In this interview, Emily Zhen will discuss how diversity is transforming the digital health investment landscape. She'll explore the impact of DEI initiatives on investment strategies, the rise of female and BIPOC founders in healthcare, and the unique perspectives diverse investors bring to identifying and nurturing groundbreaking healthcare solutions.
• Discover how to leverage diversity for better investment outcomes in digital health
• Learn strategies for identifying and supporting underrepresented founders in healthcare
• Gain insights on bridging the funding gap for women's health innovations
• Understand the role of diverse investors in driving healthcare equity and access
Megan Antonelli, Chief Executive Officer, HealthIMPACT
Emily Zhen, Principal, Zeal Capital Partners
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[00:00:00] VO: Welcome to Digital Health Talks. Each week, we meet with the healthcare leaders making an immeasurable difference in equity, Access and quality here about what tech is worth investing in and what isn't as we focus on the innovations that deliver join Megan Antonelli, Shah for a weekly No BS deep dive on what's really making an impact in health care.
[00:00:31] Megan Antonelli: Hi, welcome. This is Megan Antonelli, and I'm excited to welcome another health impact speaker back to digital health talks today. Please join me in welcoming Emily Zen. Emily is a principal at Zeal Capital Partners, where she focuses on driving economic mobility through investments in health equity, financial inclusion, and the future of work.
With a background in healthcare investing at NEA and Goldman Sachs, as well as experience as an early stage digital health operator, Emily brings a unique perspective to venture capital. As the daughter of Chinese immigrants, she's passionate about empowering underserved communities and backing diverse founders.
Today we'll explore Emily's insights on the evolving landscape of digital health investments and the critical role of diversity in shaping the future of healthcare innovation. Hi Emily, how are you today? I'm doing great. How are you
[00:01:26] Emily: Megan? Thanks for
[00:01:26] Megan Antonelli: having
[00:01:27] Emily: me.
[00:01:27] Megan Antonelli: I'm good. Thanks so much for joining me. You know, it was so great to meet you in New York at Health Impact, but I enjoyed your panel so much.
So I'm so, so glad you can join us today.
[00:01:38] Emily: It was a wonderful event that you put together, Megan, and had so much fun on the panel. Looking forward to chatting more today.
[00:01:46] Megan Antonelli: Yeah, well, it's so fun to meet investors in this space and, you know, particularly women working in this space. So I'd love to hear your story on how you got into investing and kind of what your journey has been so far.
And of course, what brought you to Zeal?
[00:02:01] Emily: Absolutely. Happy to share. So I grew up in the Chicago suburbs and. I've always been really passionate about healthcare. I've always loved the sciences and biology, grew up doing research and volunteering at the hospital. But at the same time, I was also very interested in startups and innovation.
I went to school at Penn and studied biology and business. I was pre med and a business dual degree through Wharton and got the chance to realize that there's actually a lot more overlap. A lot of the challenges in healthcare are not purely just scientific and medical in nature, but they're due to challenges in technology, innovation, and policy, and ultimately businesses.
systems, not always working together. Well, and as you alluded to coming from an immigrant family, my grandparents played a huge role in raising me and I saw their journey in growing older and also in not necessarily being fluent in English, right? And so having that role as an English translator and also caregiver.
gave me a personal lens to healthcare as well, which motivated me to learn more about venture capital. And so early on, I worked at several digital health startups, including healthy, which is a digital health EMR infrastructure platform and a company called neuro flow and the behavioral health startup.
space that does a lot of work in value based care and behavioral health. And I realized that I loved working with early stage companies, but I didn't realize it was a job you could do right out of college. And so I wanted to just get more experience working with healthcare companies and seeing what it would take for large healthcare companies to really scale and be successful and continue growing.
And so starting with that. I went to work at Goldman Sachs, as you alluded to, in healthcare investment banking, and there got to take part in IPOs and M& A. While I was there, Oak Street went public and Moderna, for example, um, got to work closely with a number of companies from life sciences to, uh, medical device and digital health on acquisitions across.
Gene and cell therapy to more value based care as well. Had a great foundation there, realized I still wanted to work in earlier stage and work with startups going back to that North star. I ended up joining NEA in the beginning of 2020 and moving across the country from New York city to the Bay area.
I was at NEA for a bit over three and a half years, had a wonderful experience there, investing multi stage from incubation to growth, investing, and even in public companies across both life sciences and therapeutics and digital health and healthcare services and delivery. There, I got to incubate companies like and help invest in companies like Strive Health and Valley Based Kidney Care to Curata and Valley Based.
primary care for senior living communities, very impactful companies, seeing them through from ground zero and getting to participate in later stage funding rounds as well. Then I learned about zeal was connected to the founder of zeal capital partners. Through a mutual friend and actually a board member that I work with while at NEA through that, I was connected to Nasir Qadri, the founder and managing partner of ZEAL, was really interested in what he was looking to build in the health equity vertical in particular.
ZEAL Capital Partners is a mission driven early stage venture capital firm that has the mission of closing the gaps in wealth, health, and skills across the U. S. And. Wanted to add health care as a sector, realizing the importance of health equity and economic mobility. And so the chance to really take my background experiences to be able to start that and also invest in FinTech and future work in my career.
Was super interesting. We connected for what was supposed to be a 30 minute zoom call, and it ended up being over two hours, just incredible mission alignment, the chance to be entrepreneurial, to build in an area I was very passionate about and to start the health equity vertical, build the thesis, help lead that focus here at zeal.
And the rest is history. So I joined a little over a year ago and since then have built out the thesis to our health equity focus and have made eight investments overall, three in the healthcare space that I'm excited to share more about and throw across access and affordability of care, women's health, mental health, and wellness.
And social determinants of health, which are for me.
[00:06:32] Megan Antonelli: That's an amazing, um, path to this, but almost, you know, a story like the storybook, you know, classic path, right. From Wharton to New York, uh, starting in Chicago, some great cities there, um, but also lots of great experience. And obviously like just at the ground as these digital health startups are happening and it's funny being in this for a while and seeing how things move slowly when you think of the last 10 years in digital health, things Things have moved really fast and we've seen a lot of change and a lot of companies come and some, some go as well, but, um, such, you know, such a diverse group of companies you worked with.
So that's amazing what you bring to this space and to the conversation. It sounds like, I mean, zeal in terms of where they're. Interest lies and their investment strategy, you know, that you've got a really diverse group of portfolio companies. So I'd love to hear more about both the strategy as well as around inclusive investing and what does that mean?
I think our listeners would be really interested in that.
[00:07:36] Emily: Absolutely. So zeal has a unique strategy that we call inclusive investing. And this is actually a market backed approach that is also trademarked. It has five prongs to it, which are diverse fund managers. Diverse management teams, geographic inclusivity, investment focus on our sectors, which are FinTech, future work and learning and healthcare blends towards health equity and systems change as you think about actually measuring impact.
And so what that looks like is we take a holistic approach to looking at companies and really prioritizing diverse lived experiences that are relevant to whatever companies the founders are building. And so. This is across geography, gender, ethnicity, age, background, and experiences from a career perspective, veterans, LGBTQ, it's very broad in terms of how we look at it.
And we don't look at it as anything to screen out, more so as a way to think critically about how companies can serve diverse communities and serve underserved communities. Thank you. If they have teams that reflect the populations they're serving. And we also care a lot about ensuring we are having a broad funnel when we think about sourcing.
So we actually track these metrics in terms of where we're sourcing from and who we're sourcing from. The makeups of the teams that we're investing in and the experiences that they bring. And so I think it's a unique approach to investing that allows us to broaden our reach when we source, but also to remain focused on our core sectors that are related to closing the wealth, health, and skills gaps, which are FinTech, future work, and healthcare.
[00:09:27] Megan Antonelli: That's really interesting. And I think, you know, with healthcare in particular, obviously FinTech and, and future of work also, but, you know, when you think about sort of that, we talked, um, to Robin at, uh, work in health, you know, patients as designers and patients as founders. And, and, you know, And kind of that, you know, when you have the problem, when you start with the problem that you're facing and you solve for that, that group of people.
So I think in healthcare, we, you know, it is so important and, and we see particularly with women's health, often, you know, these problems are so rarely even addressed, let alone coming through with that lens, but tell, tell us a little bit about some of the portfolio companies in healthcare and what some of that, you know, diverse leadership looks like.
[00:10:12] Emily: For sure. Well, you mentioned women's health and we're so excited to be announcing our Series A investment in a company called Seven Starling. They are a women's mental health platform that delivers virtual individual and group therapy for moms from prenatal through postpartum care and expanding into areas like menopause as well and providing holistic mental health services.
Support for, for women. It is a all female executive founding team with Tina and Sophia and Julia, and they all bring lived experiences to the table, given their own experience. Um, as women, Tina, actually the CEO just had a baby of her own. And so it's been incredible just following along their journey and having met them.
Back when I was at NEA and tracking them and getting to invest in them at ZEAL. Well, that's just one example of a company that is very mission driven of folks who come from immigrant backgrounds and Tina comes from an immigrant family, but also all women who have encountered and seen some of these women's health issues.
Challenges either themselves or through others. And it's an area I'm very passionate about having friends with different women's health conditions. I'm not a mom yet, but I want to be one day. And so it's definitely an area that is top of mind for me as well.
[00:11:41] Megan Antonelli: Yeah, I do. What I find in this is, especially with women, when we hit the space where we realize there's a problem, we want to solve it.
And that's where a lot of our entrepreneurial spirit tends to kick in. And we realized that there is a gap and then that's where we can really bring strength. to the table. And when you see all of the great businesses that are created by women for women, it's usually cause it's a problem they've had, right.
Or a gap that they see, you know, and luckily, you know, or not, maybe not so luckily, but there's, there's a lot of them to tackle, but talk a little bit about, you know, as your experience, you mentioned, you know, I mean, It just, the investment community alone is not particularly diverse, right? I remember going to, I won't mention the conference, but a conference in healthcare and feeling like, whoa, you know, the first year it's gotten much, much better, but it was a very different feeling because in, in general, healthcare is a diverse sector.
You know, field, you know, maybe not as much as we want it to be at the C suite levels, but throughout the, you know, throughout a hospital and a health system organization, there is diversity. But then when you look at the investment room or the boardroom, there tends to not be. So as, you know, as a woman coming to this area and, you know, certainly Goldman Sachs and, and all of that, tell us a little bit about your experience, but then also how does that.
Translate into the advice that you give to the female founders who are your portfolio companies.
[00:13:11] Emily: Definitely. I would say I've been in rooms where sometimes I'm the only female, which I'm sure you have to Megan, and that could be a boardroom to be a meeting with C suite executives, and one of the challenges that I faced was honestly just overcoming the fact that I looked different and had different, experiences.
I think that it took me some time, especially when I joined VC to find my voice and bring my unique voice to the table. You know, I think I've always been a bit more of a listener first, which I think is a fantastic quality that I have and many other female peers have, but to also not be afraid to share your insights and voice when they can add value to the table.
And so that's something that. Um, I've encouraged my interns to really channel and people who I work with when they're early on in their venture career to definitely listen, to soak up, to observe, but also to share their thoughts on what they think about an investment, to not be afraid to voice a dissenting opinion.
Those are all skills that I learned over time and am continuing to just. Become more comfortable, especially in a room of people who are often very experienced as well, to be able to have the confidence and believe that I have a unique perspective to provide.
[00:14:39] Megan Antonelli: Yeah, it's so important, you know, and I think reminding them that the difference and the observations that they make are, you know, that's what brings them to the table.
You know, I've come across a couple of times, but maybe because of my age, but more and more, I'm finding more mature founders. Within healthcare, we're faced, you know, the sandwich generation we've got, we're taking care of our children and our parents at the same time, also just the prevalence of chronic disease and management and how that's managed.
And, you know, as you get older, you're facing more healthcare problems. Therefore you're getting into that space when you look at some of those founders and are there specific words of wisdom advice to the more mature entrepreneurs and innovators out there coming to healthcare?
[00:15:24] Emily: Definitely. I think what's been really inspiring is seeing more female founders continue to absolutely crush it while they have new babies, while they're starting a family, and it's not easy to balance, or I don't even know if I like the word balance, because it's, it's always It always is.
Always doesn't feel like it's a balance, but to really find a way to ensure you're, you're both giving enough attention to the startup that you built, but also your family and both are so important. And it's something that I've seen successful female founders. Do is to give themselves grace when things may feel like they're not balanced because I've heard the term work life balance is actually probably not the best way to represent it and to build a strong team around them to know that There's a lot that goes into building a company and teams are really important.
And so when like I've, I've had founders, multiple founders recently go on maternity leave and they've done an excellent job working with their teams and communicating with their teams and also just staying in lockstep with them every step along the way. And so I would say it's possible. It's challenging, but with a great team and with also some grace, realizing that.
No one can do it all at any given time, but you can have it all at different times, right? Yeah,
[00:17:00] Megan Antonelli: I learned that pretty quickly in my experience and I shifted from sort of that thought of work life balance to kind of just sustainability, right? Just keeping it all All together, I was never a big fan of the term, term lean in either, because I think, you know, I've always been leaning in.
So I didn't love that as a movement, but I do think managing that balance and keeping an eye towards sustainability and that at different times things give, but I think that also, when I, in seeing a lot of the menopause and even later sort of the maternal stage and post children, entrepreneurs come into the space that has something to do with it too.
Right. So not only is there the lived experience. Experience, you know, but at the same time it's like, would we ever look at a man who's 55 and in and an entrepreneur as sort of past, but you know, with women, it, it, the perception, the lenses are a little bit different. Um, but I am excited and, and energized to see more and more women coming into that entrepreneurialship role and innovator role.
In that point of their life where maybe they don't have young children anymore, and therefore they do have more time to emphasize on it. So, but also the renewed energy around women's health and menopause and all that. So there's some opportunities there and that being said around. The sort of current environment, I'd love to hear your thoughts.
I mean, obviously we talked a lot about that with Neil Carpenter and the group that we had at Health Impact, but, you know, digital health has had its peaks and its valleys. The whole sort of investor environment right now is a bit of a valley where, you know, what are you seeing in terms of that environment and how that's changing or changed in the last couple of years?
[00:18:49] Emily: Well, there's definitely been a change from 2020, 2021, and we're seeing a market that has adjusted and we're seeing less VC funding than we did before in a higher interest rate environment, in an environment with less liquidity and distributions than you saw before compared to 2020 and 2021 with a less active IPO market.
Although we did just see a few digital health IPOs with a Tempus, which is actually one of my, one of the companies at NEA in the digital health space, working in precision medicine for oncology and AI and oncology and Waystar, for example, just IPO ing. So we're starting to see some signs of pickup. The first half of 2024 of digital health VC investment, looking at some of the rock health data look like it was picking up compared to the same time in 2023.
So we're seeing some signs of pickup. But still, by and large, it is not the same market as it was before in 2020 and 2021. It's harder to raise financing rounds, especially for later stage companies, and even series A's are getting tougher to raise than before. The rounds are smaller, and there are more bridge financing rounds, unnamed financing rounds as well that you're seeing.
The other thing that I mentioned is, despite the tight funding environment, overall, AI Base companies, especially generative AI has still been a very hot area and I would say both in terms of dollars raised and valuation have garnered Higher amounts of dollars raised and higher valuations, even if revenue traction is not yet at the same place as a non AI company, right?
And so that is another trend that I I'm seeing. I believe in the power of AI overall in healthcare and have been looking at some of these companies, but trend that I've looked at is definitely the dollars raised and valuations have been a bit higher in that category that I'm seeing now.
[00:20:58] Megan Antonelli: For sure. And I mean, in terms of how you're looking at companies, I mean, other than, are they using AI or not?
Are they an AI native company or sort of patching it on there to make them sound like an AI company? But in terms of how you're evaluating, we talk a lot about digital health value and measuring that. And where do these companies really move the needle and impact, right? Do you feel as though the criteria that you as an investor are using Has changed since 2020 to now, or is it more just that there's less money to go around?
[00:21:38] Emily: What's really important to me is given our focus on health equity and our lens towards that, looking at both financial metrics, but also Is this ultimately making a good impact on patients? Is this something that benefits both patients and whatever business organization the company is selling to?
Because as we know, most of healthcare is not necessarily funded by the consumer themselves. And so, in terms of metrics that I've looked at and have always looked at, Are things like engagement, how are patients actually engaging? Are they using the platform? What are the outcomes that come up from that in terms of clinical outcomes?
If it's a diabetes company, things like A1C metrics and how are cost outcomes in terms of total cost of care, MLR, the other area is reducing hospitalizations and ER visits, right? Especially for higher acuity patients and chronic conditions as well. And so engagement, clinical outcomes, and the 3rd area is around financials and it's around things like not only revenue growth, but gross margins.
Unit economics, looking at a per patient basis. What does the LTB CAC look like? What does the customer cohort data look like? And even though most companies I look at today, given we're seeing series A stage focused, are not yet profitable. Do we feel like there is a path to profitability? And how are they at Managing their cash and cash efficiency.
What does the burn rate look like on a monthly basis? So those metrics for me have not changed since 2020, 2021. But I think in the market, there has been an increased emphasis on an earlier path to profitability and early, more focused on some of those cash efficiency metrics, given the tight funding environment, right?
Um, because now folks are. Guiding towards raising capital for at least 18 to 24 months, right. To make sure you have enough capital to reach the metrics for that next fundraising round, and knowing that it may take more time to raise that next round of financing as well. And so if anything, I think it's similar metrics for me, but because of the tight funding environment.
It's even more of an emphasis in the market on things like cash efficiency, cash management, and managing growth and profitability, which can be tossed right in the 2020, 21 market was definitely. A little bit of more growth at all costs or, you know, just keep on funding. In today's environment, you've got to grow and you've got to be cash efficient.
And, and that's not an easy task. So that is a piece that I think has changed from the 2020, 2021 environment.
[00:24:37] Megan Antonelli: Yeah, for sure. And I, you know, especially with like, in that there's so many mission driven, you know, they're mission driven companies. A lot of people get into sort of healthcare entrepreneurship around a passion project and, you know, problems you face in the healthcare system, or those who come to it with a bit more of a, a broader base understanding of the stakeholders and the problems, but still often a passion project and profitability isn't always the first.
You know, um, cash of his and she, it's not the first priority, but, um, it should be. So I think that's really, really solid and sound advice in terms of, you know, I think that you could discern that piece of advice from what you just said, but when you are talking to your companies now or companies that come to you and you say, well, you're not ready yet.
What's the one piece of wisdom advice, or, you know, what do you hear yourself saying most often to them to get them ready, to get them to that next level?
[00:25:36] Emily: Besides that, cash is the lifeblood of the company, which I think managing that cash well and understanding what the run rate is. The other piece I would say is, Having a strong sense of customer need and listening to your customers, especially in the earliest stages, it's so important to ensure that you are building a company that is actually solving a need rather than adding another point solution to the market.
Right. To do this, you literally need to talk to hundreds of people and include the patient in that, right? Even if the patient isn't paying. How does this improve patient experience and will they actually engage with it? Is this something that will take away waste or could it actually add to the complex health care system?
And so I would also encourage them to talk to as many customers as possible, even after their post product, post revenue, right? Constantly be listening to customers, constantly be iterating to try to improve the patient experience, the experience for payers or providers or pharma or whoever they're selling into, because that is ultimately what helps companies succeed.
And especially in early stages, there is probably going to be more pivoting and iteration than in later stages.
[00:26:59] Megan Antonelli: That's great advice. You know, and I think the patient centered focus on it, but with profitability on the mind, right, in terms of how you innovate and what that sort of path to success is right now.
I mean, I always think if you don't, sometimes you'll meet innovators and it's like, well, we're just dealing, you know, we're our customers, the provider market, we're going after the hospital. We're a direct to consumer. We're going after the patient, you know, we're really, it's an insured model. We're, we're going after the insurance companies.
And I think I generally think, well, if you don't serve at least two of the three and probably one of them has to be the patient, you know, you're not going to move forward. Really good advice. So, you know, I could talk to you all day about this. I love talking about it and learning about it myself. I feel like I should know more based on how many innovators I've seen and talked to over the years, but it is, you know, it's always changing.
So it's good to get a fresh perspective. So thanks so much for joining us, Emily. Tell us, tell our audience how to, how to reach you at ZEAL. You can reach
[00:28:01] Emily: me on LinkedIn. Feel free to reach out and send me a message and would be happy to chat whether you're innovating in healthcare, whether you're another investor or just working in the space and, and believe that we could have something to collaborate on, would love to hear from you.
[00:28:18] Megan Antonelli: Awesome. Well, thanks again, Emily. Thanks so much for sharing, you know, the information and what you're doing in terms of inclusive investing there at zeal. It's so important that that is embedded and part of our bringing innovation to the healthcare ecosystem. I hope our listeners enjoyed hearing from Emily and her unique perspective and the valuable insights.
And to the future of digital health investment, I look forward to seeing her work and hearing from the rest of you. As we look to create a more diverse innovation landscape and digital health. Thank you for listening and keep innovating for impact. This is Megan Antonelli. Thanks everyone for joining.
[00:28:57] VO: Thank you for joining us for this week's health impacts, digital health talk. Don't miss another podcast, subscribe at digital health talks. com. And to join us at our next face to face event, visit healthimpactlive. com.