Alleycorp Invests $100 Million in Physician-Led Healthcare Ventures

Kevin Ryan's Continued Investment in Startups

Kevin Ryan, a New York-based investor and entrepreneur renowned for his leadership as CEO of DoubleClick, possessed the opportunity to establish or participate in a conventional venture capital firm years ago.

However, he opted to repeatedly launch companies, initially funding them primarily with his own resources. Notable examples of his ventures include Business Insider, Gilt Groupe, MongoDB, and Zola.

A New $500 Million Evergreen Fund

Ryan continues this approach, currently managing a $500 million evergreen fund largely financed by his personal capital.

A growing team contributes to the fund and assists him in both funding and incubating startups.

Interestingly, despite lacking a formal background in healthcare, a significant portion of these investments are now directed towards the healthcare sector.

AlleyCorp, Ryan’s investment firm, has already made 20 investments in healthcare-related companies in recent years.

Doubling Down on Healthcare with a $100 Million Fund

To further emphasize this commitment, AlleyCorp is allocating $100 million to a new fund specifically focused on the healthcare industry.

This fund is chaired by Ryan and will be led by Brenton Fargnoli, M.D.

Dr. Fargnoli previously completed a residency at Brigham & Women’s Hospital in Boston and gained early exposure to the entrepreneurial world through a research elective at Flatiron Health in 2015.

He later concurrently served as a medical director at Flatiron and an attending physician at Memorial Sloan Kettering Cancer Center.

The Leadership Team

Joining Fargnoli is Jeff De Flavio, M.D., a physician-entrepreneur with a track record of launching successful companies.

These include Tempest, a holistic alcohol recovery program supported by AlleyCorp, and Pearl Health, a primary care physicians group created within AlleyCorp that recently secured Series A funding led by Andreessen Horowitz.

The team is further strengthened by the inclusion of medical students Omar Njie and Sherman Leung, alongside Jane Suh, who previously worked at Andreessen Horowitz.

Fund Focus and Investment Strategy

Fargnoli explained that the new fund’s primary objective is to invest in startups that enhance the quality of patient care, broaden access to healthcare services, and reduce overall costs.

Initial investments will range from $1 million to $3 million.

The Rise of Physician Entrepreneurship

Discussions also centered on the expanding field of physician entrepreneurship, a path Fargnoli himself was introduced to by Krishna Yeshwant.

Yeshwant, a physician, programmer, and general partner at GV, completed his residency at Brigham and Women’s Hospital and continues to inspire others.

“Everyone knows Krishna,” Fargnoli stated.

AlleyCorp's Commitment to "Doctorpreneurs"

AlleyCorp currently boasts nine “doctorpreneurs” within its portfolio.

Prior to the pandemic, Ryan hosted a gathering of 100 physicians at his residence, demonstrating a commitment to fostering this new generation of healthcare innovators.

Fargnoli highlighted this as a merging of clinical expertise with technological advancement.

Industry-Wide Recognition of Physician Value

AlleyCorp is not the only entity recognizing the significant opportunities within healthcare and seeking the expertise of physicians.

Healthcare-focused funds have long incorporated doctors into their teams, and generalist firms like Andreessen Horowitz are also actively recruiting physicians.

Vineeta Agarwala, a general partner at a16z who continues to practice medicine, exemplifies this trend, having led the firm’s investment in Pearl Health.