Q&A with John Banta, president and managing director, Blue Venture Fund

John Banta, president and managing director of Blue Venture Fund, said: “Our structure is unique, in that we are off-balance sheet, separate general partner–limited partner (GP–LP) structure, but governed by a board comprised of representatives of our 38 different LPs.”

Bob Kolodgy, executive vice-president and chief financial officer (CFO) for the Blue Cross Blue Shield Association, said: “The now four Blue Venture funds continue to be very successful, providing solid financial returns and tremendous strategic value to the roughly 40 Blue entities who have committed capital to the funds.

”This is a table the Blue company executives want to be at, which is one of the great strengths of the program. This collaboration serves to bring innovation to the health care ecosystem and creates a competitive advantage for Blue Cross Blue Shield companies. John is at the centre of all of this and his contributions to the continued success of the Blue Venture funds have been tremendous.”

Mitch Perry, CFO of BCBS North Carolina and chair of the current vintage LP board, said: “Partnerships and strategic investing are central to our company’s efforts to transform health care for the better for our customers. And our relationship with the Blue Venture Funds, under the leadership of John Banta and its other managing directors, is a critical part of these efforts.

“The access that we have to solutions offered by innovative health care companies and entrepreneurs and the frequent insights that we gather from our interaction with the Blue Venture Funds and other Blues’ investors has helped us accelerate our transformation efforts.  In my opinion, the family of Blue Venture Funds represents one of the most meaningful collaborations created amongst the Blues over the past 10 years.”

Matthew Downs, managing director of Blue Venture Fund, added: “At the centre of the Blue Venture Fund ethos is the importance of team. The Blue Venture Fund team strives to assist its portfolio companies to develop and expand portfolio company partnerships with the 32 investing Blue Plans in the Fund.

”The objective is to drive improved healthcare quality at a lower cost for the BlueCross BlueShield members and the healthcare system overall. John Banta magnifies this team environment among all participants in the fund. As a result, each team member on the investment team, each portfolio company CEO, and each investing Blue Plan executive is better able to accomplish the overall mission of the fund.”

Rick Dean, president and CEO of Oncology Analytics, also said: “John and his team at the Blue Venture Fund have been great partners of our company, and me personally, for more than three years. John makes great connections for us, has his finger on the pulse of healthcare trends and supports us continually.”

Dilawar Syed, president and CEO of Lumiata, and the newly-appointed deputy director for the Small Business Administration under Biden, added: “John and his Blue Venture Fund team are one of the most supportive venture investors I have worked within my entrepreneurial career. John’s extensive network and reach in the healthcare industry, and strategic advice have been a key advantage for Lumiata in its formative years.”

Reena Pande, chief marketing officer of Ableto, noted: “I have known John since the Blue Venture Fund led an investment in our company back in 2014. He has always been a fantastic partner but also an advocate and sponsor as well as a friend and mentor. He is happy to roll up his sleeves and help navigate a client relationship and also step back and think strategical. His vision has supported the growth and scaling of businesses that have improved the lives of countless patients in need.”

How many collaborations with startups has your fund done in the last 12 months?

Our model is built on the degree to which we effectively source against themes relevant to our LP base (Blue Plan primary and special purpose licensees), and then put our full team’s effort into helping those companies be successful. We have established 204 commercial relationships between our portfolio and our LPs, representing about $1.4bn in annual revenue.  About 24 of those were new in the last year. We made seven new investments in the last 12 months.

Any contribution to the CVC or VC ecosystem you would like to highlight:

I serve as a member of the National Alliance to Impact the Social Determinants of Health, the Corporate Leadership Council of the Caregiver Action Network, the Board of Advisors to the College of Pharmacy at the University of Maryland, and the Board of the Illinois Venture Capital Association.

Team expansion and recent promotions:

In the course of the last year, the team added seven professionals including a managing director, and promoted two individuals to managing director roles.

The number of investments participated in:

In the course of 2020, we made 24 investments, including seven new investments, fourteen follow-ons, and three rolls.

The total dollars of investments participated in

The 2020 investments totalled $123m in our participation in a total of $930m of total capital raises.

The number of exits participated in:

Four exits occurred during calendar 2020, as follows:

Name                          Buyer

Ableto                         Optum

ExactCare                  CarePathRx  (partially rolled, still in)

Phreesia                     IPO (NYSE:PHR)

Verata                        Olive

Two additional exits were initiated during 2020 and completed in early 2021, as follows:

Name                          Buyer

PWN                           EverlyWell

Thrive                        Exactcare

The number of unique sectors invested in:

Broadly we are in three areas – health services, health payer infrastructure and clinical (particularly precision diagnostics).

The number of unique rounds types invested in:

We are stage agnostic. During the year, we participated in seed rounds through minority positions in control transactions, and several intermediate stages.

Plans for the year ahead:

We will continue to pursue our mission of supporting innovators solving problems of strategic relevance to the payer world, in particular the Blues. The current crisis has been a tailwind for some important themes that we have worked on for a long time. It has been a forcing function and catalyst for virtual delivery of care of many sorts – telehealth and other mobile forms of delivery, but also for the shift of the site of care (even hospital-level care) to home, and the importance of better, more coordinated behavioural health – all of which require a lot of additional work to get right. We are also renewing our commitment to address inequity in the healthcare system, particularly looking for innovative ways to support economically vulnerable communities. We are also looking to expand the role we play in deploying clinical innovation that has immense potential to improve the effectiveness and cost of outcomes. Ultimately these themes are all related – driving alignment around generating great outcomes for our members.

Pain points and opportunities you have encountered in corporate venturing:

2020 was a remarkable year – defined by increased health-related M&A and IPO volume, particularly for larger strategic assets. Based on the actual activity underway, there is reason to be hopeful that will continue in 2021. M&A as a method of open-sourced enterprise innovation is alive and well among various groups of market participants. The challenge continues to be valuation, with record amounts of money being put to work in health, and the street often looking through the current period to “recovery-phase” numbers. Our disciplines remain unchanged with regard to valuation, which requires some creativity. Although it is possible that much of the new money coming in will be lost, it is going to drive a lot of innovation in the process.

What do you think all corporations or CVCs could do better to make it a stronger industry?

Although easier said than done with a dual aim of both strategic value creation and IRR, the degree to which we can look beyond the incremental, and support efforts aimed at driving truly significant, longer-term change that creates lasting benefit, will define the longest-lasting programs.

For colour, what did you do prior to your venture role or in your spare time?

Prior to this, I was a venture-backed software entrepreneur, and before that an investment banker. I also continue to be an entrepreneur in my “spare time” (whatever that is) and started two projects in recent years – Positive Development in the ASD space, and Carallel, in the caregiver support supplemental benefit space. I have produced a feature-length film (Heaven is a Playground, New Line Cinema), produced several off-loop theatre productions, and played in a band for several years. I am also an active platform tennis player, with seven Series Championships.