Health and happiness is a compelling and exciting sector for private equity investors.
We asked SH2 (Social Starts Health and Happiness), the only venture fund focused on the emerging science of individual health and the delivery of happiness, to walk us through the opportunity set and its potential for investors.
In 2017, SH2 began investing in the science of health and happiness, covering an arc from transforming the human organism (genetics, bioscience), to creating new forms of human chemistry (the microbiome), to reading, understanding, or altering our minds (neuroscience), to expanding human experience (virtual and augmented reality), and even to new perspectives on what we eat and drink (next-generation food and ingredients) and how we interact with one another (emergent community).
SH2's primary focus is on Delightful Moments, the small, but powerful, separations from the daily humdrum when we feel stronger, calmer, more joyful, more in control, more distant from pain and anxiety. Meditation. Massage. The endorphins from exercise. The transcendence of opera. The smell of vanilla and the taste of chocolate and fine wine. These are all historic examples of Delightful Moments.
Now, breakthroughs in science and technology have the power to deliver these experiences at an individual scale. Science can help individuals be a bit happier, which can lead to greater health. Or a little healthier, which can lead to greater potential for happiness.
This is driven by a rising generation determined to control its personal health and be its best selves. It is this new, transformative cycle of human experience that we see as one of the greatest investment opportunities in decades, a $15+ Trillion market opportunity.
What Is Health And Happiness?
Not only is health and happiness science a huge opportunity, but it is also entirely transforming core human experiences. That, in turn, is driving the health experience through fundamental change. Looking back, healthcare was all about disease, drugs, hospitals, and payers - monochrome and institutional. Today, we are already moving from disease toward prevention, from institutional toward individual focus. Health is becoming increasingly diverse and personal. And the future of health will look utterly different from the past. Every aspect of medicine and care is about to be overthrown by an army of new possibilities and choices.
This strategy uncovers big breakthroughs. You see some of those here.
Why Health And Happiness?
Key reasons why investors are seeking Health and Happiness:
Exceptional uncorrelated returns
Early market tapped by the right team, a knowledge base of innovation
True impact
Health-tech exposure
The Health And Happiness Market
We think that health, coupled with happiness, represents the most remarkable, diverse worldwide investment market we have seen in decades.
Each and every one of these areas deliver or contribute to individual happiness. The joy of new experiences. The pleasure of keeping our loved ones whole and near us longer. The satisfaction of good and healthy food. The release of sexual love. The confidence that comes from feeling desired and beautiful. The excitement of peak performance. The calm of introspection.
The same factors that are changing the world of health are opening new paths toward happiness. And happiness, in our view, is the ultimate goal. Why do people want to be healthy? So they can exist for as long as possible, enjoying fully the miracle of being alive. Thus, this is one of the largest, quickest growing markets we’ve seen in decades.
When we view investing from this perspective, it feels much more than a utilitarian hunt for monetary value. Investing in this way delivers a real impact on an individual level.
How To Discover The Right Companies And Extract Value: Where are the returns coming from?
The key is to stand apart in a crowded market, seeing signals others miss, viewing the landscape from a singular perspective.
The Right Team
Having a global perspective with industry specialties who are multi-generational and have multi-cultural viewpoints gives teams an edge in the field of Health and Happiness, as well as being located wherever great companies might emerge enables us to find the best new companies in the strongest investment segments worldwide.
The Right Tools
Having advanced AI tools allows funds in dynamically developing sectors like Health and Happiness to uncover signals and evaluate far more companies than other typical funds.
Global perspective, a wide range of evaluation
Ability to uncover new startups at birth
Ability to find and evaluate far more companies than what is humanly possible - followed by deep selection and investment process
Builds rich context and helps recognize which tech and teams stand out from the pack
The Right Investment Strategy
At SH2, our mission is to find the best technologists and scientists at the very beginning and help bring them forward to make the world a healthier and happier place. We are
Highly selective, backing only those that have the best chance of enormous success.
Investing early - the moment of inception investments
Then doubling down on the best Series A rounds
Maintaining an active portfolio, risk management, and allocation
Reserving the optionality of exiting early in select companies from the middle of our portfolio to get our investors in the money earlier than most funds can
Special Thanks to Our Contributor
Mike Edelhart
Managing Partner
SH2 (Social Starts & Joyance Partners)
mike@socialstarts.com
415-699-7646
SH2 is the only venture fund focused on the emerging science of individual health and, the delivery of happiness.
Our mission is to find the best technologists and scientists at the very beginning and help bring them forward to make the world a healthier and happier place.
Our approach has generated attractive returns in 6 existing funds and leads to us being named a Top Fund under $100M. Our 2009 vintage investments have delivered more than 11X in total value, more than 8X in cash distributions, and over 41% IRR. Our 2012 fund is over 3X in multiple, with more than a dozen exits to date, on a path towards similar returns of our 2009 vintage.