Axios Pro: Health Tech Deals

June 12, 2023

Axios Pro Exclusive Content

Happy Monday, Health Tech readers.

Situational awareness: Illumina confirmed this morning that CEO Francis deSouza had resigned. Axios Pro's Mike Flaherty writes that this puts Grail back in play.

1 big thing: Optum Startup Studio said to be on ice

Illustration: Gabriella Turrisi/Axios

After a near three-year run that sources say graduated roughly 100 health companies, Optum's health care startup incubator is now on ice, Erin has learned.

Driving the news: "Optum Startup Studio ended up dissolving recently due to an org change within Optum," says Liz Selvig, a former entrepreneur-in-residence mentor who worked for the program from 2022 until the beginning of the year.

  • Meredith Brunette, the former CEO of fertility startup Bunnii, signed up to participate in the program late last year but said OSS never signed the contract and communicated instead that the program was under review.
  • Brunette was dismayed by the program's apparent shuttering because, at the time, Bunnii had secured a potential lead investor for its first fundraise and, "part of the [person's] interest was our participation in that studio," she says.
  • She added that the company had planned to pilot its BRB offering with Optum's fertility benefits group. "That would have given us a huge leg up for such an early-stage company, whereas most companies wouldn’t get to that point for several years. In health care, partnerships matter so much, and channel partnerships matter so much, and it’s so hard to get them."

How it worked: Entrepreneurs accepted into Optum Startup Studio received mentorship and a chance to pilot their offerings through Optum's expansive ecosystem.

  • Accepted entrepreneurs also collected roughly $25,000 to $50,000 in non-dilutive grant funding, per its website and people familiar.
  • "More advantageously [than the funds], they got a lot of mentorship and support from people the team knew, meaning they got invited to meetings they otherwise wouldn’t have and support from people they otherwise couldn’t obtain," one person familiar tells Axios.
  • OSS was founded in 2019 as a collaboration between Carnegie Mellon's Tepper School of Business and Optum, the person says.

What they're saying: "The executive sponsorship went away and so did the program, because it wasn’t a strategic priority for Optum," says the person close to the matter.

Zoom out: In-house entrepreneurship programs can offer startups structure and support that may be especially beneficial in a tough market, but the same conditions can cause sprawling organizations like Optum to quickly change priorities.

A spokesperson for Optum declined to comment.

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