Investing in Health & Wellness Startups | Helene Servillon • 8

00:00:00 I've been seeing like secondaries for open Ai and literally there's like no information about how the company's doing or whatever and they're like 50k minimum make a decision 5 minutes and I'm like like yo like you know while everyone is really focused on like the next longevity pill or Ai and Healthcare how do we modernize ancient healing modalities and forgotten Wellness with tech data and science you know I think people get fomo very often adventure and that's when you get super stupid overvalued company that aren't good for

00:00:31 the investors and it's not good for the [Music] founders welcome back to VC unfiltered we're so incredibly excited to have you here today on the show Helen from Journey one Ventures joins us uh to talk about The Cutting Edge of the health and wellness space and the different Investments that she's diving into so excited to have her here Helen welcome to the show thank you for having me lias it was it was great to meet at a wellness DC Retreat instead of a crowy crazy room we were in beautiful ohigh

00:01:05 California honestly I couldn't have been happier I think that day for a lot of us was just kind of needed of getting away from uh the chaos and everything else I know that a couple of us had some very intense phone calls literally right before we went in and so being able to breathe uh with everyone was uh was a quite a treat yeah I think a lot of funds happen to have their agms which is like their annual LP meetings um with founders and portfolio companies it was a great mixup for us to decompress a

00:01:34 little bit and slow down and I think that's one thing I want to talk about in in terms of the culture I'm building at Journey one yeah 100% so yeah honestly let let's dive into it so I want to find out more about the fund what you guys are investing in and kind of do a deep dive uh into such a unique and interesting sector J1 Ventures I I launched it in 2021 and we made 10 bets and have nine existing portfolio companies at the moment and my focus is really investing in Frontier Health and Wellness with a focus on software

00:02:07 biotech consumer Tech and digital health and so we we cover a lot of the core Venture backal categories within health and wellness and one of the questions and personal missions that I always ask myself is how do we modernize ancient healing modalities and forgotten Wellness with tech data and science um you know while everyone is really focused on like the next longevity pill or Ai and Healthcare I think those are really interesting sectors and Trends to follow but there's a lot of incredible resources that I think from a cultural

00:02:40 and social construct we probably have overlooked so for example um we recently invested in a male birth control company uh called contraline and they have two out of the three Global Assets in the male contraception industry and uh as a as a as a man who's looking to um look for male contraceptives there's only two options in the market which is uh getting a vasectomy which is hard to reverse and very expensive to reverse and then condoms and um so they have a male IUD version which is technically a

00:03:16 medical device these are all FDA regulated um products and processes and then they have a hormonal uh you know gel that um the patient would put on their arm daily that is a different approach and so when I look at the the the category contraception it's not like we just invented birth control we we started innovating um and developing products mainly for women and I think the cultural construct at the time was women should have responsibility of this challenge um and so now you know things have changed and uh we also have um some

00:03:56 you know advances in Material Sciences to get there but um you know we maybe have been able to do this before it's just the social construct of this time didn't give us that opportunity I mean that would be gamechanging in general so what a what a unique uh what a unique space to be in so that's absolutely one aspect right of the kind of Frum to your health and wellness what else are you looking at or what kind of comes across your plate in general because it seems like again a very unique category so

00:04:27 another company that we re we we backed in the last two years is lco therapeutic so they are a drug pharmaceutical company that develops MDMA for MDMA assisted therapy so it's actually combining drug plus um Talk therapy um for the use case of PTSD treatment and when we started doing diligence on the sector of okay this is one approach to help solve for you know deep acute depression um and then there's anxiety eating disorders what are some of the trends that are evolving from this company trying to

00:05:04 attack this um use case and are there other approaches so we looked at a company that um that helps uh patients get off anti-depressants and they have a a basically a digital Health platform that they're building and it's pretty in beta and so you know once we look at one deal that we go in on it takes a lot of work to look at a completely different sector so you kind of catch on a theme you learn a lot and then you build a thesis and we started to build a thesis within like the sexual Wellness space

00:05:38 that we're exploring so we're looking at um doing an investment in you know the STI testing sector which you know it's it's it's a massive Tam um for for those that are sexually active and and also one of the hindrances to um you know getting pregnant has been um STI like goner and cl Med that are easily preventable that sometimes people don't know they have and so you know we look at use cases that solve problems that we really care about um I've dealt with a ton of anxiety and I didn't go the route

00:06:14 of anti-depressant I went to coaching and lots of therapy and just changing habits that would catalyze anxiety and manifest anxiety but there are a lot of people who you know struggle with that but don't have those same tools and resources to to take the approach I did and so um it's one that I like really relate to and I think when we were diligen in this uh papering platform for anti-depressants uh it was one of those deals when you watch customer interviews or interviews on people who are dealing

00:06:48 with this problem and you know this woman had this video and she was talking about getting brain zaps and just feeling like I tried to get I tried to get off my medication my doctor didn't have a good solution for me and I just feel trapped and I'm she was just like crying and depressed about it and it just like really hit home for me I was like this is a this is a severe issue and onethird of the US population is on a daily psychoactive drug so I don't see that number materially decreasing well

00:07:20 hopefully with the Investments that you're making potentially right yeah what one one step at a time hopefully makes that change 100% And from the storytelling as ECT I mean it's it's it's to be able to to invest into such a interesting space that can actually change lives like tangibly that you can see I mean that's a that's a it's a great mission to be able to to be on uh especially for you and for your LP so congrats on that definitely yeah thank you and I I think um I'm curious to learn a little bit more about like what

00:07:54 sectors or Industries you're really focused on in the next six months but it's always an ever evolving creative process and the more fun I could have in you know trying to figure out what what is the next thing that's going to create a lot of energy for me to want to go really deep in the subject I think that's like the beauty of this job and also running a fund is that you have a lot of um flexibility to like to really make it fun and meet a ton of people and you know solve problems that you genuinely care about honestly I think

00:08:31 Venture is probably best for people with like kind of intense add where right here don't tell the podcasters about my interesting management habits oh God I mean that's it's the perfect thing is because it it it lends itself so well to to anyone that has it because you you dive so deep into a subject so intensely and you're like okay that was very that was super interesting it's like oh now there's a new emerging industry let me dive deep into something like that that and it catches your eye and you will do

00:09:05 it deep dive into there for 6 or 12 months and learn everything that there is absolutely to know about the space and then you can move on to a different one and so I I yeah I think one of the things that I've learned about this job after being you know six years in it now and kind of five years really like hyperfocus and then running the fun for the last couple years it's really hard to be proactive about your daily schedule like a lot of this job is really reactive for example you don't know when one of your portfolio

00:09:36 companies is going to you know need to run a Hail Mary um with with some sort of decision that you need to drop everything for and pick it up and so just understanding the workflow and how you design you know doing diligence and creating Community awesome so so walk me through so you've walked a little bit around kind of your strategy is there are is there a stage that you're investing in is it preed seed walk me through a little bit more about that and then I'm just even from my own kind of personal understanding because we don't

00:10:09 do a ton of consumer deals like I I would love to find out more about how you're approaching even diligence or when you look at the deals on on kind of what your methodology is around that yeah I mean I think consumer is a really big category right I think we're we're starting to look at consumer Tech and um you know one of the one of the companies in the sexual Wellness space is a digital Health platform um and then there's also consumer package Goods which is you know food and Beverages and and beauty and I I always like to to

00:10:44 look at like what is Venture vable I think the interesting thing about being VC is that you want to be pointed in how you're hunting but open to all opportunities because you're bu basically building this like data set in your brain right and the more information that you can feed it the better you can start to refine a thesis or see opportunities um and so you know I think I think certain categories are sometimes challenging like for example cpg um sometimes it's hard to get patents uh within within products um you

00:11:23 know maybe it's a product itself or the service of how the product is delivered um that different differentiates the company but I think I think you know one of the questions that I saw in in preparing for the podcast is like what's the hot take of unpopular opinion about like startup or Venture ecosystem and I think it's when Venture Capital started as a model to catalyze exponential growth for software companies and then you know in the what was it like 200 maybe like 9 to 14 era we had a lot

00:12:00 of consumer companies that were consumer packaged Goods getting financially built by this same structure and you know if you pump a lot of money in a company to spend spend spend on marketing you can definitely get Topline revenue and and generate Venture scale returns but when it comes to profitability and having like a reasonable CAC that can you know often go to and so I think that I'm trying to figure out okay well if I want to see some of these businesses exist that they're not quite Venture scale um

00:12:36 how can you get these businesses off the ground and so I think Revenue based financing is really interesting for for companies that can be cash flow cash flowing in the first like six to 12 months um it really just like depends on also the business model like consumer package Goods sometimes service-based businesses can get that way and I think you know for Founders um Equity is very expensive to raise early on and also valuations are always just kind of sometimes make made up like a preed company used to be three and a half

00:13:12 million now is $5 million in valuation and then everybody who raises out of YC is out thegate 10 to 30 million like pre- Revenue so it's like you're raising you know you're you're giving up sometimes a lot of your company early on and EV valuation of make sense like you know there might there has to be different ways to get a business off the ground that could potentially have Venture returns but maybe it's at like a series a stage that they raise certain like Venture financing so these are just

00:13:43 some things that I've noticed that I'm trying to better understand and it just has taken one deal by deal to get to that thought honestly and I I totally understand that because when you look at some of the companies that come out and if they're valued pre-revenue at 10 to 30 it's like okay how am I supposed to return like the the valuation that I'm coming in at like it would be very yeah it' be very difficult to get a 50 or 100x out of it I don't know how I make the fund returns that I need based on the valuation that they're

00:14:12 going for I mean it's weird now even even right now seed deals are almost at the same level as a deals were like eight years ago like which is insane to me like preced wasn't even really a thing like 10 or 15 years ago and so it the the ecosystem can get absolutely a little wonky I mean the reset definitely has helped I would say um from that kind of view but yeah it's still you have to be very opportunistic in kind of what you're looking at to be able to deliver the right returns back to the uh to the LPS yeah so I think

00:14:50 going back to your question regarding consumer it's you know out of the three categories we like to spot for deals and I would say we're more interested in consumer technology um at the moment and looking at a lot of like digital Health platforms um that are essentially like point of Point Solutions like specific types of care delivered through that and um still trying to formulate like what category like you know IVF and um ache freezing um and fertility has been a big category since the the covid era and you

00:15:30 know the first women's Focus F healthc care funds only really launched in the last five years which is Bonkers and so if you kind of look at that trend of like when people started really backing the category I'm trying to work out a timeline of okay well what's what are the what are the sectors that people went really big in and is it going to fuel Innovation and tangential sectors around it um and so how do we look at that and your other question I forgot to answer was uh stages and uh it's a it's

00:16:06 a fun one because you know like valuations versus stage like it can mean very different things to different investors especially in really expensive markets like New York and SF but um so we're we're generally C to series B stage and specifically right now I really like Bridge rounds that can provide like dear term like that that are going to raise in like a six to9 month to a preferred round and from a fund manager perspective it's a nice markup right getting in before at a discount and then seeing how much that

00:16:43 that company can what type of kpis that company can hit within that 6 to9 month uh timeline so I think as I as we as we evolve I look at like what's our existing portfolio what can we round it out our last two deals were FDA approval deals like let's focus on Revenue generating digital Health deals and balance that out because you know biotech deals take a long time to to get moving yes yeah clinical trials take a while like even within the portfolio maybe outside of it tangentially what uh are

00:17:21 there do you have any War stories that you would want to share either from uh deals maybe that you did do that you didn't would love to hear uh uh more about the space when I first got started in 2018 I was working for a family office and I I forly worked in Enterprise tech for a voice AI company and so when I pivoted to venture I was like okay well I'll do Tech like that sounds kind of an easy transition but I I've also done like six career pivot so my background wasn't just Tech I've worked in like Hardware

00:17:55 before I worked in the electric bicycle industry I worked for puma and reok so it was just like I could have potentially approached to venture from a few different angles but the most recent one was working in Enterprise TCH and specific te Telecom and so I I this is when the Cannabis industry in California um was becoming um adult use legal and so there are a lot of interesting things coming from that sector and I hypers specialized in cannabis and one of the deals that I came across but I never F

00:18:28 fully pursued was a company called duy which is a point of sale solution specifically for dispensaries and for the audience um Canabis is a vertical SAS industry where because it's ferally illegal still um you know majority of the US market is is medically legal and then it's adult adult East legal so we have about what is it like 39 States at this point and 25 plus um States and so companies like you know Shopify and and and block which you know was Square um publicly traded companies they don't want to operate in the sector so

00:19:09 what it did is that it it it created very specific vertical SAS Solutions point of sale to be to be wholesale to service industry and this company I was already looking at a deal and I got to excited about it and didn't kind of like closed my my vision on going deeper into the horizontal that I was looking at which was like retail Tech and uh they ended up raising I think a series a in 2019 and around like 15 or 20 and then in 2021 they valued at 3.7 billion and you know 2021 was also a massive bull market and yeah the the

00:19:51 valuation wasn't predicated based on like a reasonable Revenue multiple but still you know like yeah like holy yeah so I think you can't have fomo because it's like you always could have been an email or intro away from a company yeah um but that one you know hurt and I think as an investor like if you don't look at this job is experimental like you'll be a little too hard on yourself the best way that I look at life in general and and learning is that like okay I didn't get that right what did I learn and like how can

00:20:28 I do better next time and and that one was like you know when you do get excited on a deal get really real with like the bias that you might have and bring people around the table to help make decisions that really push and think differently than you and that's why we talk a lot about diversity and Venture is that not just from different education backgrounds countries but it it pushes you to really think through different perspectives because I think as humans we're pattern making machines and I think a lot of

00:21:05 investors tend to follow sheep mentality so you know you you I've been seeing like secondaries for open Ai and literally there's like no information about how the company's doing or whatever and they're like 50k minimum make a decision in five minutes and I'm like like yo like it's a brand name I get it we know it's going to do well I get that but like you know I think people get get fomo and follow hype very often in Venture and that's when you get super stupid overvalued companies that aren't good for the investors and it's

00:21:41 not good for the founders yeah and that's one of my things that like kind of just sucks about The Human Condition Adventure yeah I mean it's true we're supposed to look for outliers but a lot of the time you end up everyone ends up following the same path and I can look at bird this was so apparent to me with bird in 2017 I was like I don't I don't get how this makes sense like half the country is Frozen for half the year like they're not going to use scooters you can't use it when it rains because you're GNA

00:22:11 you're going to eat crap and so it uh yeah that one was very but within a year it was a billion dollar company and I'm like I don't I don't get how this makes sense like I actually get the use case because again I worked in the electric bike in urban Mobility space I think the scale at which they got off the ground was just unrealistic like the I remember I I recently just moved back to LA and I remember when I was living in La when burp was like super hot what 2019 I would walk the V Venice canals and see a

00:22:47 bird in the canal and I was like this is a problem like this is what scale un ruthless scale looks like and it's not cool it's like literally watch people throw money away but also like damage the environment and potentially the little cute things living in that gross water the ven canals might be a stretch but yeah you never know what might be living in the murky water the ven canals you want to be considerate of our of our monster friends so well then walk me through the use case a little bit more cuz I can see

00:23:27 it at scale but I like even even even with then like I understood it if you were looking at it from if we could take it from uh the like in Amsterdam right like mostly bikes right high city very little cars I don't know how well it like in LA necessarily it might have ended up running through it but I would love to hear your kind of perspective I think it's also like La was designed for cars and you know majority of the land in a city is occupied by a car that moves 5 to 10% of at the time and so

00:24:01 most like people like the convenience of getting a to B you know in a comfortable way and um you know the West Side particular n La is really flat it's easy for people to move around so I don't think it's like every city every Market can benefit from like electric scooters or electric bikes but a lot can and the cost of a car versus a bicycle you know it's also just culture right like when I got electric bikes in 2011 no one knew what the hell an electric bike was and Bike Share didn't exist in the United States bik sure hit

00:24:38 the ground in Boston and New York I think it like 2014 and so the conditions to ride were scary for people like if you go on a bike in La likelihood of you getting an accident is like way too high so like you know so that's why I think you have to look at like you know changing consumer behavior and and when a product comes and like what are those markets that it makes most sense to launch in but you know when some companies raise half a you know several hundred million dollars and it's like we're just going

00:25:11 to go in every market and I think that's you know a ruthless mentality that sometimes isn't fully thought through 100% um honestly uh hen thank you so much for coming on the show truly appreciate it uh we're just about out of time but uh any final thoughts that you would love to leave are viewers with I think for investors that are looking um listening to the podcast one of the things that I really wish I did from day one was have a super organized and tight CRM software that I chose from day one I

00:25:42 actually built my um contact book and dealbook in air table and it just didn't scale I think air table is like Salesforce for like in like entry level folks but there's more programming and more sexiness to air table but what I mean that it takes a lot more uh stitching and um developing to actually have the product that you want but it's nice because it can be super modular so we actually um did a like 9086 month process to really upgrade our backend operations and and it allowed us to do deals faster um to to Market to our LPS

00:26:23 um opportunities on the SPV and The Syndicate that we run more efficiently with Automation and work flow and we chose HubSpot sales and marketing because instead of doing like type form uh questionnaires and putting it into like a Monday CRM it's just all lives in one spot so I think for those that are really looking to U make decisions to help create more efficiency in their process really looking at their systems earlier rather than later I highly recommend yeah I will 100% jump on that bandwagon because we use HubSpot too so

00:26:58 I'm 100% on board with you awesome thank you so much for uh for jumping on really appreciate it um yeah look forward to uh to chat with you again yeah thanks Lucas I I'll have to stop by the office