Cigna starts $250 million venture fund to make healthcare bets
(Bloomberg) – Cigna is launching a venture fund to invest in healthcare startups, committing $250 million of its own capital.
Health insurers have been starting venture-capital arms to find new ideas to improve their businesses and generate financial returns. UnitedHealth Group Inc., the biggest health insurer, said in November that its Optum unit was creating a venture arm with $250 million in funds. Humana Inc., Kaiser Permanente, and a group of Blue Cross and Blue Shield insurers all have venture units.
Tom Richards, a Cigna business development executive who will lead the fund, said it will partner with companies like Omada Health and Contessa Health, part of a focus on care delivery and digital health. Richards said that he expects to hire a team to vet future investments.
Richards said in an interview that there’s a lot of money going into healthcare ventures but that Cigna Ventures has “very deep expertise in the healthcare services space itself.”
Investment in healthcare startups has increased this year. According to the MoneyTree Report from PricewaterhouseCoopers and CB Insights, $10.6 billion was invested in healthcare deals in the first half of this year. Two of the seven largest venture-capital rounds in the second quarter involved healthcare firms, the report shows.
Cigna is among the biggest U.S. health insurers. The company in March agreed to buy pharmacy-benefits manager Express Scripts Holding in a $54 billion deal to gain more control over the healthcare supply chain.
The stock has declined 9% this year to $184.87, giving Cigna a market value of about $45 billion.