee which plan is right for you:
- Insider-only posts
- Operator-level access to give you an edge
- Boardroom-level support from our team (whenever you need it)
