By: Auren Hoffman, Tod Sacerdoti and Jeff Lu
When we started Flex Capital ~2 years ago, we had 2 underappreciated secrets:
- A new model for VC: A better venture capital product could be delivered by combining the expertise of current software CEOs and full-time venture investors. By splitting the roles, we could offer CEOs better advice and select better companies for investment. .
- Data + Middleware: Data-as-a-service and middleware business models exhibit accumulating advantages that are underappreciated by the broader investment community.
Our very first investment out of Flex Capital in June 2019 was in a little-known company, Datavant. Almost exactly 2 years later, Datavant announced it is merging with Ciox today, valuing the combined entity at $7 billion and will operate under the Datavant brand. The merger will create one of the The merger will create the world’s largest ecosystems of healthcare data which includes:
- More than 2,000 U.S. hospitals and more than 15,000 clinics
- More than 120 health plans
- More than 100 health data analytics companies
- More than 30 life science companies
- More than 70 academic institutions and non-profits
- More than 75 state, local, and federal government agencies
There are so many things that are unique about the company and circumstances around the investment, but it all starts with the founder and CEO, Travis May.
Our relationship with Travis started in 2009. Fresh out of college, Travis started working at LiveRamp with our partner, Auren Hoffman. LiveRamp is the leading middleware and data company for advertising and marketing technologies. Travis quickly rose to a leadership role in the company and ended up taking over as CEO of LiveRamp, succeeding Auren after the Acxiom acquisition.
During Travis’ time at leading LiveRamp, he caught up with a friend from college, who happens to also be an extraordinary entrepreneur, Vivek Ramaswamy. Vivek is the founder and CEO of Roivant, an innovative biotech company which leverages data, aligned incentives and speed to deliver better healthcare. Over a series of dinners, Vivek and Travis brainstormed whether a business model similar to LiveRamp’s (built around data connectivity) could thrive in the healthcare ecosystem. The more they thought about it, the more excited they became that this could solve one of the biggest challenges facing healthcare. Travis was the perfect person to lead it, and Roivant was the perfect thought partner to understand pharma use cases.
The two friends founded Datavant with Roivant being the founding minority shareholder and capital provider. Prior to starting Flex, Tod Sacerdoti and Auren Hoffman, also participated in the original financing in 2017.
When we raised the debut fund, Flex Capital I, Travis was the type of value-added LP we wanted to join the investor base. He graciously invested and contributed to putting us in business. Travis also happens to be the founder of a company which is a paragon for the types of businesses we aim to work with.
In so many ways, we are lucky that Travis chose to partner with us. First, as a co-worker back in 2009, then as a limited partner in Flex Capital I in 2018, as a portfolio CEO in 2019. The vast majority of our position is still invested in the combined entity of Datavant and Ciox, and we sleep easy at night knowing that Travis May will be overseeing it. We believe it is still Day 1 at Datavant and are excited about the combined capabilities of the two companies.