Halle Tecco (MBA 2011)

Halle Tecco (MBA 2011)

Halle Tecco (MBA 2011) has been a health care investor since she graduated from HBS. Her fascination with the massive disruptions underway in the industry led her to found the Rock Health venture fund in 2010, and today finds her working as the founder and CEO of Natalist, a direct-to-consumer fertility company. We talked with Tecco about how the pandemic has impacted the health care startup and venture capital ecosystem.

What ideas and companies have seen an increase in funding during the pandemic?

Halle Tecco: Definitely telehealth—it has been around for a long time but with slower adoption than what we’d like to see. COVID has provided the momentum to bring more care online as providers adapt to the situation. Especially for clinics and hospitals that are treating COVID patients—many of them are now screening patients online to decrease the capacity burden and reduce the spread of infection.

Across the care spectrum, nearly everyone is implementing telehealth in some way now. Most of these providers have been dabbling or have had various initiatives around telehealth in the past, but COVID has really pushed it to become an essential part of the care experience they are delivering. When things go back to normal, whenever that happens, I don’t think the pendulum is going to swing all the way back. While I don’t think every health care interaction will be digital, we’ll end up somewhere in the middle—where we are leveraging telehealth to our advantage more than we have in the past. Because now the providers have ripped off the bandage. Telehealth procedures are in place. The health insurance plans are seeing the benefits and the cost savings.

Beyond that, there are companies that have done well despite the pandemic, and there are companies that have done well because of the pandemic. The former are stronger because instead of building a business based on a pandemic that will hopefully end sooner rather than later, you have really built an essential product that improves a core tenet of health care. Those to me are the real winners.

How has the crisis shifted the health care venture landscape?

THE WAY FORWARD

See more from the online-only June Bulletin’s coverage of the path ahead for education, health care, management, and the hotel and restaurant industries.

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THE WAY FORWARD

See more from the online-only June Bulletin’s coverage of the path ahead for education, health care, management, and the hotel and restaurant industries.

Return to June Bulletin

HT: Venture capital is a lagging indicator, trailing what’s happening in the market. The firms investing now raised their funds in the previous environment. So if we see a steeper recovery, and it becomes difficult for VCs to raise new funds, that impact on startup funding won’t happen for a while.

What I'm hearing from the VC community is that they are operating business as usual, and continue to seek deals. However, the data would suggest otherwise. In April there was a 30 percent month-over-month decrease in the number of VC deals in the US.

I have always appreciated that health care is an essential industry—one with a mission where you can feel good about what you’re putting out in the world. Investors today see the impact from this global pandemic and have an opportunity to use their investment decisions to support companies that make positive change.

What about long-term negative impacts to the health care venture landscape that could arise from the pandemic?

HT: We don’t yet know what the recovery will look like—whether it will be U-shaped, V-shaped, or L-shaped. When VCs begin to raise their next funds, if the market doesn’t have appetite for that asset class, then we’ll inevitably see a shrinkage of VCs. There will be fewer and/or smaller funds. If the market overall is not returning and the VC asset class is better or worse than other asset classes, that will determine the future pool of capital for VCs—which then determines the pool of capital for startups.

I was reading the Airbnb CEO’s letter [of May 5 regarding his company’s layoffs], and I appreciated the way that he explained it with so much empathy and respect. His core message was: “Our business is different now, and when people resume, they’re not going to resume what they were doing in 2019. This is going to be really different.” I think there are other industries—like travel, co-working, and commercial real estate—that are being disrupted far more negatively than health care.

The demand for health care has only gone up. The impact of the quarantine is really just shifting a bulk of the care remotely, and providers are being forced to become more efficient. For example, in prenatal care we’re seeing modified obstetric visit schedules to reduce the spread of disease. So for non-high-risk mothers who would’ve had 12 in-person appointments before, that’s getting cut in half. Perhaps we’ll find that outcomes are the same, and we just made the prenatal health care experience more efficient and cost-effective. We never would’ve had this experiment if COVID hadn’t forced its hand. I’m hoping there’s some good that will come out of this.

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