July 21, 2025 • 18 mins
In this episode Michael Greeley, Co‑Founder and General Partner at Flare Capital, shares how his firm partners with entrepreneurs to reinvent healthcare technology, the rise and fall of digital health and AI waves, and what it takes to build, finance and exit enduring health tech ventures.
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(00:00):
This is Scott Becker with a special combined
episode of the Becker's Healthcare podcast,
the Becker business, and the Becker private equity
podcast.
We're thrilled today to be joined by a
brilliant leader in the venture capital space.
We're joined today by Michael Greeley.
Michael's a general partner of Flare Capital Partners.
(00:21):
He's a Harvard Business School graduate,
a a really bright investor and thinker.
Michael, can you take a moment,
and and tell us a little bit about
yourself and about Flare Capital,
and your background?
Thanks, Scott. I'm delighted to be included.
So I've been,
in the venture business for more than twenty
(00:41):
five years. I've started three firms, started Flare,
with a colleague of mine, about a dozen
years ago. We manage about a billion dollars
focused on,
obsessively focused on early stage health care technology,
have,
approximately 60 portfolio companies,
grew up overseas in the Far East mostly.
I was an organic chemist,
(01:02):
prior to business school at Williams College. And
so I've been really fascinated by the the
convergence
of health care and,
technology.
We live in Boston. The firm's based in
Boston. And so, really, kind of at the
vortex of that,
collision of those two big industries. So it's
been a terrific,
terrific run.
(01:23):
And how did you get started? I know
that early on in your career, you worked
at one of the most famous investment banks
in the world, Wasserstein Perella, some of the
brightest, most interesting people ever. How did you
get started in the venture space?
So,
I think it's been it was a confluence
of a number of of,
observations. You're right. Wasserstein Perella, we had a
(01:44):
this is this is going back almost thirty
years ago. We started the firm with a
billion dollar buyout fund when that was a
a very large number.
And as exciting as it was to, quote,
do deals,
I just felt always removed from
really the front lines of of innovation
and
found myself living in Boston, which is really,
you know, probably one of the historic cradles
(02:07):
of innovation, you know, second to the valley,
and became really fascinated with partnering with,
entrepreneurs who are trying to reinvent whatever industry
they were focused on. And so I successively
went from kind of one end of the
market to the end of the other end
of the market,
and thought being partners with entrepreneurs
(02:28):
was,
the next best thing to actually being an
entrepreneur,
myself. Now having said that, I have started
three firms. So I think I I
to be innovative, as you know, Scott, in
the services business,
you typically have to set out and start
a new firm. And
I was on the board of the NVCA
and observed, this was maybe
(02:49):
fourteen years ago,
that the entrepreneurs who are focused on the
health care industry, which was, you know, plus
or minus 20% of the economy,
were relatively
underserved
by the venture community and just thought there
was white space there to build a firm
that was really geared, sort of purpose built
to work with those entrepreneurs.
(03:10):
And our positioning is we're the invited guests,
we're the partner of the entrepreneur,
and it's been fascinating,
you know, ups and downs,
watching this industry be rearchitected.
And so I appreciate your comments about where
I started. I feel like where I've ended
is is just as exciting, but for very
different reasons.
(03:31):
No. No. It sure is. And and talk
a little bit about
sort of the ups and downs. It it
seems like in terms of technology in health
care, digital health and tech
in health care, I I don't know if
you do any work in the bio space
too.
So so we we look at pharmatech,
and have some really exciting companies that are
(03:51):
selling into that
set of, large pharma and biotech companies. We're
not taking on
drug discovery risk directly.
I think for me, there's been a series
of of waves,
not not surprising
that at the outset we thought there were
class of entrepreneurs that were focused on an
important part of the economy that were relatively
(04:12):
underserved as
I just said. And then, as COVID,
you know, became more of our,
reality,
there was a dramatic acceleration
to adopt technology to make the system
go virtual, on demand, intelligent,
predictive,
always on.
And that's now seemingly being eclipsed as as
(04:33):
profound as that was
by what we're seeing around automation and, some
of these AI capabilities that are coming to
the market.
And and,
you know, so there are obviously industry headwinds.
The big beautiful bill, it's quite uncertain where
that lands from much of the health care
industry, but direction, I think it's gonna put
real constraints on a lot of the growth
(04:55):
dynamics.
But
the the offset is what we're seeing in
in automation
is profoundly exciting, and we're seeing that in
in the performance of our of our company's
first quarter. Many of them were, you know,
effectively on or ahead of plan.
Second quarter, we'll we'll start to see that
data over the next several weeks. But it
(05:15):
feels like
directionally,
these businesses, these entrepreneurs
are operating with such
degrees of freedom. The the dollars that they're
focused on are so large. These categories are
so large that it feels like we're at
the golden age of of maybe a couple
decades of very interesting company creation.
(05:36):
And and and where are you? Like, what
I I don't know if it's by specific
company or entrepreneurs that you're working with or
area.
When you think about, Michael, what you're most
excited about today?
What are you most excited about? What what
sort of, you know, gets you going
where you think that founder really has it
(05:57):
or that solution or that area
is really ripe for innovation?
And do you think more in terms of
let me ask you one more follow-up question.
Do you think more in terms of the
right founder or the right idea or both?
How do you think about that? I I
think first and foremost, it's the people, and
we we talk about it being,
found there's sort of duality of the founding
(06:18):
team. There's somebody who's deeply technical and very
articulate about these new capabilities,
married with somebody who really possesses voice of
the customer.
And that is typically somebody who's more experienced,
candidly,
who has worked inside the health care system
and has seen all of the issues, limitations,
frustrations,
(06:39):
and is now stepping away to build capabilities
that will rearchitect,
you know, these revenue streams or
provide tools to manage these new risks that
are being introduced into the system. And, Scott,
as you know and you're beautifully articulate about
the move from,
fee for service to value.
That has profound implications on the executives who
(06:59):
are literally managing that transition,
and they're
grasping for tools to help them, you know,
re architect, reinvent their business models. And so
for us, that is so fundamental
that that that shift is so profound. It'll
come from the innovation economy that'll drive that.
And so specifically
(07:21):
and it,
you know, it it's not interesting to talk
to a talk about a cocktail party because
everybody's talking about it. But automation and around
administrative workflows,
we're seeing real unlocks in budget. So there's
a whole automation theme that we're aggressively going
after.
We, like many venture firms,
in the height of COVID, focused on a
(07:41):
number of virtual care models. We probably have
a dozen companies that are identifying very
expensive,
hard to manage subpopulations
either in GI
or oncology
or behavioral health.
And so we think they're really interesting new
models to
provide care
more customized, more tailored to those smaller populations
(08:04):
that the system has a hard time managing
amongst,
you know, the entire population. So, you know,
with the ability to
triage,
activate, engage, inform,
these specific populations, we think those are continue
to be very interesting businesses.
The headwinds are
funding.
(08:24):
Cost of capital is now a real thing.
It's hard to access. It's,
in many cases, it's expensive. So you have
to be convinced as we are that
these businesses ultimately create enduring economic value.
And so the endpoints we we try and
solve for
are cost reduction and attributable cost reduction
(08:46):
within one budget cycle, sort of within one
year that there's a measurable
hard ROI
coupled with an outcome story,
and that tends to take a few years
to show outcomes.
And that's where the capital cost of capital
issue starts to bite, which is, can you
get enough runway? I do think, Scott,
(09:06):
the value creation in these models tend to
be more asymptotic and maybe acutely asymptotic,
so that you you kinda bump along to
the series of the c, the series a,
the series b, and then you start to
see real lift as you can tell an
outcome story, an impact story.
And unlike a lot of other sectors
where it's more of a 45 degree angle
(09:27):
curve,
these are more asymptotics,
business models
for when you map value creation over time.
But we think there's something very enduring to
these businesses.
And as a seed fund, is it sort
of a a venture capital fund, I mean,
you've got a billion under management now, which
is an incredible amount. At what point do
you exit a company? Or how do you
(09:49):
look at that or think about that?
You know, it's hard to force the sale
of a company. Those tend to be more
distressed situations, so it's nice to be acquired
where somebody's out you know, does outreach.
We had a terrific May. We probably had
our best month,
in the last ten years. We were a
seed investor in a company called SmarterDx,
which sold for 1.1
(10:10):
or a little over a billion dollars.
That was a terrific outcome over course of
a three or four year journey. Mike Gao
was a founder, amazing entrepreneur,
and he was unlocking
some very important capabilities of documentation.
We had a financing for a company we
helped start called Cohere Health in the prior
auth space. Very exciting,
(10:32):
on a path to being a very, very
significant company.
We sold a company, called Adion, the real
world evidence. So we're starting to see enough
proof points
that if you're in early with people who
have those attributes, voice of the customer,
and really deeply understand
the technology and the capabilities they're building,
the the end markets are measured in tens
(10:53):
of or hundreds of billions of dollars. So
there's plenty of spend
to create really big companies in. And so
I I think, you know, that's that tends
to be some of the markers that we're
looking for,
when we're going into something. We're we're very
focused on initial ownership. We wanna be on
the board. We wanna be active, hopefully, helpful.
You mentioned we manage about a billion dollars,
(11:13):
half of which roughly come from
nearly three dozen
of kind of the leading strategic entities in
the sector, hospitals, payers, device companies, lab companies.
And so we think we have,
the ability to get early revenue proof points.
And so we like coming in the seed
series a stage and being significant partners.
(11:34):
Thank you. And and you mentioned this combination
of somebody that's great,
technically,
sort of the engineering, computer sciences, and then
also somebody who's either got voice of customer
or could be almost like a a
front person with customers.
How important is that combination?
And then what else do you look at
in building out a leadership team? And then
(11:55):
one other question on that.
Do you ever seed companies as an idea
from Flare
versus finding a founder that that is looking
to to grow? Yeah. Perfect. Perfect questions.
We've cocreated half a dozen companies with one
of our strategics,
strategic LPs where we'll partner. They'll contribute an
(12:15):
asset.
That's been quite an effective model. It's effectively
the inverse of what most venture firms
do where you back people, then they go
build the product. This is we start with
the product, and then we recruit the the
the team around that. And we think that's
a really provocative model, particularly at this part
of the cycle where there are a lot
of stranded,
quote, stranded assets or programs in large companies
(12:38):
that are not properly resourced or they've they
don't have enough internal funding.
So we actually quite like that cocreation model
and,
probably a half a dozen of those that
we're working on right now just to give
a sense of the amount of activity. It
seems to be quite an active source of,
investment opportunities for us. Thank you. And when
your companies go to that next stage, are
(13:00):
they selling to a venture capital fund, to
a private equity fund? And and does FLIR
ever retain some equity in that as you
go forward? And how do you think about
that?
Yeah. So I I think in a very
real sense as early stage investors, when you
get to series
d
or growth rounds, our job is is kind
(13:21):
of done. And so if there's an opportunity
to sell for cash,
obviously, there's earn outs as you know. You're
a gifted lawyer. You you
have dealt with this a million times undoubtedly.
So there is usually a residual interest.
But we're in a weird part of the
cycle where a private to private earlier may
(13:41):
actually lead to a much better outcome.
You know, the part the negative of what
happened in '22 is we created several 100
companies when the category probably could absorb a
few 100 companies.
So we smeared a talent a finite talent
pool across too many companies,
and we create a lot of look alike
businesses. And so
we're quite amenable to combinations if you can
(14:04):
get to scale faster.
That's not simply a cost reduction. That's adding
more logos,
more depth to the pipeline.
And so we've done a handful of private
to privates where the resulting
combined company has a much higher likelihood of
success.
A new class of buyers, which I think
is not,
(14:25):
been adequately
kind of reported on, are the private equity
portfolio platform companies. They've become very acquisitive, and
they're looking, I think, down market to earlier
stage investment
investors portfolios like ours and saying, we have
this, you know, billion dollar asset, and it
needs these types of capabilities to have a
(14:45):
more complete solution to bring to market.
And I've been really pleased with
how active the private equity platform companies are.
The strategics have been active all throughout. The
payers are fairly acquisitive. The big tech companies
have big
health care books of business that they're trying
to support.
But the private equity buyers, I think, have
(15:07):
become a real force,
in in a part of the cycle that's,
you know, it's this year, I think we'll
do 12 to 14,000,000,000 of investment activity in
health tech early stage
off of a $30,000,000,000
high watermark in '22. So, you know, roughly
running, you know, half to a third of
where we were.
(15:28):
And we need more liquidity in the system.
That's, you know, full stop. And I think
we're starting to see some signs of that.
But you said something that's fascinating. In terms
of, like, what you talked about in 02/2022,
and then it was explosion of all kinds
of telehealth companies, all kinds of other things.
Now it's almost you see this explosion of
so many different AI, different points of service
or companies and so forth, in trying to
(15:49):
figure out which of the several 100 that
have been started or more will actually become
real businesses and go deep and become and
you're and you're already seeing some of the
combination of those businesses too. But you look
at any similarities there in what's happened with
the explosion of AI companies compared to what
happened in sort of the digital health telehealth
Yeah. I have years ago? I have real
(16:09):
anxieties because what we we haven't tripled the
number of customers over the last five years.
The number of customers are largely the same.
I think there is,
will be a painful
it may be more painful than what we
saw on the virtual care models because the
valuations were so inflated. There'll be a real
painful reconciliation
or rationalization.
(16:29):
I don't like what I'm about to say,
but I think raising large rounds has been
such a powerful point of differentiation.
And what we say to our partner and
our entrepreneurs is that it's not how much
you raise, it's how much you own, and
just drive on efficiency. But we are in
a you know, this is a phenomenon where
capital
wins. If if nothing else, capital allows you
(16:50):
to live for another day. And so you're
seeing these spectacularly large financings.
The level of dilution on those financings is
probably equivalent to smaller rounds and call it
20 or 30 or 40% dilution. And so
the pre moneys on some of those companies
are are, you know, very, very elevated
and,
you know, don't reflect
(17:11):
the commercial risk that's ahead of the company
still. So I think you'll see,
there's just a lot further to fall when
these things,
is the valuations are so worth. These things
don't scale quickly.
But capital is clearly a weapon now in
this market.
Oh, it's a fascinating, fascinating
question.
I could talk to you, Michael, for hours.
(17:32):
I have so many questions. I'll hold them
for now and try and get you back
on. Yep. But but would love to bother
you about growth rates and what you expect
and what you see, and and when you
see it's you know, things are starting to
plateau in a company, but so many more
questions. But in the meantime,
Michael Greeley, founder of Flare Capital,
brilliant investor. You know, some of the people
(17:53):
went to law school, went to Williams College,
and I would not have known coming to
the Midwest
what a magnificently
brilliant place that was, but for the people
I went to law school with who were
from there.
Michael, just a great pleasure to visit with
you. Thank you for joining us today. You're
doing terrific work. I love what you're doing.
Thank you so much.
This is Scott Becker with a special combined
episode of the Becker's Healthcare podcast,
the Becker business, and the Becker private equity
podcast.
We're thrilled today to be joined by a
brilliant leader in the venture capital space.
We're joined today by Michael Greeley.
Michael's a general partner of Flare Capital Partners.
(00:21):
He's a Harvard Business School graduate,
a a really bright investor and thinker.
Michael, can you take a moment,
and and tell us a little bit about
yourself and about Flare Capital,
and your background?
Thanks, Scott. I'm delighted to be included.
So I've been,
in the venture business for more than twenty
(00:41):
five years. I've started three firms, started Flare,
with a colleague of mine, about a dozen
years ago. We manage about a billion dollars
focused on,
obsessively focused on early stage health care technology,
have,
approximately 60 portfolio companies,
grew up overseas in the Far East mostly.
I was an organic chemist,
(01:02):
prior to business school at Williams College. And
so I've been really fascinated by the the
convergence
of health care and,
technology.
We live in Boston. The firm's based in
Boston. And so, really, kind of at the
vortex of that,
collision of those two big industries. So it's
been a terrific,
terrific run.
(01:23):
And how did you get started? I know
that early on in your career, you worked
at one of the most famous investment banks
in the world, Wasserstein Perella, some of the
brightest, most interesting people ever. How did you
get started in the venture space?
So,
I think it's been it was a confluence
of a number of of,
observations. You're right. Wasserstein Perella, we had a
(01:44):
this is this is going back almost thirty
years ago. We started the firm with a
billion dollar buyout fund when that was a
a very large number.
And as exciting as it was to, quote,
do deals,
I just felt always removed from
really the front lines of of innovation
and
found myself living in Boston, which is really,
you know, probably one of the historic cradles
(02:07):
of innovation, you know, second to the valley,
and became really fascinated with partnering with,
entrepreneurs who are trying to reinvent whatever industry
they were focused on. And so I successively
went from kind of one end of the
market to the end of the other end
of the market,
and thought being partners with entrepreneurs
(02:28):
was,
the next best thing to actually being an
entrepreneur,
myself. Now having said that, I have started
three firms. So I think I I
to be innovative, as you know, Scott, in
the services business,
you typically have to set out and start
a new firm. And
I was on the board of the NVCA
and observed, this was maybe
(02:49):
fourteen years ago,
that the entrepreneurs who are focused on the
health care industry, which was, you know, plus
or minus 20% of the economy,
were relatively
underserved
by the venture community and just thought there
was white space there to build a firm
that was really geared, sort of purpose built
to work with those entrepreneurs.
(03:10):
And our positioning is we're the invited guests,
we're the partner of the entrepreneur,
and it's been fascinating,
you know, ups and downs,
watching this industry be rearchitected.
And so I appreciate your comments about where
I started. I feel like where I've ended
is is just as exciting, but for very
different reasons.
(03:31):
No. No. It sure is. And and talk
a little bit about
sort of the ups and downs. It it
seems like in terms of technology in health
care, digital health and tech
in health care, I I don't know if
you do any work in the bio space
too.
So so we we look at pharmatech,
and have some really exciting companies that are
(03:51):
selling into that
set of, large pharma and biotech companies. We're
not taking on
drug discovery risk directly.
I think for me, there's been a series
of of waves,
not not surprising
that at the outset we thought there were
class of entrepreneurs that were focused on an
important part of the economy that were relatively
(04:12):
underserved as
I just said. And then, as COVID,
you know, became more of our,
reality,
there was a dramatic acceleration
to adopt technology to make the system
go virtual, on demand, intelligent,
predictive,
always on.
And that's now seemingly being eclipsed as as
(04:33):
profound as that was
by what we're seeing around automation and, some
of these AI capabilities that are coming to
the market.
And and,
you know, so there are obviously industry headwinds.
The big beautiful bill, it's quite uncertain where
that lands from much of the health care
industry, but direction, I think it's gonna put
real constraints on a lot of the growth
(04:55):
dynamics.
But
the the offset is what we're seeing in
in automation
is profoundly exciting, and we're seeing that in
in the performance of our of our company's
first quarter. Many of them were, you know,
effectively on or ahead of plan.
Second quarter, we'll we'll start to see that
data over the next several weeks. But it
(05:15):
feels like
directionally,
these businesses, these entrepreneurs
are operating with such
degrees of freedom. The the dollars that they're
focused on are so large. These categories are
so large that it feels like we're at
the golden age of of maybe a couple
decades of very interesting company creation.
(05:36):
And and and where are you? Like, what
I I don't know if it's by specific
company or entrepreneurs that you're working with or
area.
When you think about, Michael, what you're most
excited about today?
What are you most excited about? What what
sort of, you know, gets you going
where you think that founder really has it
(05:57):
or that solution or that area
is really ripe for innovation?
And do you think more in terms of
let me ask you one more follow-up question.
Do you think more in terms of the
right founder or the right idea or both?
How do you think about that? I I
think first and foremost, it's the people, and
we we talk about it being,
found there's sort of duality of the founding
(06:18):
team. There's somebody who's deeply technical and very
articulate about these new capabilities,
married with somebody who really possesses voice of
the customer.
And that is typically somebody who's more experienced,
candidly,
who has worked inside the health care system
and has seen all of the issues, limitations,
frustrations,
(06:39):
and is now stepping away to build capabilities
that will rearchitect,
you know, these revenue streams or
provide tools to manage these new risks that
are being introduced into the system. And, Scott,
as you know and you're beautifully articulate about
the move from,
fee for service to value.
That has profound implications on the executives who
(06:59):
are literally managing that transition,
and they're
grasping for tools to help them, you know,
re architect, reinvent their business models. And so
for us, that is so fundamental
that that that shift is so profound. It'll
come from the innovation economy that'll drive that.
And so specifically
(07:21):
and it,
you know, it it's not interesting to talk
to a talk about a cocktail party because
everybody's talking about it. But automation and around
administrative workflows,
we're seeing real unlocks in budget. So there's
a whole automation theme that we're aggressively going
after.
We, like many venture firms,
in the height of COVID, focused on a
(07:41):
number of virtual care models. We probably have
a dozen companies that are identifying very
expensive,
hard to manage subpopulations
either in GI
or oncology
or behavioral health.
And so we think they're really interesting new
models to
provide care
more customized, more tailored to those smaller populations
(08:04):
that the system has a hard time managing
amongst,
you know, the entire population. So, you know,
with the ability to
triage,
activate, engage, inform,
these specific populations, we think those are continue
to be very interesting businesses.
The headwinds are
funding.
(08:24):
Cost of capital is now a real thing.
It's hard to access. It's,
in many cases, it's expensive. So you have
to be convinced as we are that
these businesses ultimately create enduring economic value.
And so the endpoints we we try and
solve for
are cost reduction and attributable cost reduction
(08:46):
within one budget cycle, sort of within one
year that there's a measurable
hard ROI
coupled with an outcome story,
and that tends to take a few years
to show outcomes.
And that's where the capital cost of capital
issue starts to bite, which is, can you
get enough runway? I do think, Scott,
(09:06):
the value creation in these models tend to
be more asymptotic and maybe acutely asymptotic,
so that you you kinda bump along to
the series of the c, the series a,
the series b, and then you start to
see real lift as you can tell an
outcome story, an impact story.
And unlike a lot of other sectors
where it's more of a 45 degree angle
(09:27):
curve,
these are more asymptotics,
business models
for when you map value creation over time.
But we think there's something very enduring to
these businesses.
And as a seed fund, is it sort
of a a venture capital fund, I mean,
you've got a billion under management now, which
is an incredible amount. At what point do
you exit a company? Or how do you
(09:49):
look at that or think about that?
You know, it's hard to force the sale
of a company. Those tend to be more
distressed situations, so it's nice to be acquired
where somebody's out you know, does outreach.
We had a terrific May. We probably had
our best month,
in the last ten years. We were a
seed investor in a company called SmarterDx,
which sold for 1.1
(10:10):
or a little over a billion dollars.
That was a terrific outcome over course of
a three or four year journey. Mike Gao
was a founder, amazing entrepreneur,
and he was unlocking
some very important capabilities of documentation.
We had a financing for a company we
helped start called Cohere Health in the prior
auth space. Very exciting,
(10:32):
on a path to being a very, very
significant company.
We sold a company, called Adion, the real
world evidence. So we're starting to see enough
proof points
that if you're in early with people who
have those attributes, voice of the customer,
and really deeply understand
the technology and the capabilities they're building,
the the end markets are measured in tens
(10:53):
of or hundreds of billions of dollars. So
there's plenty of spend
to create really big companies in. And so
I I think, you know, that's that tends
to be some of the markers that we're
looking for,
when we're going into something. We're we're very
focused on initial ownership. We wanna be on
the board. We wanna be active, hopefully, helpful.
You mentioned we manage about a billion dollars,
(11:13):
half of which roughly come from
nearly three dozen
of kind of the leading strategic entities in
the sector, hospitals, payers, device companies, lab companies.
And so we think we have,
the ability to get early revenue proof points.
And so we like coming in the seed
series a stage and being significant partners.
(11:34):
Thank you. And and you mentioned this combination
of somebody that's great,
technically,
sort of the engineering, computer sciences, and then
also somebody who's either got voice of customer
or could be almost like a a
front person with customers.
How important is that combination?
And then what else do you look at
in building out a leadership team? And then
(11:55):
one other question on that.
Do you ever seed companies as an idea
from Flare
versus finding a founder that that is looking
to to grow? Yeah. Perfect. Perfect questions.
We've cocreated half a dozen companies with one
of our strategics,
strategic LPs where we'll partner. They'll contribute an
(12:15):
asset.
That's been quite an effective model. It's effectively
the inverse of what most venture firms
do where you back people, then they go
build the product. This is we start with
the product, and then we recruit the the
the team around that. And we think that's
a really provocative model, particularly at this part
of the cycle where there are a lot
of stranded,
quote, stranded assets or programs in large companies
(12:38):
that are not properly resourced or they've they
don't have enough internal funding.
So we actually quite like that cocreation model
and,
probably a half a dozen of those that
we're working on right now just to give
a sense of the amount of activity. It
seems to be quite an active source of,
investment opportunities for us. Thank you. And when
your companies go to that next stage, are
(13:00):
they selling to a venture capital fund, to
a private equity fund? And and does FLIR
ever retain some equity in that as you
go forward? And how do you think about
that?
Yeah. So I I think in a very
real sense as early stage investors, when you
get to series
d
or growth rounds, our job is is kind
(13:21):
of done. And so if there's an opportunity
to sell for cash,
obviously, there's earn outs as you know. You're
a gifted lawyer. You you
have dealt with this a million times undoubtedly.
So there is usually a residual interest.
But we're in a weird part of the
cycle where a private to private earlier may
(13:41):
actually lead to a much better outcome.
You know, the part the negative of what
happened in '22 is we created several 100
companies when the category probably could absorb a
few 100 companies.
So we smeared a talent a finite talent
pool across too many companies,
and we create a lot of look alike
businesses. And so
we're quite amenable to combinations if you can
(14:04):
get to scale faster.
That's not simply a cost reduction. That's adding
more logos,
more depth to the pipeline.
And so we've done a handful of private
to privates where the resulting
combined company has a much higher likelihood of
success.
A new class of buyers, which I think
is not,
(14:25):
been adequately
kind of reported on, are the private equity
portfolio platform companies. They've become very acquisitive, and
they're looking, I think, down market to earlier
stage investment
investors portfolios like ours and saying, we have
this, you know, billion dollar asset, and it
needs these types of capabilities to have a
(14:45):
more complete solution to bring to market.
And I've been really pleased with
how active the private equity platform companies are.
The strategics have been active all throughout. The
payers are fairly acquisitive. The big tech companies
have big
health care books of business that they're trying
to support.
But the private equity buyers, I think, have
(15:07):
become a real force,
in in a part of the cycle that's,
you know, it's this year, I think we'll
do 12 to 14,000,000,000 of investment activity in
health tech early stage
off of a $30,000,000,000
high watermark in '22. So, you know, roughly
running, you know, half to a third of
where we were.
(15:28):
And we need more liquidity in the system.
That's, you know, full stop. And I think
we're starting to see some signs of that.
But you said something that's fascinating. In terms
of, like, what you talked about in 02/2022,
and then it was explosion of all kinds
of telehealth companies, all kinds of other things.
Now it's almost you see this explosion of
so many different AI, different points of service
or companies and so forth, in trying to
(15:49):
figure out which of the several 100 that
have been started or more will actually become
real businesses and go deep and become and
you're and you're already seeing some of the
combination of those businesses too. But you look
at any similarities there in what's happened with
the explosion of AI companies compared to what
happened in sort of the digital health telehealth
Yeah. I have years ago? I have real
(16:09):
anxieties because what we we haven't tripled the
number of customers over the last five years.
The number of customers are largely the same.
I think there is,
will be a painful
it may be more painful than what we
saw on the virtual care models because the
valuations were so inflated. There'll be a real
painful reconciliation
or rationalization.
(16:29):
I don't like what I'm about to say,
but I think raising large rounds has been
such a powerful point of differentiation.
And what we say to our partner and
our entrepreneurs is that it's not how much
you raise, it's how much you own, and
just drive on efficiency. But we are in
a you know, this is a phenomenon where
capital
wins. If if nothing else, capital allows you
(16:50):
to live for another day. And so you're
seeing these spectacularly large financings.
The level of dilution on those financings is
probably equivalent to smaller rounds and call it
20 or 30 or 40% dilution. And so
the pre moneys on some of those companies
are are, you know, very, very elevated
and,
you know, don't reflect
(17:11):
the commercial risk that's ahead of the company
still. So I think you'll see,
there's just a lot further to fall when
these things,
is the valuations are so worth. These things
don't scale quickly.
But capital is clearly a weapon now in
this market.
Oh, it's a fascinating, fascinating
question.
I could talk to you, Michael, for hours.
(17:32):
I have so many questions. I'll hold them
for now and try and get you back
on. Yep. But but would love to bother
you about growth rates and what you expect
and what you see, and and when you
see it's you know, things are starting to
plateau in a company, but so many more
questions. But in the meantime,
Michael Greeley, founder of Flare Capital,
brilliant investor. You know, some of the people
(17:53):
went to law school, went to Williams College,
and I would not have known coming to
the Midwest
what a magnificently
brilliant place that was, but for the people
I went to law school with who were
from there.
Michael, just a great pleasure to visit with
you. Thank you for joining us today. You're
doing terrific work. I love what you're doing.
Thank you so much.
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