General Catalyst’s goal, Taneja says, is flexibility — both incubated companies and early-stage ones, as well as growth-stage investments like Cityblock. The firm plans to stay grounded — and avoid over-extending itself — by working closely with healthcare professionals and partners in its ventures, he adds, such as Tullman at Transcarent, or Arch Venture Partners managing director Robert Nelsen, another Midas Lister and pharmaceuticals expert, with whom the firm partnered on its second SPAC.
Given a broader recent craze for SPACs and the bumper crop of billion-dollar funds looking to deploy money into private-market companies, it would be easy to see General Catalyst’s expansion as one as much driven by easy access to capital — essentially an argument of,? But Taneja insists that unlike nosebleed valuations among enterprise software companies today, commerce apps or certain voice-based chat apps, healthcare can sustain a larger influx of dollars long-term.
“I think healthcare is in this three, four or five year period of massive transformation, for 20% of the GDP,” Taneja says. “That is very different from what’s happening where a software company recently with less than $100 million in revenue and growing 50% raises capital at a $5 billion valuation. That’s just investors predicting it keeps growing to at some point create a return.”
The new healthcare fund will co-invest with General Catalyst’s flagship funds in appropriate opportunities, the firm says, meaning limited partners in those funds won’t necessarily be shut out of deals in the sector, which made up 20% of commitments from its last fund. Taneja insists that the fund neatly fits his firm’s broader societal goals: “It’s very consistent with the firm’s focus on trying to do great work at the intersection of impact and returns, creating great companies that are fundamentally in the long-term interests of society,” he says. “What better sector to go do that than healthcare?”
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