Silicon Valley VC funds are realizing they need to hire investors with medical backgrounds to make good bets in the multi-trillion health market.
Much of this hiring is happening quietly, but sources said that Andreessen Horowitz has quietly expanded its bio fund led by Vijay Pande (a rare example of an investor with a background in medicine and tech); Menlo Ventures is looking for investors with a biotech background; and CRV recently made a hire for its bio-engineering fund run by tech investor George Zachary.
Eric Schmidt's fund Innovation Endeavors recently publicly posted a job for "someone who lives in the intersection of life sciences and computer science."
"I've heard of a lot of (Silicon Valley) firms looking for PhDs and MDs; folks with health care backgrounds and computational biologists," said Ambar Bhattacharyya, a health investor with Maverick Ventures.
Health-tech is the new hot space for Silicon Valley investors, who see opportunities to give the gigantic health sector a "Silicon Valley-style overhaul." But after some missteps, including Theranos, many investors are realizing that it's a highly complex area, which requires extensive consulting with medical experts or bringing them in-house.
According to the venture fund Rock Health, venture financing in the space reached $4.2 billion, with genetics, analytics and wearables among the most popular areas for technology investors.
Sand Hill Road firms Andreessen Horowitz and Khosla Ventures were among the most prolific investors in 2016, Rock Health found.
Some biotech investors have expressed concerns about uneducated investors in the space, if they don't do their due diligence. In some cases, these investors are driving up valuations for promising biotech companies to Internet-company levels.
"I hope that (new) backers understand that patients' lives are at stake," said Alexis Borisy, a biotech-focused partner with Third Rock Ventures, told us recently.