Process and Strategy
At Netra Health, our mission is to connect early-stage healthcare innovation with investors, advisors, and experts who share our passion for transformative impact. We strive to identify and support promising ventures that have the potential to bring about meaningful advancements in healthcare and support them with capital, guidance, and our network.
Founding and Pivot
Founded in 2014, Netra Health's original intent was to use wearable technology and predictive analytics to improve people's health through the development of algorithms. As we interacted with other players in the North Texas healthcare startup ecosystem, we learned that Netra was uniquely positioned to fill a crucial gap in the region by offering early-stage healthcare startups expert advice and mentoring. In addition, as we told our story to our circle of friends and colleagues, we were approached by investors who were interested in getting in on the ground floor of the startups in which we had invested. Recognizing the need to bridge the gap between promising startups and passionate investors, Netra Health's value proposition evolved, adhering to our original vision statement.
Room for everyone
Since healthcare is such a wide field, we look for companies that fall within our areas of expertise when making investments. Since we are aware of the still unlevel playing field, we have also made an effort to assess businesses owned by underrepresented entrepreneurs.
Our team has developed a rigorous 4-6 month proprietary and tested diligence process, covering 50 categories in 12 key areas, with experts in such areas as clinical care, biomedical engineering, medical devices, regulatory, and marketing. The end result of this thorough process is a detailed memo (15-20 pages in length) to investors outlining our thoughts on the company, including pros, cons, risks, mitigation assessments, and potential return on investment. This memo details our understanding of the problem at hand, the competitive landscape, the company's solution and roadmap, interviews with key members of the company, and engagement with key opinion leaders in our network. As a result of our quality diligence process, we maintain an investment rate of 5%. Over the past decade, we have invested in about 50 out of approximately 1,000 deals presented to us.
Beyond the role of an investor
A distinctive feature of Netra Health is that we personally invest in every company we pitch to our investors. In addition, many businesses see value in our expertise and offer us an advisory role, allowing us to actively contribute to the success of these startups while reducing risk for our investors.
Having faced the difficulties of investing without deal flow and diligence, we are dedicated to building a platform where other investors can gain access to deals, data, and analysis with a low barrier to entry. Large initial investments are typically needed for a startup, making it challenging for individual investors to take part on favorable deal terms. In contrast, the value of Netra Health and its investors is recognized by these businesses, allowing us to negotiate lower pooled investment minimums. As a result, our investors are able to invest in great opportunities for as little as $10,000, allowing them to better diversify their pre-IPO portfolio.
“Netra Health truly understands the needs and challenges of early-stage healthcare startups. Their investment approach is not just about financial backing but also about providing comprehensive support and industry expertise. We have especially appreciated their input on hospital and clinic operations, clinical study design strategies, and the overall reimbursement process. It's been a pleasure partnering with them on our mission to improve healthcare outcomes."
- Daniel Powell, CEO, Spark Biomedical
Netra Health is strategically focused on working with startup companies that reside in a promising "sweet zone," a juncture where they have progressed beyond being mere ideas on a napkin (e.g., prototypes and early data exist) and are at an inflection point to generating but have yet to generate significant revenue. Given our background, we are in a special position to contribute to the development of effective business strategies. Companies on the cusp of an inflection point present excellent investment opportunities and allow us to share in their rapid expansion and high returns. Our approach allows us to support companies in these pivotal growth phases and enables our investors to gain optimal value from their investments.
“Netra Health has been a value-add investor from day one. Manan and Puneet immediately opened up their networks with other investors, customers, researchers, and partners. They regularly dig into strategy. With their respective background, we get unique insights and feedback on our go-to-market strategy (e.g. on things like pricing, distribution, and more.) I can't speak highly enough about having Netra Health as an investor and partner.”
- Quin Sadler, CEO, Plantiga
Results That Matter
In contrast to the industry standard of 10%-30%, we have seen a positive return on investment (ROI) on nearly 80% of our pre-IPO investments to date, thanks to our rigorous due diligence process. Our average holding period has been 2-3 years, and over 50% of our successful exits have yielded a return of more than 2x. One of our exits had over a 14x return in 2 years. An investment of the same check size in each of our portfolio companies that have exited (via IPO, acquisition, or bankruptcy) would have produced a return over 2.7x over 4.25 years, or an internal rate of return (IRR) of about 66.2%. The vast majority of these investments were in later stage businesses, which already achieved their strongest growth, limiting our financial upside prior to their exits. We evolved our current strategy to shifting to earlier stage investments before pivotal growth, allowing our investors to achieve higher exits of at least 5x-10x multiples over 5-7 year hold times. Our current portfolio includes a company that has returned nearly 10x in less than 4 years, and it still has growth potential before an exit.
** Remember that past history does not predict future returns. **
As Netra introduces new investors to the exciting world of early-stage health startups, we place a strong emphasis on equipping them to make informed decisions. We understand that exploring this area, especially if you are not familiar with its nuances, can be both exciting and challenging. Our commitment lies in bridging the knowledge gap and providing valuable insights that demystify the process. We strive to provide novice investors with the information, support, and community they need to make educated investment decisions through the use of our extensive resources, expert guidance, and welcoming environment. We hope that by promoting open communication and education, a new generation of astute investors will be developed who will aid in the development and success of cutting-edge healthcare ventures. Join us in this educational journey, where your curiosity and eagerness to learn are the cornerstones of informed investment.