Investment Strategy

WRH combines a disciplined investment strategy with extensive healthcare expertise and advanced technologies. This strategy is based on Disruption Theory, as articulated by Harvard Professor Clayton Christensen in his bestselling The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (1997). Disruption Theory has been perhaps the most influential theory of innovation in the past two decades. Through extensive collaborations with Professor Christensen by the WRH team, we have unique expertise in Disruption Theory and its application to early-stage venture capital. 

 

At the core of Disruption Theory are empirical findings that new companies have far higher odds of growth and survival when they enter markets in lower cost, lower performing market tiers, or otherwise establish themselves in non-mainstream segments rather than competing directly with mainstream incumbents. Healthcare disruptors have included Genentech (gene splicing), Invisalign (orthodontics), 23andMe (genomic testing), AthenaHealth (doctor office claims and billing) and ZocDoc (doctor appointment scheduling). Other disruptive examples include Adobe, Apple, Amazon, Google, Intel, Salesforce.com, Spotify, Uber, Wix, Zillow. 

 

See table below.

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The healthcare industry is at an opportune time for disruption, given huge underlying shifts in the way healthcare is provided.  The gatekeepers of healthcare are moving away from hospitals and doctors to the consumers and self-insured corporations that pay for up to 50% of overall healthcare costs.  The industry generally has been slow to embrace disruptive business models, as incumbents have dug in their heals, which has led to many smaller healthcare companies leading the charge.  This gives a unique opportunity to find young companies at lower valuations, that can lead to more traditional Venture Capital-type returns. 

 

WRH continually evolves its ability to invest in early disruptors. This has resulted in best practices and a large computing system named MESE® (sounds like ‘peace’). MESE® was created by Thomas Thurston who manages its technical team, giving the Fund the ability to identify, analyze and monitor disruptive companies worldwide. Using custom big data and big computing capabilities, MESE® can sort up to hundreds of early-stage candidates daily to reveal top performing healthcare companies using a variety of proprietary indicators, even for early startups that ot disclose little or no data about their financial or commercial status. This gives WRH+Co vast market visibility, with an ability to pinpoint targets that deserve closer analysis. WRH team members can proactively contact top targets rather than relying on in-bound deal flow. For example, of WRH+Co’s last ten healthcare investments, five resulted from this out-bound process whereas five came from more traditional in-bound personal networks.