Five Questions: Insight Partners’ Hilary Gosher

In this series, Digital Health Business & Technology will interview a wide cross section of digital health investors, from those who work at venture capital firms and at health system and health insurance venture funds, to individual and angel investors. To be considered for this series, email us here. 

Hilary Gosher, managing director at the private equity and venture capital firm Insight Partners, is well traveled. She went to a university in South Africa, worked in London for a time and then received her MBA from INSEAD, a prestigious business school in France. After business school, she moved across the Atlantic. 

“I wanted to come to the U.S. after business school because I wanted to be part of the single largest economy and just learn a little bit about how business works,” Gosher said. She came to New York in 2000 to work for Insight Partners, where she has spent the last two-plus decades collaborating with more than 200 software companies. 

“Life is a confluence of hard work and being in the right place at the right time,” said Gosher, whose portfolio includes New York-based mental health startup, Alma and the San Francisco-based analytics company Clarify Health, along with a few non-healthcare firms. 

Digital Health Business & Technology spoke to Gosher about the controversial mental health startup space, what she wants to hear from entrepreneurs in a pitch meeting and the New York City digital health investment scene. The interview is edited for length and clarity. 
 

You’re on the board of Alma and an investor. The mental health startup space has a lot of potential, but it is not without controversy. What’s your takeaway?

I think there's a much greater awareness of the need for better mental health coverage and care for patients. I know which company you are referring to, we won't mention any names. But there are the companies focused on widening the funnel of allowing patients to find the right care, and then there are companies that are actually doing the delivery of the care. This is essentially two different angles. You can work with the provider, as Alma does. You have a mental health provider, how can Alma help them run a small business practice and be more efficient with their time? They take care of billing, payments, credentialing, scheduling and all that kind of stuff. The mental health practitioner can just focus on the patient. So that's one way that it’s been approached. The other way are companies trying to get as many patients as possible into care and then overservicing them in ways that are not always good. That’s where we’re getting that scrutiny.  

What are you telling portfolio companies about this downturn?

The last few years have been a very interesting environment because the cost of capital was virtually free. You could raise money and in fact, companies that weren't even looking to raise were proactively getting outreach from all sorts of venture firms saying, “Hey do you want to take our money?” In that environment, when the cost of capital is cheap, you tend to underestimate the value of it and so you spend it. I think there was just a lot of spending last year as companies sought to do growth at all costs. Today that's changed a little. If it costs a $1.50 to get $1 of revenue, the boards are providing more scrutiny. There's not a board in the country who's not having a conversation with their leadership teams about being more prudent. Everyone’s looking at the financials and saying, “What's the ROI on my various initiatives? And which ones should I agree to spend money on, and which ones just don't make sense?” 

What areas of digital health might be affected by a recession?

Anybody who is providing a solution that is paid for by an employer, where it's additive to your normal benefits package, I think that may be challenging. These are companies whose value proposition is helping an employee population get healthier through 15 or so services. If the recession were to continue by January of next year, as these contracts come up for renewal, my guess is employers will take a real hard look at what's the utilization of certain solutions and how many people are actually using it. They’re going to ask, “Should we really renew?” Digital health that is focused on providers and patients themselves have far less risk than those folks whose natural business value proposition means selling into employers.

What do you want to hear from entrepreneurs and companies that are pitching you?

If you can bring real customers, we want to talk to customers. We always want to hear from the person who is the user of the product, whether that's the patient, a physician, a healthcare system or someone else. Are they really getting value from it? If you're a founder and producing a minimum viable product, the faster you can get customers using the product to iterate quickly, the faster you can go to market. We're really looking at product market fit—companies that have a real product, real customers and it's obviously solving a real problem. What they're looking for is capital to scale and we're excellent at that scale up journey. And that product market fit is what a lot of founders are trying to get to and it's really hard. 

How would you describe New York’s digital health and tech investment scene? ?

Silicon Valley is still the hub for deep infrastructure technology. If you’re doing deep AI and machine learning, and deep infrastructure, there is nothing quite like the enormous community of developers in Silicon Valley. But if you’re investing in healthcare domain expertise, it can come from anywhere. We’re seeing companies emerge out of Atlanta, Boston, New York, Seattle, Los Angeles. Israel is huge. We have a company that’s come out of Spain. Silicon Valley has a toehold, but I don't think it has a complete grip, especially for vertical solutions like healthcare and financial tech. New York is huge for fintech. Silicon Valley has a great legacy, but other markets are rapidly catching up where there’s more domain expertise needed.