Entrepreneurs are building new technologies and business models that improve health outcomes while saving time and money. But they don’t always have the connections to payers and providers, or a clear understanding of how services get paid for by Medicaid. Many also lack the investment they need to scale their solutions within Medicaid.
We invest in early- through growth-stage companies. We offer critical investment capital and network-building support to mission-aligned entrepreneurs. By mission-aligned, we mean companies working to improve access and ensure value-based health care for people living on low incomes in California.
Our team brings deep knowledge of policy, delivery system partners, and reimbursement across Medicaid and California. That gives us a distinct ability to help our portfolio companies work through California’s complicated Medicaid ecosystem.
Our Impact
- 100% of CEOs in our portfolio say their relationship with the Fund is valuable
- 93% of CEOs in our portfolio would recommend that other start-ups work with the Fund to grow their business
- 115% average annual growth of Innovation Fund portfolio companies at growth stage
How much money can a company be awarded? What are the terms?
We make investments of up to $3,000,000 over the life of a company. The original investment is likely between $50,000 and $250,000 for companies at the seed stage, and up to $1,000,000 for growth-stage companies.
For growth-stage companies, we also provide up to $400,000 in grant funding to help accelerate impact in California. These grants do not go to the companies directly. Instead, we can offer grant support to delivery system partners, such as providers and payers, to support adoption, scale, and evaluation of the technology.
As a private foundation, we can be flexible with our investment terms. We can offer debt with warrant coverage or participate in equity funding rounds.
Does the fund invest in companies that are based in or operate outside of California?
Companies must be incorporated in the US, but they can be based outside the state. We look for companies that have active clients or strong prospective partners in California, or that want to build those partnerships.
“We are doing it. For the longest time, people said it was impossible to improve Medicaid. But look at us — together with the amazing health care providers with whom we are partnering — we are doing it.”
—Nathan Pelzer, cofounder and CEO,
Clinify Health
Is the fund limited to companies that are already working to improve access or care for Californians living on low incomes?
Not exclusively. We seek companies with a strong commitment to CHCF’s mission, and whose products or services have the potential to significantly improve quality of care, lower the total cost of care, or improve access to care for Californians with low incomes. In these cases, we help companies understand how to work within the systems that provide care for people living on low incomes. We can provide feedback, answers, and expertise on broadening the reach of these solutions. Ultimately, for us to invest, we need to see both mission alignment and a path to a promising commercial relationship.
How do we work with a company after we invest?
We stay actively involved after investing, through our position on the company board and our relationship with the executive team. Our hands-on work and network-building support help companies gain traction. For example, we:
- Make introductions to partners that can help a company scale and spread
- Help shape the product to meet the needs of Medicaid and other stakeholders providing health care to Californians who live on low incomes
- Provide education about evolving Medi-Cal policy
- Recommend candidates for leadership roles who understand Medicaid and the systems that provide health care to Californians who live on low incomes
- Support an independent evaluation that helps our partner understand the impact and value of the innovation, and where there is room to improve
When surveyed, 100% of CEOs in our portfolio say their relationship with the fund is valuable. Ninety-three percent would recommend that other start-ups work with the fund to grow their business.
For Payers and Providers
We recognize that many health care leaders are focused on providing high-quality care and are constantly working to improve care and to solve complex challenges. We believe the more people work together on complex problems, the better.
We support plans and providers looking to leverage innovative technologies to tackle hard problems by offering grants for pilots, start-up expenses like electronic health records integration, project management, and outcome evaluations. We also develop innovation landscape papers that help plans and providers identify technology companies that are coming up with solutions to some of the most persistent health care challenges.
The goal of the Innovation Fund is to support and develop companies that have a significant positive impact on Californians living on low incomes and the providers and plans that serve them. When we identify companies we believe are especially well-positioned to advance widespread improvements in our state’s health care system, we invest directly in their success.
It is not our objective to make a return on these investments. When investees repay CHCF, or when a company has a financial exit, that money is repurposed into additional mission-related activities.
In 2021, the fund’s portfolio of companies served over five million Medi-Cal enrollees at over 250 hospitals and 100 community health centers in California.