Oak HC/FT $800 million fund and what it wants to invest in

Venture capital firm Oak HC/FT just raised an $800 million fund, bringing its total assets under management to $1.9 billion.

It's the third fund for the firm, which was founded in 2014 and invests in healthcare and financial technology companies.

We talked to Oak HC/FT about where it's planning to invest its third fund.

Oak HC/FT, the healthcare and financial-technology venture firm spun out of Oak Investment Partners in 2014, just raised $800 million for its third fund.

That brings the firm's total assets under management to $1.9 billion. With five years of investments under its belt already, the firm's planning to keep investing along the same trends it's been tapping into so far across healthcare and fintech.

“It's a continuation of the themes of both of these markets over the last decade,” Oak HC/FT cofounder and managing partner Annie Lamont said, adding that healthcare and financial services account for roughly 30% of the US economy. “It's a 20-year opportunity that we're looking at.”

In particular, cofounder and general partner Andrew Adams said there are three key areas where Oak HC/FT will be looking to invest in with the new fund around healthcare.

Companies that work with Medicaid, the US government-funded program that provides health insurance for low-income Americans. Already, Oak HC/FT has invested in Quartet, which just got a big investment from Medicaid insurer Centene; Unite Us, a company working to connect health systems and health plans to housing and food services; and Galileo, which plans to work with Medicare and Medicaid.

Finding ways to curb drug spending. The way drugs are dispensed and paid for can be an opaque and antiquated process, Adams said. “That's something we want to bring a lot more efficiency and transparency to,” Adams said. Through past funds, Oak HC/FT's invested in WithMe Health, a company looking to take on the $360 billion prescription-drug industry by setting up a replacement to a pharmacy benefit manager.

Investing in new care models, whether that's helped with new services or technology. Oak HC/FT has been an investor in primary care companies like VillageMD and Paladina Health, which operate primary care practices.

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In financial technology, cofounder and partner Patricia Kemp said there are at least two key areas where the firm will be looking to invest with the new fund.

Payments. Particularly, business-to-business payments, where at least 50% of all activity in the US is still done by check. That offers a big opening for startups looking to drive efficiency, according to Kemp. “Payments in general still offers incredible opportunity,” she said. Cross border payments are also ripe.

Fraud prevention, risk, security and identity, are also areas where Oak HC/FT will look to back promising startups. Already, the company has an investment in Feedzai, a startup that uses machine learning to cut down on shopping risk. “Financial services companies are the greatest purchasers of data,” Kemp said, adding that there are “tremendous use cases for smarter and smarter uses of data.”

In general, Kemp said, financial services capabilities, like payments or risk monitoring, are increasingly coming to underpin every industry.

Think of Uber, which is known as a transportation company but actually owns a huge payments infrastructure it created to process taxi fares. Or Oak HC/FT portfolio company Urjanet, which aggregates data from utility, telecomm and cable companies (with the customer's permission) to be used in verifying addresses or making credit decisions.

“Fintech is greater than what I just described,” Kemp said. “It's become a key support function, and you're seeing more and more opportunities tied to that.”

As a VC that focuses on just those two industries, the team also sees a competitive advantage in identifying and helping companies that straddle both healthcare and financial technology.

“We do like the convergence story between the two,” Lamont said.

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