Dhrooti Vyas on Building Crosswalk Health and the Power of Healthcare Incubation 5-21-25

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Becker Private Equity & Business Podcast 11 min 2 speakers 7 chapters transcribed
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What is Crosswalk Health and its mission?

Dhrooti Vyas 0:50
I'm now working on something new, but today I'll tell you about Crosswalk, and then I'll tell you a bit about what I've learned about building venture-scale businesses in healthcare more broadly.
Yeah, tell us a little bit about Crosswalk, but take a moment first and tell us where you're most focused today. What are you most focused on currently?
Dhrooti Vyas 1:11
Yeah, so I am working on a new healthcare company creation platform. Healthcare incubations are a particularly fantastic way to commercialize innovation in this industry. And I can share some of the reasons why I am very bullish about this thesis and how we're thinking about it.

What role do healthcare incubations play in startup success?

And tell us about that and tell us where that would fit in. Is that at the seed stage? Is that closer to more at the venture stage? How does that look? And what are the different stages when people invest in healthcare companies? Because a lot of our audience is all over the board in this, whether they're familiar with seed stage versus not, versus venture stage, versus PE stage. Where do you fit in and what type of companies would you look at wanting to help seed and incubate?

How do investment stages differ in healthcare startups?

Dhrooti Vyas 2:03
Yeah. So I am thinking about venture scale health care companies and those that have the potential to generate financial return on a seven to 10 year time frame and have the potential to exit for call it over 100 million dollar outcome. And it's very interesting when we think about healthcare startups. If you look at the traditional pathway of starting a startup, so for example, if you look at healthcare startups that go through Y Combinator, Y Combinator's overall realized moik on healthcare is that Somewhere between 1 and 2x, whereas in the consumer and fintech investments, that hovers closer to 7 to 8x. And if you look at the flip side, if you look at health care, health tech companies that have successfully exited for over $100 million since the passage of the ACA, and returned investor capital, it's some 17.5% of those are incubations or corporate spinoffs. Think companies like TrellisRx or Landmark Health.
Dhrooti Vyas 3:18
Some are slightly more complex stories, two entities that merged and then brought in some corporate backing. Progeny's story looks something like this. But, you know, when I think about these data points, my takeaways are twofold. One is that there's a lot of complexity to the American health care system. So it's hard for an entrepreneur in the wild to start a health tech startup and be successful. There's a lot of alpha to being able to be slow and considered in the early days of launching something new. And then the other takeaway is that there are a lot of places in the healthcare ecosystem where things are working quite well, but they're subscale. So this is the story of Trellis. This is hopefully our story with Crosswalk Health, the last company I incubated. And that makes me feel very bullish about incubations as a mechanism for scaling these companies that already are demonstrating great unit economics and viability.
and talk to us about what does it mean to incubate? You know, obviously we're familiar with the term from birthing wards and we're familiar with it. Some in venture capital or early stage companies with Y Combinator and others. What is, how do you define incubating? Just because a lot of people like myself are really sure exactly what that means.

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