Ask A VC: Rock Health’s Halle Tecco

Editor’s Note: Christine Magee is an editor for CrunchBase.

Halle Tecco is the founder and managing director of Rock Health, a digital health-focused seed fund. Rock Health has backed over 55 healthcare tech startups in the past four years including Omada Health, Doctor on Demand and Augmedix.

Everyone’s been talking about wearables this year – it’s estimated that 10M activity monitors were sold in 2014 alone. What’s the next phase in wearable tech?

We did some research around wearables in the spring of 2014, and we noticed that venture funding of wearables grew 5 times from 2011 to 2013. So there was this record number of deals done in the wearable space, and obviously there was also a concurrent rise in sales of these wearables (that was really led by Fitbit). All of the original wearables were pretty much activity trackers taking simple measurements — but we see these as a gateway to something more.

We are starting to see some really interesting technology that is more biosensing, using micro-needles to get into the interstitial fluids in a noninvasive way, or measuring new sources of data like your breath – like Spire, for instance. And then there’s a company called Empatica that’s trying to predict seizures. So having perhaps more of a clerical focus is where we see all of this technology going. And of course there’s the Google contact lens for non-invasive glucose monitoring — that one’s very cool, and the inventor of that technology recently went over to Amazon, so who knows what Amazon’s going to be doing. But all of these tech giants are starting to invest in this space, which is fantastic.

When we talk about health and activity trackers, it seems like we forget about the massive amount of personal data involved. Should we be concerned about where this data is going?

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You’re right – there is a type of person who is concerned about that. Me personally? First of all, I can’t imagine how the data would be used against me. If someone’s going to steal my health data — to what end? My employer’s not allowed to fire me for that, my insurance company isn’t allowed to increase my payments because of that.. I don’t see a motivation to steal it, so personally I think that’s the wrong way to look at the problem. I think it’s something we have to consider in any sort of technology, but to me, the worst case here would be that someone is too afraid to use this technology and in turn they don’t learn more about themselves. We call this citizen science — if we have more data we can find more answers. The downside is much higher if someone steals my ATM card than if they steal my Misfit data.

I know the gadgets are more fun to talk about, but how many of the companies that you’re working with have some sort of social impact aspect to them?

One interesting example is Oscar Health now offering Misfit Flashes to their members, and if they wear them they get discounts every month on their health insurance. I think that’s huge — that’s really aligning the incentive for patient care with financial rewards. That’s not necessarily social impact for really low-income people, but I’m optimistic that those sort of incentives are going to work. Imagine if Medicare/Medicaid did something like that and was able to offer incentives to their members. AARP is also doing interesting stuff, they’re testing some wearables in the market for the 55+ age group, and testing the impact that just being aware of your activity will have on changing behavior in this group that is less tech-savvy than the 20 somethings that traditionally buy these wearables.

According to CrunchBase data, a number of Rock Health’s companies have gone on to raise follow-on funding from corporate VCs. Should we expect to see an increase in corporate venture activity in the next year or two?

In wearables in particular what’s interesting is that the medical device companies have been building very complex devices for decades, and if they can figure out how to innovate they’re very well positioned help build very sophisticated wearables.

In digital health in general, corporates are always a few years behind. They need to learn, they need to create a strategy, they need to get a thousand people to agree with that strategy… but we’re really starting to see them pick up. A lot of very traditional health companies, whether that’s Blue Shield of California or United Heath Care, are starting to realize that they can grow and they can innovate by investing in these companies. Most recently there was a VC fund set up as a joint venture between Qualcomm and Novartis, and I thought that was a really interesting kind of coming together of the two pieces that make up digital health.

What’s one trend in the digital health space that’s particularly exciting to you right now?

TeccoDisruptOne of the big trends that we’re really bullish about is the concept of digital medicine. If you break down medicine into diagnosing things and treating things, there are a lot of places within that sector where technology can drastically reduce cost and increase access. We have a company called Neurotrack that can detect Alzheimer’s just using software — it uses the camera on your laptop to watch your eye movements as you take a couple of tests online and then tells you your chances of Alzheimer’s sooner than anything else on the market. Since it’s software-based, the cost is next to nothing, and it’s doing something that no one’s ever been able to do before. Generally when someone is diagnosed with Alzheimer’s, it’s just too late for any treatment to be effective, and for that reason we haven’t been able to find a cure. If you’re able to know 10 years before that someone’s going to get Alzheimer’s, you can try more drugs to see what’s going to be effective. That’s on the diagnosis side, which I think is fascinating.

What are you still looking for?

My colleague always says we’re looking for the health app that’s going to be on the home screen of your iPhone, something that you use so often and that’s so important to you that it’s on your home screen right in between Facebook and Venmo. I know that’s a very vague answer, but I’m personally very excited about healthcare breaking down hospital walls and becoming something that consumers can manage on their own and not just dependent on doctors who are pretty expensive and pretty difficult to get to. We still don’t have that Apple of healthcare, that brand that we love and that we really respect and trust — that’s what we’d like to see.