A top Silicon Valley VC firm is investing $200M in health software startups
The Silicon Valley venture capital firm announced Wednesday it plans to invest $200 million in software companies involved in biology and healthcare. The firm also announced Vijay Pande as its newest general partner.
"What used to be impossible, now is cheap," Pande told Business Insider, referring to the Moore's law of doubling of computing power and other resources. "What's left to do? Build software companies together to transform healthcare and transform the world."
Computer-driven medicine
Specifically, the firm plans to invest in three areas: digital therapeutics, cloud biology, and computational medicine. Pande stressed that investing in software-based biotech was very different from traditional biotech, and far less risky.
Digital therapeutics is the idea that software-driven behavioral therapies can have a huge impact on diseases and problems like PTSD, depression, quitting smoking, and insomnia. Andreessen Horowitz already invests in a company called Omada Health (of whose board Pande is a member), which is using digital tools to improve treatment of type 2 diabetes.
Cloud biology refers to having robots perform lab experiments, which aims to do for biology what cloud computing did for software.
Computational medicine is the use of AI or machine learning in medicine. The "Achilles heel" in machine learning is the need for massive amounts of data to train the machine, Pande said. That's why medicine is a natural partner, because it generates a huge amount of data in everything from radiology to genomics.
"We're going to get to a point where computers are better than human beings" at certain medical tasks, Pande said. They're already better than humans are at recognizing images, which makes up a huge amount of modern medicine, he added.
Investing in health
Formerly a professor of chemistry, structural biology, and computer science at Stanford University, Pande was appointed to lead these efforts because of his expertise. He is the founder of the Folding@Home, a project that runs in the background on thousands of PCs to simulate the three-dimensional structure of proteins - something known as protein folding.
Computing power has changed tremendously since Folding@Home started in 2000, Pande said. In 2007, the project set a Guinness World Record for the most powerful supercomputer in the world, at 1 petaflop, or 1 quadrillion floating point operations per second. "That [same amount of] compute power now costs $400 per day," Pande said.
The firm closed a $200 million round of funding last week. Although it hasn't put out a specific timetable for making investments, Pande said they plan to make four Series A deals (the first round of financing after a business's initial seed capital round) and eight Series C deals (a third round of investment for businesses that have typically advanced further along) this year.
One of the first recipients is twoXAR, Inc., a company that is pioneering digital approaches to drug discovery. The company announced Tuesday that it has raised $3.4 million in seed financing.
And Andreessen Horowitz isn't alone. Google Life Sciences just announced it will partner with the American Heart Association to invest $50 million in curing heart disease. And in October, IBM's Watson acquired the imaging company Merge Healthcare, Inc., with the aim of help doctors diagnose ailments like cancer from X-rays and other images.