Welcome to our Member Spotlight series where we give a profile overview of our many diverse members. For this deep dive, we spoke to Jan Garfinkle, Founder & Managing Partner at Arboretum Ventures and Chair of NVCA’s Board of Directors.
Tell us about your firm. What makes it different?
Since Arboretum Venture’s inception in 2002, we have pursued a strategy of funding innovative companies that drive cost out of the healthcare system while still providing great clinical care. We invest in healthcare companies in the areas of medical devices, life science tools & diagnostics, and tech-enabled care delivery, and aim to generate superior returns for our investors by identifying “better, faster, cheaper” technologies that align with the U.S. healthcare system’s transition to emphasizing value.
Where did your firm’s name come from?
We are based in Ann Arbor, MI, home to the 125-acre Nichols Arboretum that inspired our name. Analogous to an arboretum, we nurture fertile opportunities with the support they need to grow into mature companies.
What defines your portfolio?
We target opportunities that can achieve significant milestones and value creation in a capital-efficient manner, often in nascent segments and geographies where there has not been significant investment into competing companies. Our portfolio is designed to be diverse in terms of stage and geography, although we prioritize opportunities in under-ventured geographies, particularly the Midwest and in Michigan. Our presence in this market allows us to identify promising technologies and entrepreneurs that have flown under the radar due to their location outside of traditional venture hubs.
How is the firm different today than when you first started?
Our first fund was just $25 million, and we led a minority of our early investments. Today we manage $700 million across five funds. Although our core thesis has remained consistent, our growth has enabled us to fund a broader set of promising companies, lead the majority of our investments, and forge stronger connections with strategics. We now count six health systems / payers among our limited partners who are invaluable as both investors and thought partners.
Why is your firm a part of NVCA?
NVCA serves a critical role supporting our industry and ensuring the U.S. remains a world-leading environment for entrepreneurs. As current Board Chair of the NVCA, I see firsthand how NVCA advocates for entrepreneurs, supports appropriate regulatory treatment of startups, and shapes public policy. NVCA also promotes a more diverse and inclusive entrepreneurial ecosystem through its VentureForward initiative and provides an unmatched network for VCs looking to work collaboratively and share best practices.
Tell us about the current VC landscape in your geography/region.
The Midwest has a burgeoning startup ecosystem, strong academic institutions, and highly talented resource pools. With the lower cost of living, companies can be more capital efficient. In fact, the average Midwest startup only requires two-thirds of the funding an equivalent Bay Area company would need to reach a successful exit. We are also proud of the diversity in our region; Ann Arbor has one of the highest rates of women-founded VC startups in the U.S. However, although the Midwest startup scene has grown substantially, there remains a shortfall of venture capital in the region. We aim to attract additional outside funding into the area through continued investment in high potential regional companies.
What’s ahead for your firm in 2019?
We recently closed Arboretum V, a $250 million fund, and we’re looking forward to backing a new batch of leading healthcare startups. Operationally, we are staying the course and will continue to maintain our focus on investing in under-ventured regions and building connections across the Midwest. Strategically, we are tracking several trends including chronic condition management, wellness and prevention incentives, rising patient engagement, and the expansion of integrated care.
Describe your firm’s culture in 5 words or less.
Diligent, Driven, Principled, Experienced, Supportive.