Define Ventures, a venture firm whose portfolio consists of well-known early-stage startups in Silicon Valley, received $460 million in Fund III and Opportunities Funds and is looking to expand its investments in digital health.

The firm invested in Folx, which offers virtual healthcare services for the LGBTQ+ community, hybrid women's healthcare provider Tia, digital care management platform DexCare, healthcare-management platform Laudio and many other startups. 

Lynne Chou O'Keefe, founder and managing partner of Define Ventures, sat down with MobiHealthNews to discuss the company's recent raise and the types of early-stage digital health platforms in Silicon Valley it looks to invest in. 

MobiHealthNews: What type of digital health companies are you looking to invest in with the funds garnered in April?

Lynne Chou O'Keefe: With the $460 million for our Fund III and Opportunities Fund, it makes us one of the largest early-stage digital health funds. And we really focus on the convergence of healthcare, because we're deep healthcare operators with Silicon Valley principles and what's happening in technology, and really also unlocking consumer influences.  

We have this analogy, which is we're rebuilding the house of healthcare and that starts with what we call the front door or we'll call it a consumer gateway.  

How people enter into the health system, we believe, is changing, between health and wellness, mental behavioral health, and coming in and having those needs is rapidly evolving with the consumerization of healthcare.  

We say once you enter into the house, you're on the foundation layer of that house. And every clinical decision, every business decision, rests on what we call data liquidity and analytics. We really believe that, to give people personalized care, you have to not only understand the clinical data and the claims data, but also home data and community-based data, as we obviously march to more value-based care in the future. 

So if we have the right clinical data, claims data, home data, community-based data, we can now walk you through the hallways of the house to a more personalized experience, where healthcare is delivered in the rooms, which is really tech-enabled service, digital therapeutics.  

And then the last area we say is vertical reimagination. So we say full-stack houses, these are the new entrants that can kind of come in and compete with the incumbents and full platforms, which have all these elements built together.

MHN: Is there a type of company you're looking to invest in, specifically? AI or generative AI-focused companies, for example.

O'Keefe: We invest in both incubation, seed, Series A and Series B. So the question of what you are looking for absolutely depends on stage. We've invested in a team of two people truly with a PowerPoint and an idea, and we've invested where we've been part of $140 million Series B in value-based care. So we do look for different things.  

As it gets to generative AI, of course, it's like the meteorite hit, right? And, you know, ramifications are still yet even to be discovered. But one thing, having been in healthcare and having operated in healthcare, that I think we always have to come back to, especially living in the valley and understanding technology, is, to me, I'm going to say somewhat of a bold statement: It's never about the technology. It's about the use case.

So, instead of asking a question, "What's the generative AI company you're looking for?" I think of it more as, "What is the problem or the need or the use case I'm trying to solve for a provider, a payer, a life science company, an employer or the consumer, and are LLM models an inflection point for that use case to be solved?"

I've seen these generations of technologies over time. If it wasn't generative AI, it was blockchain before that, etc. And I think healthcare works in a way where, we're probably not the first to use technologies versus other sectors, but we need help in healthcare, because we need technology enablement to drive use cases, to drive value and to drive ROI [return on investment]. 

MHN: What are some red flags when you hear a pitch?

O'Keefe: There is the age-old market. The timing of that opportunity is incredibly important. And I also say, "Can this model be flexible in some cases, in a fee-for-service world and a value-based world, as we're marching in this journey of the healthcare system. Does the founding team really understand the use case?" You know, if they're just throwing a lot of language about generative AI, but can't really articulate how is the payer going to use this and find ROI within a year? How do we think about go-to-market motion, and what will this product and solution differentially solve? And is this the team to bring their expertise to make this vision a reality? 

And for healthcare, one thing I will say is, and especially in digital health, the go-to-market, that understanding, I think, that's where Define can be very helpful. We believe in defining partnership. It's one of our core values. But we also need an entrepreneur who's done their homework, and we will augment that through our networks, our experience, and we will adapt our go-to-market models. But someone who understands that. And you need to know that on day one.