Why CVS Created a Dedicated Venture Fund

By Kaitlin Milliken |  August 18, 2021

During the COVID-19 pandemic, healthcare providers around the globe sought digital solutions, and patients sought at-home options for what would have been in-person visits.  

Vijay Patel, Partner & Co-founder of CVS Health Ventures and Senior Director of Business Development of CVS Health

Digital health and virtual care are two areas of focus for CVS Health Ventures, a $100 million venture capital fund launched by the Rhode Island-based healthcare company in April of 2021. According to Partner and Co-founder Vijay Patel, the team also explores investing opportunities in behavioral health, holistic care, and new technologies enabled by AI and data. Investments, he says, will focus on Series A startups.  

“We’re responsible for driving key strategic partnerships across the organization,” Patel says of his 15-person team. “We have folks with both investing in capital backgrounds at CVS, and then a mix of strong operators across our business.” 

During a conversation with InnoLead, Patel shared why CVS created a dedicated fund, and the importance of getting business leaders across the organization involved. 

Successful Ad Hoc Investments

This last year and a half, we were actually an investor in a company called LumiraDx, a point of care diagnostics company. And so several years ago, we identified point of care diagnostics as an area of focus. …

During that pandemic, it was an opportunity to work with them on actually accelerating the development and the prioritization of a point of care COVID-19 test, and we were able to bring that to market at late summer last year. And it’s been a really successful partnership. We’re able to meet a need of our customers with what we think is some of the best technology to date.

Creating a Separate Venture Fund 

Before establishing the fund, [CVS] had invested in around 20 individual companies… We have had really good success in our…opportunistic approach towards investing. [But] instead of us opportunistically structuring each investment from…our balance sheet, having a traditional fund structure…makes us more market relevant and able to compete on the standard footing with other investors, and also make us more entrepreneur-friendly… So we’re trying to make it really appealing to the best entrepreneurs…while also providing visibility into the fact that we’ve committed capital. 

And we also believe that [startups] can really benefit from the depth and breadth of our capabilities and expertise. We see a lot of alignment, not just from the interesting technology and the innovation, but also around our mission…of making healthcare more accessible, addressing affordability issues, and making it simpler. 

The Importance of Tapping Internal Experts 

Where we found success in our investing activities is where we’ve partnered really closely with our subject matter experts, and business unit leaders, to understand where the real opportunities are, and [what] they’re seeing day-to-day in their business. [We can] understand where there’s challenges that an innovative company or new technology can help solve… Being really plugged in and aligned with those stakeholders and leaders has been great, because they are aligned with our customers. … There’s a greater chance for success, because we know it’s a priority area for the company.