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Illustration: Sarah Grillo/Axios

Bernie Sanders still may eke out a win in Iowa, and is the consensus front-runner in New Hampshire. But most venture capitalists investing in America's health care industry — the primary target of Bernie's ire — have shoved their heads so deep in the sand that they've found water.

Why it matters: At some point, it could become a failure of fiduciary duty.

The big picture: Health care accounts for over 20% of all U.S. venture activity.

  • A majority of that is in biotech/pharma, which last year saw 866 deals raise around $16.6 billion.
  • Investors view many of those deals as binary: Either the drug doesn't work, resulting in a total write-off, or it does work and the financial sky's the limit. Strike out or grand slam.
  • Sanders pledges to limit the upside, either by limiting drug prices under the current system or (if he gets Medicare-for-all) by establishing a single, centralized buyer.

Few health care VCs I speak with are working on a Plan B in the event of their risk/reward models being made obsolete, nor are they hearing such concerns at the portfolio company level. Three main reasons:

  1. They don't believe Sanders will win. One investor told me he's "not electable." When I asked if he felt Trump or Obama were "electable" early in the campaign, he took a very long pause. Another said that contingencies will begin if Sanders gets the nomination.
  2. Even if he does win, they don't believe Sanders will get Medicare-for-all. This is the "Senate firewall" theory, and will probably prove correct. But it ignores that a Sanders victory likely comes with electoral coattails down-ballot, and the typical rule that new presidents get at least some version of their flagship policy. In this case, that could be drug price caps, which already has bipartisan support.
  3. If Sanders wins and implements his full plan, then it's such a revolutionary shift that there's not much health care VCs can do to counter it. As a Boston biotech investor told me, it's kind of like worrying about the size of your fund if the dollar begins hyper-inflating. Why bother? At that point, the whole thing is chaos.

Health care VCs also argue that industry concerns about a President Sanders will first be reflected in public market valuations, with private market valuations to follow. And one mentioned that there could be fewer deals in areas like ultra-rare disease drugs, which come with ultra-high prices, because of fears that Sanders could call them out by name.

The bottom line: For now, health care venture's strategy is see no Bernie, hear no Bernie. We'll see how long that's viable.

Go deeper: Venture capital has no guesses as to what 2020 has in store

Go deeper

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Why it matters: The DOT could effectively become the new Commerce Department, as infrastructure spending, smart cities construction and the rollout of drone-delivery programs take on increasing economic weight.

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Biden turns to experienced hands for White House economic team

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Joe Biden plans to announce Cecilia Rouse and Brian Deese as part of his economic team and Neera Tanden to head the Office of Management and Budget, sources tell Axios.

Why it matters: These are experienced hands. Unveiling a diverse group of advisers also may draw attention away from a selection of Deese to run the National Economic Council. Some progressives have criticized his work at BlackRock, the world's largest asset management firm.

Biden taps former Obama communications director for press secretary

Photo: Mark Makela/Getty Images

Jen Psaki, who previously served as Obama's communications director, will serve as President-elect Joe Biden's press secretary, the transition team announced Sunday.

The big picture: All of the top aides in Biden's communication staff will be women, per the Washington Post, which first reported Psaki's appointment.