1Mby1M Virtual Accelerator Investor Forum: With Darshana Zaveri of Catalyst Health Ventures (Part 1)

Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Darshana Zaveri was recorded in April 2020.

Darshana Zaveri, Managing Partner at Catalyst Health Ventures, discusses the firm’s medical device-focused investment thesis, including the nuances of epidemiologic diagnostics that are currently immensely relevant. The Catalyst investment team also includes Managing Partner Josh Phillips and Principal Neil Swami.

Sramana Mitra: Let’s get acquainted. Tell us a bit about yourself as well as Catalyst.

Darshana Zaveri: I’m a Managing Partner at Catalyst Health Ventures. I have been at Catalyst since its inception in 2008. We’re two Managing Partners who manage the fund. We have been investing together since 2008.

I was a scientist for several years doing pure pharmaceuticals and drug discovery research before I went back to Harvard to get my MBA. Then I came to Catalyst.

Our firm invests in healthcare. We are a purely healthcare-focused venture capital firm based right outside of Boston, Massachusetts. We have about $150 million assets under management across two funds. We are now investing out of our new fund.

Within the broad space of healthcare, we specifically focus on medical technologies. We do not invest in biotech or pharmaceuticals, or anything that we consider pure science risk.

Sramana Mitra: Could you double-click down a little bit on some of the specifics of stage? What stage do you like to invest in?

Darshana Zaveri: We consider ourselves pretty early stage investors. We will do anything from Series A and even seed. Occasionally, we do Series B. We like to be the first institutional investor in a company.

Often, the company formation occurs with our money. We’re not afraid to go really early. I would say typically, we are Series A where there is a product concept and some proof of concept that has been done.

Sramana Mitra: Let me ask you a slightly detailed question. Early is where we play. Early has lots of nuances in our world because we are deep into early. Early can be pre-product. It can be a product concept with customer validation.

Especially medical devices, they take some resources to get a product to market. It’s not so easy to bootstrap your way to a product. Digital health is a little bit different. What do you want to see? 

Darshana Zaveri: The majority of our deals are medical devices. It’s very hardware-focused and mechanical solutions for healthcare needs. We do some digital health, but it is a very small part of our portfolio. That’s not the core of our expertise.

The core of our expertise is medical devices and diagnostics. As you correctly pointed out, you cannot really bootstrap your product to the market for those kinds of companies. A lot of early product development, clinical development, and pre-clinical development is required.

When you look at the types of companies that we are attracted to, most of our companies actually never get to market as independent companies. Most of them will be bought out. These companies are addressing major unmet needs in healthcare.

The majority of them will be acquired before they ever get to final regulatory approval in the market. What we like to see is a strong product concept. Sometimes that product concept is just something on paper.

We invested in a company that was nothing but a drawing on paper. There was not even a product to look at. Certainly, no pre-clinical data. We’re not afraid to get into deals like that. However, we will then make sure that we are appropriately capitalizing the companies and keeping them really lean until that critical clinical value has been demonstrated.

In the case of the company that I just described, we did a total round of $250,000. That $250,000 got us to a product concept that we could see, and also clinical demonstrations. Then we did Series A and followed with a Series B. We just want to make sure that we’re not putting too much money at risk at those early stages.

This segment is part 1 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Darshana Zaveri of Catalyst Health Ventures
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