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LATAM HealthTech CVC

Strategic roadmap to initiate & build out a LATAM HealthTech corporate venture

 

During Fall 2020, three students and I paired with a Peruvian healthcare corporation to develop a strategic framework for designing a corporate venture that’s especially suited to the partner company’s goals and current start-up landscape. Through the project, I gained experience and knowledge in:

  • Strategies for corporate investment

  • VC deal flow

  • Types of VC structures

  • LATAM entrepreneurial and VC landscape

  • Latest LATAM HealthTech trends

The Recommendation

When engaging with the partner corporation, it was apparent that they had little experience engaging with and investing in start-ups and other small companies within the region. Furthermore, the LATAM entrepreneurial landscape, especially in HeathTech, is young but fastly growing. There are few start-ups and those that exist are in the pre-seed and seed funding stages, both of which are less common to be supported by a VC. 

Understanding this market, we proposed two main recommendations. In both, it requires the company to set aside a dedicated fund to satisfy short-term and long-term investments. A dedicated investment keeps incentives aligned with an investment thesis that has a return and exit. The recommendations are:

  1. Initially invest indirectly through other VCs and/or angel investors to gain knowledge of the space, observe a broader deal flow set, and reduce risk. The corporation could even work with a particular VC to establish an industry vertical, such as healthcare. Then, once the start-ups grow, capitalize on successful ones by directly investing with a larger investment. Relationship terms with the VC or other investor must be negotiated.

  2. Alternatively (or concurrently) strategically invest in R&D via collaborative venturing or sponsored acceleration. The company can focus innovation into workstreams by engaging with start-ups that are targeting a specific area of interest for the company. This approach is very hands-on- the company is a sponsor, mentor, and facilitator- but can lead to long-term gains that will benefit the corporation.