How Venture Capital is Helping to Innovate Healthcare

00:01
Welcome to Startup Success, the podcast for startup founders and investors. Here you’ll find stories of success from others in the trenches as they work to scale some of the fastest growing startups in the world stories that will help you in your own journey. Startup Success starts now.

Kate 00:18
Welcome to Startup Success. Today we have two exciting guests in studio Dr. Tara Bishop and Eileen Tanghal, co-founders of Black Opal Ventures. Welcome to the studio.

Dr. Tara Bishop 00:33
Thanks, Kate. Pleasure to be here.

Eileen Tanghal 00:35
Thanks, Kate.

Kate 00:35
I’m excited to speak with you both. Black Opal Ventures caught the eye of my producer who was doing some research. But let’s start a little bit with the two of you from my understanding you met at MIT.

Dr. Tara Bishop 00:50
That’s right. Hey, Eileen. And I have actually known each other for over 30 years, we met within the first week of us starting undergrad at MIT and have stayed very close friends and confidants throughout our careers. So we have a long history of knowing each other, essentially, our entire adult lives.

Kate 01:07
So that’s great. Talk about coming full circle. And now here you are with your own fund. So before we get into Black Opal Ventures and where you’re focused, I’d love to learn a little bit about both of your backgrounds and what led you back together. Eileen, do you want to start and kind of walk us through?

Eileen Tanghal 01:28
Yes. So like Tara, I trained as an engineer at MIT. So I studied electrical engineering and computer science, and college. And right after college, came to Silicon Valley and joined an early stage venture-capital backed startup company, and I was one of the first 10 employees there, we had less than a million in revenue, we were still trying to find our product market fit our long term business model, and had the benefit of seeing that company go from, again, what was less than a million in revenue to $100 million revenue company that went public. So I had a very early experience of a successful VC-backed company. And then I got into another startup during the.com, which didn’t go so well. Raised, like hundreds of millions from at the time, Softbank and others. And so what I like to say is I was at a successful one, and then another one, which is really good for them to pursuing a career in venture capital. After that, I went to London, studied my MBA at London Business School, I went there because I wanted to be a product manager. I wanted to continue down this route of being a product manager and really learning the business side of tech companies. And really out of nowhere, I was selected to be part of this venture capital summer associate program. And that started my career in venture capital. So I’ve been a venture capitalist now for about 22 years. And I’ve had all sorts of different roles within VC, starting as a financial VC in London, and then a corporate VC in the Valley at big tech companies, then a VC for the CIA. And then, of course, now launching the fund with Tara. And what I can say is in my VC career, the successes I’ve had are always when two different areas come together and collide. So really, you know, starting back in 2014, and Applied Materials when I was running it were very early investors into successful company called Twist Bioscience was colliding semiconductors. And in that time, gene synthesis.

Kate 03:50
Interesting. Yeah, that makes a lot of sense. I like all the different investing experience you’ve had, and then the fact that you’ve been on both sides of the spectrum with your startup experience. I think a lot of listeners can relate to that. Right, I can see how that would add to, you know, as you approach investing now, Tara, what about you? What’s your background?

Dr. Tara Bishop 04:12
So as Eileen mentioned, we were both engineers in college, and I did study engineering, but then actually decided to go to medical school right after university. And so I took a very different career path that was straight to medical school that actually had quite a bit of sort of a prescribed career path for the next seven plus years of my life. So four years of medical school, three years of residency, and then a series of fellowships, which is just all part of training in medicine. But it is interesting, you know, one of the things people often ask me like, What drove you to have what I consider a very wavy but interesting and impactful career path, and it probably actually started in the early 2000s when I was a resident and treating patients in a system that I felt was very, very broken. It was a time when we had nothing digitized in healthcare, we had very poor access to care with a lot of people who were uninsured or underinsured. And it was just hard to work in a system that felt that broken. And so I think many of the career choices I’ve made in the past 20 plus years have been really to try and improve that healthcare system. So I started my career in clinical medicine. I spent the first portion of my career in academic medicine, I was a professor at Cornell Medical school full time working in the Department of Health Care Policy and Internal Medicine. And in that capacity, I saw patients I taught medical students and residents and I did a body of research around access, quality and cost of care. And that really kind of opened my eyes to the larger picture of healthcare, a lot of interesting things were happening at the time, particularly the Affordable Care Act, which was being passed around that time. And all of a sudden with that we were having not just a lot of new people who are getting insured, but a lot of things in those bills that bill in particular, that was driving changes in the healthcare system, particularly around an area called value based care, I had an opportunity to actually move over to the private sector about eight years ago and became the medical director at McKinsey. And that role and the consulting role, we were really working with our clients, both hospital systems, payers, government agencies to really navigate this new and burgeoning world of value based care. And so I spent a lot of work with clients, not just in the area of value based care, but how do you actually use data and analytics to drive value rather than volume and healthcare. Like Eileen, probably later in my career had an opportunity then to join a startup company. And so Eileen and I both have startup experience, and I became the Chief Medical Officer at a startup health insurance company called Bind. And Bind was actually trying to take this concept of value and data and analytics and technology and really change the underwriting model of health insurance. We built that company from the ground up, ended up selling it to an acquirer and and had an amazing experience building a healthcare startup. And that was really my sort of there was a decision point at that point of what what do I need to do next? Do I stay with a larger company? Do I go back to clinical medicine, and we ended up having an opportunity to actually launch Black Opal. And it has been, I think, one of the most exciting and best opportunities of my career so far. And so I might actually turn it to Eileen to share a little bit of how we got Black Opal off the ground.

Kate 07:48
Okay. I mean, you brought us right there, that was where I was gonna go to next. And I just have to tell the listeners that you’ve raised $63 million so far, so congratulations. And that’s quite an accomplishment and says a lot about what you’re doing. So yes, Eileen, if you could us there, that would be really interesting to hear.

Eileen Tanghal 08:06
Yes. So as Tara mentioned, we’ve known each other for a long time, and we have remained close confidants and friends in that entire period. And I like to say that really makes a difference. Of course, when you’re deciding to start something like this, it’s so important that the partner you choose that you’re aligned and know each other. But it started really as a concept that we had in one of our yearly get together. So Tara and I, and a group of our other friends from college get together on a yearly basis. And we were in 2019, with one of our friends who was running a big division of a pharmaceutical company hiking up, we like to say mountain but it’s actually hill. But joking aside, we were actually all going for this morning, just talking about what we were doing at work, right. And I was, of course, in the middle of making investments for the CIA for the Defense Intelligence industry. And I was sort of explaining the problems that they faced. And Tara started talking about what she was doing. And it turned out machine learning AI, quantum, etcetera, there was a big overlap in the problems of the Defense Intelligence we’re facing, and then of course, what hospital systems, insurers, payers, providers are facing. And we had an “aha moment” right then in 2019, and decided to launch effectively an angel investing group amongst us, which, you know, few people know but I think we’ve now made it more and more known. We called it Fi Altus. FI standing for sisterhood and Altus because we were climbing up a high place at the time. So we started this Fi Altus investing group, which was really this – Let’s find companies at the collision of tech, and specifically tech in this case, that was for collecting information, interrogating information, analyzing information that the agencies and defense and cells are using, and could be relevant in healthcare and life science. So that was our thesis as angel investors. And that’s what we did. And so how did we get here? Well, as Tara mentioned, we had this opportunity backed by our anchor investor, Eli Lilly, to start this fund and take, effectively what we were doing with our own money and make it into an institutional backed Fund, which is what you see today, Black Opal, and, you know, we were present, you know, we were presented with this opportunity, we had to think very, very hard about it, we were very lucky and grateful to Eli Lilly, and the folks there for encouraging us to take the risk. Because as you can imagine, you know, I, we were both perfectly situated where we were, and we built both that we were doing important mission based work, right, Tara was completely improving healthcare, I was investing on behalf of the Defense Intelligence for national security. So why would we leave our posts and take a risk. And I’m going to stop there and say, you know, we each had to think hard about whether we were going to do this, and we took a couple of months to consider it. And then decided that we could still accomplish our personal missions, and be sort of a representative and someone who could inspire others. Or maybe that sounds a little bit, you know, arrogant, but we felt like we could make a difference. If we did Black Opal, we could still make a real impact on healthcare, on an important problem statements, and inspire others to do the same with Black Opal. And so that’s what we did. But it was a long journey from this is our side thing that we do to this is what we do 100% of our time.

Kate 12:02
I can see where that would be somewhat of a transition. Because it’s such a big step. Like you said, you both were accomplishing a lot and your full time posts and had a lot going on and were doing very rewarding work there as well. And this is a big step. So I can see where it’s you have to really think through making that transition. How has that been Tara now, you know, you’ve got to the point where you’re going to make that transition, you commit to that, can you walk us through the early days to where you are now and how it would be great to hear.

Dr. Tara Bishop 12:40
Yeah, so it’s interesting to kind of I often tell people, it’s probably good, I didn’t know what I didn’t know at the time, although I do think people should know what they’re getting into. As Eileen mentioned, we were in sort of a unique position where we did get an anchor investment by Eli Lilly. And while we still had positions that we had to think about timing and exit, and whether it was the right decision for us. And so we took several months to actually make a decision about whether this was the right move for each of us personally and together. There were a few things that I think were perhaps a little unique about our starting up of the fund and a few lessons learned also, just to give you a sort of a sense of timeline, I ended up leaving my role at Bind in the summer of 2021. And I started getting us ready to launch a fund. And that involves a lot of operational aspects. It involves starting to talk to our investors to raise more capital, so we could be a bigger fund and starting to actually build a pipeline of deals that we could invest in that really would fit in our thesis. We held the first close of the fund in February of 2022. And what that meant was we could go out and start investing and we could start building our portfolio in this space, while also at the same time continuing to fundraise. It’s almost like having two full time jobs. So you know, again, as I mentioned, sometimes it’s kind of good to not know exactly what you’re getting into. But I think for people who are considering fundraising you know, particularly venture capital raising it is two full time jobs particularly in those early days. And then we actually decided to stagger our entry into Black Opal. Eileen moved to London within In-Q-Tel and wanted to, I think rightly so, spend at least a year in London and complete that commitment. And so Eileen joined the fund full time, although she was working a lot of nights and weekends at the time in September of 2022. And then as you mentioned, we close to hell the final close at the fund of this first vehicle in December of 2023. So almost two years after our first close, but in that time we raised capital from some amazing investors, including Bank of America and JP Morgan, several health systems like Atlantic Health System and Henry Ford Health System and a number of fund to funds including Illumine Capital and Summit Venture Partners. So we have had an amazing group of investors who have provided their confidence in us. And at the same time, we have an amazing group of portfolio companies who also have given their confidence to us. We have nine portfolio companies that span from diagnostics to delivery of care to data and analytics and life sciences. So a real spectrum of companies in our portfolio now.

Kate 15:29
Well, first, congratulations on the roster of investors. Very impressive group right there. And then tell me about these portfolio companies. And what Black Opal is looking for in investments.

Eileen Tanghal 15:45
So when people ask us what we invest in, we tried to keep it simple and tell them and this is what we follow, that we have a four D strategy underpinned by two C’s and an A. MIT people, they like to shorten things, either by numbers or acronyms.

Kate 16:07
Okay. I’ve never heard it put this way. (laughing)

Eileen Tanghal 16:11
So we have a four D strategy underpinned by two C’s and an A. So I’m going to let Dr. Bishop talk to you about our four D strategy. And I’ll talk about two C’s and an A.

Dr. Tara Bishop 16:21
Okay, so the four Ds are a way that allow us to actually start to segment and think about healthcare and life sciences. It is a massive industry. Lots going on there. And how do we actually start to then think about where there’s real opportunity and, you know, map our portfolio to this opportunity spaces and the problems that happen in healthcare. So the four Ds really follow what is a typical patient journey. The first is diagnosis and prevention. So how can we use innovative technologies to diagnose and prevent diseases before we might even have them or more accurately and more efficiently than we can do nowadays. And so we’re looking for companies that are transforming the way we diagnose and prevent diseases. The second is around delivery of care. So how do we actually deliver care differently than we have been doing that, that may be virtual care, it may be remote monitoring, it may be even trying to change the burden of administrative work that happens in the delivery care system, or the way we pay for health care. So this entire concept of how do we change delivery of care. The fourth area is really around the personalization and the impact of treatments in healthcare. And that may go all the way from, and the D is actually drug discovery and development. But how do we go from highly costly discovery of medications to more efficient, faster methods of doing that, to then actually getting it to the right patient at the right time. And so that D is really around drugs and discovery and development of therapeutics. And then the last D is actually a thesis that we believe that data and analytics are going to be an underpinning and an opportunity in healthcare, there are vast, vast amounts of data in healthcare and life sciences. And yet we tap into so very little of that right now. And so we invest in companies that are building that infrastructure layer around data and analytics that allow us to hopefully unlock the potential of all that information in the healthcare and life sciences ecosystem.We underpin that with these two Cs and an A and that really speaks to the tech side of that disruption that’s happening because of technology. And I’ll actually turn it over to Eileen to talk about the technology that drives all this innovation.

Eileen Tanghal 18:42
So when we look back over our careers, and sort of when we started at MIT in the 90s, we can see that the big transformations that have happened within the tech sector, or within industries, because of the tech sector, happened when there are these inflection points in three areas, these two C’s and an A. The first area, of course, is compute. Right? So when we were back in MIT, everything, you know, even before that, you’re talking about things happening in mainframes. I mean, we’re a little bit younger than that. But mainframes and then it went to PC, and then it went to mobile, and then it went to cloud. And what we see now that’s happening is a move to the edge. So as you saw I worked at ARM and effectively you have what are compute resources normally being done in the cloud, being sort of minimized so that they can run on edge processors and knowing what that means is that an edge device which could be used for diagnosis or monitoring, or even treatment is going to have a lot more compute in it. So we believe this move of edge compute of tiny ml, lots of nerdy terms, is going to change the way that we diagnose, monitor and treat patients. So the first thing is the change, what is another big change in compute. The second C is around connectivity. Again, if you think about the big transitions, in terms of the big companies were created, the winners in tech, they happen when big changes and connectivity happens. So you went from 2G GPRS, like dialing up with your AOL modem, right to 3G, the invention of the mobile phone to 4G, where you have like really fast downloads on the Netflix on your screen to 5G. And now we are at the beginning eras of the evolution of LTE to 6G. And that’s going to be yet another 10x increase in the end devices and almost 100x increase in connectivity speeds, which means things like remote surgery at real time speed is going to be able to happen because you have the connectivity and infrastructure there. So you’re talking about, again, compute and connectivity driving another revolution in technology, which can have a big impact on healthcare, and specifically healthcare equity and outcomes. And then finally, the last one is around analytics or what used to be called analytics. Now, of course, it’s AI or advanced AI. And when we started with even Fi Altus, this is before that generative AI became a household name and Open AI. And everybody thought we could see that ourselves, this transition from, you know, this brute force training of AI models to some more sophistication and the ability to bring AI into the hands of people just like, if you think about the internet era, when there used to be all these specialized website development firms in 2000, you had to go to someone to get your website up, and then all of a sudden, anybody could make their website and anybody could have a storefront on Amazon, that’s what’s going to happen. And we already see that having in AI like, there’s, there was a small group of people who knew how to do it, everybody’s gonna get their hands on this, to like these, these large language models. And again, that gives them up the power to affect their business. So specifically in healthcare, you’re now going to put tools in the hands of payers, providers, etc, that are going to allow them to focus on what they really should focus on, which is taking care of patients. So no more of this, you know, 80% of my time is dealing with overhead, because I’m going to have tools. So compute, connectivity, AI should improve. What we found, however, is that there’s always been this sort of riff, maybe, between the people are building the technology, and then them being able to navigate the healthcare industry, because it’s, you know, as Tara mentioned, so they might, it might exist, but either they don’t know the people, they don’t have the patience, or whatever it is, to bring it into the industry. And that’s why we’re trying to collide these two worlds to make a difference.

Kate 23:04
That’s fascinating. Just the way you broke that down is so … I’ve never heard investing partners break it down in such a clear, concise manner that’s so easy to understand. That’s exactly what’s needed. We all see all these technological, incredible advancements, and then you go into the healthcare world. And it always seems I hate to say this far behind, right? And you must be so excited about the possibilities of bringing that to healthcare. It’s so needed, and you could really change the world, change lives. We’re getting close on time. But if could each of you share maybe something you’re excited about that you’re seeing in investment and then you don’t have to name names, or I know you have to keep things private, but just maybe what you’re excited about and then I want to let the listeners know they how they can find out more information about Black Opal but but that would be great. That was fascinating.

Dr. Tara Bishop 24:09
So if I can chime in there first. I think we both have our things that we’re very excited about. So first of all, I think there’s a few things that are just macro level that I’m excited about, Kate, it’s fine for you to say it feels like healthcare is still in the dark ages. I mean, it’s true that they still use fax machines, and there’s so much opportunity. I think what excites me about healthcare right now. And I think why the timing feels right is we have seen some things that have demonstrated our ability to actually pivot and change very quickly. I think COVID, for example, allowed us to understand how do you change the entire delivery system that was providing care in brick and mortar practices, to a whole different way of doing that. And I think for many of us who have lived and breathed in healthcare, maybe it did take a global pandemic to actually open our eyes. Actually there are different ways to do things. And I think that’s a really important sort of market driver. I also think this concept of AI and the fact that it is now as Eileen mentioned, not just in the hands of a very few specialized practitioners, but it’s coming into every part of our world. And when I speak with other physicians and healthcare administrators, there is a sense that like, we can’t miss out on this, if we miss out on this, we’re going to miss out on a massive wave of evolution. And so these concepts of how is healthcare ready. And now it’s actually for me very exciting. Having worked in a world and having done much of my work to improve healthcare, it actually feels like we’re at a really important time in healthcare to have change. The other thing is, I’m super excited about our portfolio and the kinds of companies that are really bringing together technology and really innovative technology into the healthcare ecosystem. For example, we have an investment in a company that has wearable technology that was developed out of MIT, it’s a company called Empatica, that allows us for the first time to monitor things that were very hard to monitor in healthcare. Things like stress, depression, pain, where we’d have to ask questions, it’s be very subjective. And yet, they’re such important sort of markers of how someone is doing that can now be quantified in a way that we never could quantify before. We have an investment in a company that is transforming the way we diagnose lung cancer, the largest cancer killer in the world. And if we can just even save some lives from early detection can change and transform the lives of many people. So those are the kinds of companies they’re really using this innovative technology, but really having impact and use cases and solving problems in healthcare. So that’s what excites me about this space alternative to over to Eileen to share some of her perspectives.

Eileen Tanghal 26:57
So as you heard, I was for six years with In-Q-Tel, which is the non-for-profit venture capital firm associated with the agency (CIA). Now why was In-Q-Tel created? Well, one of the reasons why is because there was this realization that people trying to really give policy recommendations, were spending kind of 80% of their time figuring out how to put the data into a format that they could use to then figure out the end. So again, a lot of overhead. And when I go into a doctor today, like maybe all of you, I just see so much overhead – you have to go in, I have to fill out a form, they asked me 1000 questions again. And then I just do not understand why there’s so much overhead, which of course Dr. Bishow always tells me why. But what I’m excited about is that that same overhead was there in the agency 10 years ago, and with the help of all these innovative startups from graphing, and we have a graph based database company called Tiger graph. So the agency uses graph databases to better analyze the 1000 points of data they have, we have a conversational AI company called Jairo. So the Defense Intelligence agencies use natural language processing, again, as a mechanism for monitoring conversations and for sort of multiplying their abilities. So I just am so excited about effectively taking what already worked or has worked in a different industry, in my case, Defense Intelligence, to help analysts to help doctors. No code platforms, so again, so that they, you know, even on the sort of digital twin and optimization side, all the tools that exist already today just need to find their way into this industry. And it is very hard to maneuver. And that’s why it’s so important to have a partner that has the expertise in the industry. And that’s why we decided to do this. And it makes sense to do this now. The second. So that’s just for me very excited about the infrastructure. The next thing that I will say is I’m just also excited about what I see as a revolution in terms of the way that we discover and make drugs. When I started, you heard I started my semiconductor, a career and a startup in 1997. When people were, I don’t know, they were trying to optimize chips and semiconductors, etc. Using very manual methods, sort of brute force methods, not very efficient. And the startup I was at did a digital twin. And then from then on the industry evolved and you don’t see manual labor. You know, that’s the only way we can get that many transistors to a chip and this small in your phone. It had to move forward quickly. And what I’m excited about on the bio side is when I look at how things are today, it reminds me of the 90s in semiconductors, it’s sort of still manual, a lot of people with pipettes, moving things. Not a lot of automation. Not a lot of improving, right. And unfortunately, that’s what keeps prices high. Right? That’s what comes out of the hands of normal people just like if we were to keep things that way, then there would only be one computer and we’d never have a phone that’s like $50. And this is a supercomputer to automate things and may cheaper. So the second thesis for us is around in D, this drug discovery, delivery distribution, how do you put in automation from let’s call it the semiconductor industry or any other industry, into the tech-bio industry, so we can bring the cost down so that everybody gets to live and have access to drugs, not just wealthy people? That’s the two things I care most about.

Kate 31:02
Wow, incredible. I mean, you both have me excited, because I feel like this is an area where there’s like you were saying, there’s so much potential, so much progress. And we all have personal stories of loved ones who are just too early. And there’s all this change, coming and possibility. And what you’ve talked about today is very moving. And you know, the work you’re doing is very moving too and I don’t say that lightly. As we close, thank you both for being here where I’m listening, I’m you know, where can I go to find more information about Black Opal Ventures? If you want, if you could let us know, that would be great.

Dr. Tara Bishop 31:41
Yeah. So we have a website. So please see our website, you’ll see ways to contact us on the website and also see a little bit about our story and our thesis. And very soon we’ll be adding the portfolio. So you’ll see the companies that we’ve invested in also, and then we’re on LinkedIn, very active there. So connect with us on LinkedIn. And then you know, we are out and about, so we’d love to see people at conferences and industry events. It’s always lovely to be able to connect to people in person outside of the virtual world. So lots of ways to connect. And we love hearing about, as we mentioned, highly innovative companies and technologies that are really solving important problems in healthcare.

Kate 32:22
Thank you. Thank you both for being here. Thank you. It was a fascinating conversation. I learned a lot. So I really appreciate your time. Thank you so much.

Dr. Tara Bishop 32:31
Thank you. Thanks, Kate.

32:32
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