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Madison HealthX Ventures raises first fund

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October 18-20, 2023 / Tucson, AZ
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The Story

HealthX Ventures, a Madison venture capital firm that invests in digital health care businesses, will announce Sunday that it has raised more than $20 million for a first fund.

The fund, which raised the money from about 80 investors, puts money into very early-stage software businesses that solve cost, quality and access issues in the health care industry, said Mark Bakken, a serial entrepreneur who is founder and managing partner at HealthX. It has already made five investments, two of them in Madison, he said.

HealthX is one of just a handful of Wisconsin-based funds that have raised more than $20 million during the past few years.

“For Wisconsin’s economic growth, we need to see the formation of organic venture funds that work with national firms to import capital and best practices to our startups,” said Joe Kirgues, co-founder of gener8tor, which operates venture capital funds and startup training classes. “And HealthX represents just that kind of fund.”

The trend nationally is for more midsize funds that invest in specific sectors, said Tom Still, president of the Wisconsin Technology Council. HealthX fits into that trend, with its focus on the digital health sector, he said.

The Madison region has great depth in the area of digital health and has the potential to become a national hub, Still said.

Digital health is a growing industry. The proportion of American hospitals with an electronic health record grew to 76% in 2014 from 9% in 2008, according to an article in February in the Harvard Business Review.

“The first wave was getting the electronic medical record platform in place to start introducing the concept of documenting medical history in a way you could search it,” Bakken said. The next wave will be the effort to slice and dice the information, and use it to produce lower costs and healthier people, he said.

Madison is well-positioned to participate in that revolution.

“There are a lot of really smart people in this community and in the region who care a lot and are passionate about making health care better, safer and more efficient,” said Frank Byrne, a medical doctor who is senior executive adviser to HealthX and former president of St. Mary’s Hospital in Madison.

Madison also has a confluence of the right resources, Byrne said.

Epic Systems, which makes electronic health records software, is one of the dominant players in an industry that is streamlining the way health organizations do everything from admitting and billing to tracking blood samples, managing operating rooms and recording patient information. Located outside of Madison in Verona, the company employs nearly 10,000 people.

Along with Epic, Madison has strong computer science and academic medicine programs at the University of Wisconsin-Madison, two five-star hospitals and an emerging group of digital health start-ups, Byrne said.

Enter Bakken and HealthX.

Before starting HealthX, Bakken founded three companies. The third, Nordic Consulting Partners, which Bakken started in 2010, grew into one of the largest Epic consulting firms in the country. Now Bakken says he has built a team of five experienced people and is applying the connections and expertise he gained at Nordic to HealthX.

When Redox Inc., whose technology helps software applications integrate with electronic health records, was talking with venture capitalists around the country aboutraising money in 2015, the Madison startup asked Bakken, already an investor, to join the meetings, said Niko Skievaski, a Redox co-founder.

“Having him at the table builds confidence among investors we were talking to,” Skievaski said.

Along with Redox, HealthX has invested in:

  • EnsoData, Madison, makes software that analyzes and learns from massive amounts of data to inform clinical decision making.
  • Moving Analytics, San Francisco, makes digital technology for patient rehabilitation programs.
  • HealthiPASS, Chicago, makes a patient check-in and payments technology.
  • Epharmix, St. Louis, helps clinicians care for and monitor the sickest 20% of their patients.

Other state-based funds that have raised $20 million or more in recent years include the Badger Fund of Funds, which said in August it had raised $35 million, with $25 million of that coming from Wisconsin. But that money will be distributed across more than a handful of smaller seed funds across the state. Other groups have raised $20 million plus funds in the last few years: Capital Midwest Fund raised nearly $30 millionin 2015; 4490 Ventures raised $30 million and Venture Investors raised $80 million in 2013; and NEW Capital raised $25 million in 2012.

Wisconsin has for two years in a row been ranked last among all states for start-up activity by the Ewing Marion Kauffman Foundation. But Bakken said he believes that his fund and others have a chance to turn that around.

“Hopefully now we can encourage other people with good ideas to try to start companies,” Bakken said. “Hopefully we won’t be 50th out of 50 forever.”

Source: HealthX Ventures raises first fund

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