Michael Greeley, Co-Founder & General Partner, Flare Capital Partners
In an interview with Invest:, Michael Greeley, co-founder and general partner of Flare Capital Partners, reflected on the firm’s achievements including recent investments out of the firm’s new large fund, despite challenges in capital markets. He also highlighted key trends such as the rise of AI-driven healthcare solutions and the shift toward home-based care, positioning Flare Capital at the forefront of healthcare innovation.
What were Flare Capital’s key achievements in the past year?
Flare Capital is a healthcare tech venture firm I started about 10 years ago. We manage around $1 billion, focusing on transformative companies in the healthcare space, especially in software and services. To date, we’ve invested in roughly 55 portfolio companies. This past year has been a bit tricky for healthcare investing; however, we started investing out of a new large fund—a significant accomplishment. We’ve made fewer new investments than I’d hoped due to the state of the capital markets, but the performance of our portfolio companies has been encouraging. Healthcare is undergoing a profound transformation, and executives are urgently seeking novel solutions to manage it. That’s where the companies we back come in. Despite the broader challenges, the underlying fundamentals remain strong.
What are the key trends in healthcare tech?
In 2021, we saw $30 billion invested into the healthcare tech sector, compared to a typical $4-5 billion annually for the prior years, which fueled new ways of accessing healthcare. This year looks to be around $10 billion. One of the big themes is the shift from fee-for-service to fee-for-value, where providers are compensated for outcomes rather than just activity. This shift has profound implications and is forcing healthcare executives to find new ways to engage and treat diverse populations.
A major area of focus is care outside the traditional hospital setting. People want their healthcare to be virtual, on-demand, and increasingly predictive and intelligent. AI is crucial in this transformation — people expect to be notified in advance of certain conditions and demand smarter, more efficient care from their providers. While we still believe great healthcare comes down to human-to-human interaction, AI is dramatically changing how payers, providers and patients interact. Replacing labor with technology and automating clinical and administrative workflows might sound cold, but automating processes that rely on expensive or inconsistent human labor can deliver a significant return on investment. We’ve made several investments in this area, and we expect this trend to continue for years to come.
How does venture capital help founders navigate challenges and support their growth?
Our best entrepreneurs tend to be a bit older — typically in their 40s rather than their 20s. Healthcare is incredibly complex, so these founders need deep professional networks and a solid understanding of the regulatory environment. Boston’s ecosystem is fascinating, with a strong IT industry and a robust healthcare and life sciences sector within miles of each other, which creates a very compelling environment for innovation. That said, our strategy isn’t limited to Boston. At one point, we had more companies in Denver than in Boston, so there’s a real distribution of startups. We’ve built a strong value proposition. Half of our capital comes from 30 plus strategic partners, and our established customer relationships are critical in helping founders with early proof of principle and gaining early revenue traction. We actively connect them with the right executives and potential customers.
Another area where founders need support is recruitment. Healthcare management teams are particularly complex — finding great clinical executives is like finding a needle in a haystack. We also help with fundraising and capital formation by leveraging our network of co-investors. We work hard to be their first call when they need help. It sounds simple but being that trusted partner through their journey is core to what we do.
How do you foster collaboration and help your team develop skills?
One thing I’m pushing for is having the team in the office four days a week. It’s been a challenge, but I believe there’s an apprenticeship dynamic in this business that works best in person. The younger generation might not fully embrace this idea, but we feel it’s crucial for development. We’re deliberate in how we staff deals, making sure everyone gets a chance to work with different team members. For investment decisions, the person who’s least excited about the deal must be on the team. This creates a culture where we can argue passionately but always with respect and backed by data. Our team is also one of the most diverse in the industry, not just in terms of gender, race and ethnicity, but also in professional backgrounds. We have doctors, people with experience in hospitals, insurance companies and technologists. Everyone must contribute during our partner meetings, whether you’ve been in the business for a year or 10 years everyone’s input is valued. We hired each person for their unique insights, and we want them to actively participate.
What are the key challenges venture capital is facing, and how are you finding opportunities in them?
One of the chronic challenges is finding great talent. In our sector, there are probably 1,000 to 1,500 entrepreneurs trying to raise money, but only a couple dozen will go on to build truly big companies. The challenge is getting in front of those standout individuals. That’s why I’ve built the firm the way I have, offering assets and resources that attract top-tier entrepreneurs. I want those great founders looking for us just as hard as we’re looking for them. Another issue is the influx of capital at the start of COVID, which led to the creation of 800 or 900 companies in 2021 when the market could only support about 300 to 400. This spread the talent pool too thinly, especially at the executive level, leaving many companies with incomplete teams. Without strong leadership, companies struggle. Now we’re seeing the effects with many of these companies shutting down or merging at a fraction of their original value. This correction will likely continue over the next couple of quarters before things normalize, but talent access remains one of the biggest challenges.
How is Flare Capital addressing skill and talent gaps?
We have a strategic partnership with a leading search firm in our category, which helps us be more creative in identifying talent. About seven or eight years ago, I also created the Flare Scholars internship program. We now have 380 current and former Flare Scholars working across the industry. Each year, we receive several hundred applications to select around 50 scholars. This program has become a cornerstone for identifying and nurturing emerging talent. In addition, we work closely with key service providers — lawyers, accountants and so on — and aim to stay top of mind with them. If they come across potential candidates or entrepreneurs, we want to be the first firm they think of. We don’t use much venture debt, but the collapse of SVB and other banks has slowed the recovery of certain services. In each of our markets, we maintain strong relationships with lawyers and bankers, but the financial landscape hasn’t bounced back as quickly as expected.
What key trends will continue to disrupt healthcare technology, and how are you preparing for them?
I have some anxiety about all the AI innovation happening right now. It’ll take a few years before customers investing heavily in AI can clearly calculate a return on their investments. My concern is that the returns might be underwhelming, and some of the current enthusiasm around AI could taper off. Right now, it’s a tale of two cities. Companies purely focused on AI are raising money at extremely high valuations, while others—doing great work but not AI-centric—are struggling to get investor attention. Many AI companies are selling products where the ROI is still speculative, and it may take years before we can say, “Yes, automating this part of the workflow delivered a strong return.” My worry is that some of these investments won’t meet expectations.
What are your top priorities for the next two to three years?
My main priority is adding to the core investment team. We’re always recruiting great people. Then, probably late next year, I’ll be focused on raising another core fund, which will likely be similar to our current fund around $350 million. So, in the near to medium term, my focus is on expanding the team and preparing for that next funding round.
