Providence has proven over the last decade or so to be one of the most tech-forward health systems in the country. The Renton, Washington-based health system has conducted hundreds of tech pilots, spun out several digital health startups and funneled millions into companies creating innovative healthcare tools.
Over the past eight years, Providence’s venture capital arm was a key part of the health system’s tech and innovation strategy. This month, the health system announced that it had spun off Providence Ventures — and that it had been renamed Allumia Ventures.
Allumia — which is now an independent venture capital firm — also announced that it had closed its third fund. Providence is investing $150 million into the third venture fund, exactly as the health system did for the prior two funds.
As Allumia (then Providence Ventures) came to the end of its second fund, its leadership realized it was time for the firm to spin off, as doing so would allow the firm to build relationships with a broader range of health systems, said Allumia Managing Partner Jeff Stolte.
“Given our longevity in this space, we had numerous other health systems approach then Providence Ventures to kind of kick the tires on how we did what we did and, quite frankly, solicit interest in whether they could do it alongside of us or invest in the fund. As we’ve spun out of Providence and stood up a traditional venture capital legal structure, we’ve now enabled that to happen in a more formal manner,” he explained.
Allumia is looking to build upon the $150 million that Providence committed to the third fund by inviting 3-5 other health systems to be limited partner investors into the fund, Stolte added. He said the venture capital firm is aiming for its third fund to end up in the $200-250 million range.
The firm is seeking “like-minded, mission-oriented organizations that look and feel something akin to Providence” as new investors in the fund, he said. These organizations may not operate at the same scale as Providence — but Stolte pointed out that working with health systems of different sizes and structures will deepen Allumia’s understanding of regional differentiation in market needs.
Allumia currently manages a portfolio of 28 investments and 10 successful exits. In addition to Stolte, Allumia comprises six other people: four investment professionals, a CFO and a project manager.
As for the firm’s investment strategy — Stolte said it will remain largely the same as it was before the rebrand. Allumia’s investors will continue to invest in solutions tailored for health systems, integrated delivery networks and sometimes payers, he remarked.
“Our model really starts with our team’s deep relationship with Providence — and then in the new fund, our new limited partners too. We will continue to spend a great deal of time really picking the brains of thought leaders and business leaders across those organizations to identify the areas of the most pressing need,” Stolte declared. “We will start with defining the problem statements that our limited partners care most about, and then we will scour the landscape to find best-of-breed solutions that seem to address those problem statements.”
In recent months, some hot areas of interest for Allumia include behavioral health solutions, tech to address healthcare’s workforce shortage and AI to increase operational efficiency, he added.
Photo: phive2015, Getty Images
