Five Questions: Maverick Ventures’ Prateesh Maheshwari

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. 

Prateesh Maheshwari, investor at San Francisco-based Maverick Ventures, knows a thing or two about startups, having spent three years as the director of finance and strategy at insurtech, Oscar Health. At Oscar, Maheshwari said he spent a lot of time with the company’s investors and came to appreciate the modularity of starting up an insurance company. 

“You could apply the learnings from building an insurer to literally each vertical,” Maheshwari said. “How do you engage members better? How do you build a better provider network? How do you do better prior authorizations? There are all these things an insurer has to tackle and it felt like they could all be separate businesses.”

Maheshwari spoke with Digital Health Business & Technology about what he learned when he switched into venture capital, what digital companies should know about pitching to Maverick Ventures and what it’s like being married to Julia Roberts. The interview has been edited for length and clarity. 

What didn’t you realize about the venture capital world that you learned quickly?

Honestly, the inefficiency of private markets. That is not a comment on digital health investing in particular, but more about how the industry works. You spend a lot of time getting to know all the individual companies. It feels like a big matching game of hundreds of entrepreneurs and hundreds of VCs trying to have kind of that serendipitous meet where a VC has a thesis in a certain space and a company is building something in that space and raising at that exact moment. You end up spending a lot of time with all sorts of BS.  

What’s exciting is there are a lot of folks building in healthcare right now. I thought Oscar was unique in that you had people from tech who wanted to build something in healthcare. It might have been unique 10 years ago, but you’re seeing lots of entrepreneurs coming into the industry because of a personal connection to healthcare. 

What conversations are you having with portfolio companies about the economy?

We’re at an uncertain point in the economic cycle. Part of the reason you're seeing so much volatility in the public markets and from investors is that the range of outcomes is wide. Having conservative investors, we are having a lot of conversations around growth vs cash-burn tradeoffs. Some of the advice we’re giving portfolio companies is making sure they can be the masters of their own destiny. In a different economic cycle, they might be able to fundraise off the back of that. That's not the environment that we're in. They must focus on unit economics, making sure that there's a proven economic model and getting a sense of their path to profitability. 

What segments do you feel are recession proof?

One of the things that happens during a recession is there are a lot of focus on cost structure and on cost efficiency. If the macroeconomic environment continues to get worse, one of the things you will see is more focus from large health systems and payers on how to be more efficient and get their cost structures under control. For instance, for hospitals how do you make your billing much more efficient through automation? How do you get better at labor costs, which is like 60% of the cost structure for health systems? How do you make sure you have the right internal staff and you're not using temporary employees on a long-term basis? On the payer side, how do you enter markets more efficiently? That efficiency layer will do really well in this environment. 

What should digital health companies know when pitching to Maverick Ventures?

There are a few. One is why does that team have an unfair advantage to win in that market? In healthcare, especially in healthcare services, there are often not a ton of barriers to entry. We really need to find out which company is going to be excellent at executing. Maybe that comes from their executives having seen the problem up close at a previous role, maybe it's because they have some technological or some product insight that no one else has or maybe they’re just really well connected in that area.  Regardless, they have to emphasize why they're the right team to win in that area. That is one core piece. 

Second is exhibiting a degree of rationality around growth vs. burn. You need to play the market that's in front of you. And the market right now really rewards strong unit economic models. So as businesses come pitch to us, we're spending a lot more time making sure that the economic model scales and that it scales in a way where margins can really cover up costs over time. 

What was it like to read about your marriage in The New York Times?

Well, I’ll tell you, my wife’s maiden name is Julia Roberts. So, there were a lot of people who clicked on that story thinking the actress got married to me. I would call it really false press, but it’s been fun to have that to click on many years later. There were comments about how it was fake news. 

Editor’s note: Maheshwari and Dr. Julia Ann Roberts, a medical doctor, wed in 2016.