This former Social Capital partner is betting that early-stage biotech startups have been misunderstood for too long, and she's joining CRV to change that
- Kristin Baker Spohn joined CRV as an investing partner on Wednesday to lead the firm's investments in biotechnology startups.
- Spohn was most recently an angel investor in health technology companies, and was a partner at the troubled Social Capital prior to striking it on her own.
- Spohn told Business Insider that the key to nailing successful deals in health tech is in an investor's ability to see how the industry has historically functioned without shying away from big ideas for how to transform it.
- Spohn also said artificial intelligence is one of the biggest areas of improvement for health tech, but is usually the most overhyped.
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If you ask Kristin Baker Spohn, the golden age of health tech hasn't even really started.
All the rage a few years ago, health tech startups have recently been more associated with unattainable valuations, eccentric founders, and in some instances, allegations of outright fraud. And Spohn wants to bring the industry back from the brink with a little help from one of the oldest venture firms.
On Wednesday, Spohn announced that she was joining CRV to lead its biotech division as an investing partner. The former Social Capital partner had been angel investing in a range of health tech startups, but wanted to make a bigger dent in the massive industry.
"There's a massive amount of innovation, and you're seeing some really phenomenal outcomes," Spohn told Business Insider. "There's a lot of money pouring into this area, and you need folks that have the depth of understanding of the market but also see how it could be to pick the right outcomes."
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According to Spohn, she has the privilege of having both those perspectives. She previously led business development at Castlight Health through its public debut before jumping back to another early-stage health tech startup called Collective Health. She points to Series A-stage startups as the sweet spot for her skills.
"It's a wonderful intersection of intellectual and tactical work," Spohn said. "I love when you've got the sense of the product and just really open to the big strategic questions on how you're building the company."
"Just because you have AI doesn't actually make it a company"
Instead of continually building companies only to jump ship years later, Spohn moved to Social Capital, the now defunct venture fund that chose not to raise new funding after leadership missteps by founder Chamath Palihapitiya. After the firm closed, Spohn decided to become a full time angel investor.
At CRV, Spohn is already looking at startups with potential, specifically those using artificial intelligence in medical imaging like MRI and X-ray. At the same time, she cautions against investing in just any AI startup.
"You are seeing a ton of companies that are saying they have AI for this or AI for that, but when you dig in you see that just because you have AI doesn't actually make it a company," Spohn said.
According to Spohn, those mistakes come when investors with strict technology backgrounds try to break into health tech investing. They don't understand how the industry functions and how different consumers are affected at different steps along the way.
"There's four key stakeholders in any product or area: who uses it, who benefits from it, who decides to use it, and who pays for it," Spohn said. "In a consumer company, those four are the same. But in healthcare, there are sometimes four different people or four different companies at each stage. I look for founders that really understand how this affects their go-to-market strategy and delights all those stakeholders."