There are great opportunities in the chaos that is our health care system. Even the investment climate is disorganized.
One effect of the Affordable Care Act, a.k.a. Obamacare? A spike in venture interest in health care startups. Digital health care companies raised $2.3 billion in the first half of 2014, which surpasses the total raised in all of 2013, according Rock Health, a health care-focused seed fund. That figure is impressive given that 2013 was already a record year at $1.9 billion raised. (That’s a 39% increase year over year, even as biotech investment grew just 8% and medical devices investment fell by 17%.)
Funding rounds that engaged traditional venture capital firms grabbed most of the headlines: Flatiron Health raised $130 million in May, Doxmity raised $54 million in April, Zenefits raised $66 million in June, Teledoc raised $50 million this week. Look past the big VC firms, though, and you may notice that non-traditional investors—in particular, large health insurance companies—are increasingly participating and investing in the startup…
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Big Data Advancing The Greater Good
Recent data about small business confidence is reason for cautious optimism, and in reading the recent surveys, something has crystallized for me. The improvement in sentiment and thawing risk aversion at the grassroots level is directly attributable to the end of QE. It would seem counterintuitive that a rise in rates would be the key to growth, but I realize now that QE was not a growth initiative, but rather a stabilizing initiative. The Fed’s end game was to de-risk banks by keeping long term interest rates low and hence allow them to bolster reserves. The consequence of this was increased credit availability to long-term mega borrowers (e.g. Cisco’s recent $8B bond offering), yet decreased credit for short-term oriented small businesses. The unwinding of QE is allowing the credit seesaw to tilt to small businesses which are the key to growth, not Cisco. These are the first signs of a potential slingshot for the economy. In 18 months the fear mongers could very well be talking about runaway inflation, but for now the prospect of organic growth, job creation, and the end of price controls in the credit markets are cause for market purists to rejoice.
You may love Bob Dylan, you may hate him – but no one who can argue that the man is a genius. And it is further indisputable that if you like almost any “popular” record made after 1962 that you owe it to him and the path that he paved for all who followed him. In 2012 he released an album, exactly fifty years after his first. The album was good — not thrilling, not fabulous, but good. In an of itself, it is an album worth listening to. That opinion isn’t based on a comparison to Blood on the Tracks or Blonde on Blonde, or any of his seminal works that laid the foundation of popular music as we know it. It’s just based on an evaluation in a moment in time. He’s not the man or the artist he was decades ago. It would be unfair to compare him to himself, wouldn’t it? It would be unreasonable. It would be unproductive.
For the last year I have been listening to the debate in the financial blog-o-spheres about Apple. Let me throw it out there right off the bat that I am not a Tim Cook fan. That being said, as a witness to Apple’s loss of market value and present valuation in the marketplace, I think that some of what the stock is enduring is the result of an unfair comparison of the company to itself. I say some because I agree that Apple has not been the innovative company it was under the great genius direction of Steve Jobs. It has recycled and facsimiled versions of existing products with new bells and whistles and some improvements at the margin; but, it has not given us the disruptive, cult like products that we learned to expect from it. And so some significant compression of its valuation is justified. As any stock transitions from “growth” to “value”, it will endure the same process. It is inevitable and wholly appropriate.
I really don’t want to turn this into a complex financial argument, so in the simplest of a terms I will point out that by most widely accepted measures Apple is valued between 30%-40% ‘cheaper’ than its peers. It’s not growing as fast as they are, it’s not perceived to be innovating as well, and its management team is not held in as high a regard. BUT — Apple’s profitability is enviable, its products are still extremely relevant, it has over $100B in cash, it has no debt, and we all still sit on the edge of our seats wondering what they might be giving us next. So I caution everyone not to make the mistake of comparing today’s Apple to it’s former self. Like Dylan, it may not be the genius we once knew, but that does not mean it’s not still great.