Formation Capital Sees Big Opportunity in Senior Tech Startups

Health care reforms are paving the way for a slew of newer, innovative technologies that help improve quality of care at lower costs, and one senior housing investment group is seeing a big opportunity to fund fledgling startups focused specifically on senior care.

Generator Ventures is an early-stage fund focused on startups in aging and long-term care, formed in partnership with Formation Capital, a $4 billion private equity fund focused on senior housing, post acute and health care real estate investments.

“There’s an interesting dynamic that’s developing,” says Formation Capital Chairman and Generator Ventures Partner Arnold Whitman. “Now, people are looking at the fact that there are ways to create cost-effective, quality services through technology. It’s an area of great opportunity.”

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The principal investment behind the fund is a $1 million seed commitment to the Generator on behalf of Formation Capital.

While the investment is relatively small for a company that manages $4 billion in assets, the idea is to invest a portion of the capital and then spread the investments around to outside, institutional partners, says Whitman.

“We see Formation as a very viable partner that’s bringing more than just money, but also innovation, service and technology for seniors,” Whitman says. “Depending on the opportunity and the appetite, we can take a small investment from the Generator and make that a larger investment. There is a lot of flexibility around that.”

Generator Ventures runs the Aging2.0 Global Innovation Network and the GENerator accelerator program for startup companies focused on health care technologies.

The partnership with Formation Capital became official at Aging2.0’s Global Innovation Summit held in San Francisco in Mid-May, according to Generator Co-Founder Katy Fike.

Prior to the partnership fund with Formation Capital, Generator Ventures has worked with 11 companies in its first accelerator program, providing advisory services in exchange for a small equity stake.

But now that the fund has a partner in Formation Capital, it is able to invest capital in promising companies across the Aging2.0 network.

“We’re just now starting to invest in individual companies, doing due diligence with a handful of companies that we’re looking to give capital investments,” says Fike.

Companies on Generator Ventures’ radar include those using technology and design to improve quality of life for older adults.

This incorporates a broad range, Fike says, encompassing technologies that extend to aging in place, wearable devices, cognitive impairment, fall prevention, assisting family and professional caregivers, as well as tech that enables senior housing to go beyond its walls, helping residents stay connected to their families, health care professionals and outside communities.

Even with the health care technology space buzzing with hordes of senior care tech startups, the abundance of entrepreneurs in the space is considered more beneficial than harmful to the senior living industry, and overall health care in general.

“It is novel what’s happening right now,” says Stephen Johnston, Generator Ventures co-founder. “There certainly has been a lot of health and innovation, and there’s going to be a similar tsunami of innovation in aging services as more older people get online.”

Written by Jason Oliva

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