Advocate Aurora Health announced it has launched a new investment arm and has made an initial investment in a San Francisco-based telenutrition startup.
The Milwaukee- and Downers Grove, Illinois-based health system said Thursday its new subsidiary, Advocate Aurora Enterprises, is focused on backing businesses that “enable people to improve their health and well-being beyond traditional clinical care settings.”
The Advocate Aurora subsidiary recently led a $25 million Series C funding round for Foodsmart, which provides personalized nutrition services on its app-based platform. Advocate Aurora did not disclose the amount of its investment.
“You’re going to see us continue to invest in health-related businesses designed to make us a destination health company, not just providing hospital, doctor and home care services but where people can look to us for all their health care needs,” said Jim Skogsbergh, president and chief executive officer of Advocate Aurora Health, in a statement.
Scott Powder, recently appointed president of Advocate Aurora Enterprises, said the subsidiary is focused on investing in and partnering with health and wellness businesses in three areas: aging independently, parenthood and personal performance.
Powder, who previously was senior vice president and chief strategy officer for Advocate Aurora Health, said Foodsmart is an "ideal first partner" for the health system.
In addition to personalized meal planning, Foodsmart provides a platform for online shopping with partners including Walmart, Amazon and local grocers. Jason Langheier, chief executive officer and founder of Foodsmart, said that arm of the business has grown as a result of "cultural shifts" that have prompted more people to buy food online during the pandemic.
Foodsmart, which currently has more than 1.25 million members from over 650 employers, also provides “foodscripts” to help users manage disease and chronic health conditions.
"A lot more health plans have come on board to be in network with us," Langheier said. "And the partnership with (Advocate Aurora), and hopefully the dieticians there, means we can provide even deeper care and really sustainable change the way people eat."
With the new partnership, Advocate Aurora is exploring ways to bring Foodsmart's platform to its patients, employees or other area employers, Powder said.
Other investors in Foodsmart’s funding round included Mayfield Fund, Seventure Partners (Health for Life Capital), New Ground Ventures, Benefitfocus Founder Shawn Jenkins, Classpass CEO Fritz Lanman and former Darden Restaurants CEO Clarence Otis, along with social impact investors The Social Entrepreneurs Fund and Larry Berger, CEO of Amplify.
Advocate Aurora previously funneled VC activity through its former subsidiary 83 Tech Harbor, which it established in 2018. The health system formally changed the name of the subsidiary to Advocate Aurora Enterprises late last year, according to the Wisconsin Department of Financial Services.
"That coincided really with the evolution of our strategy," Powder said. "... The strategy is really under the broad umbrella of Advocate Aurora Health and the purpose of helping people live well, so having a sort of generic name that doesn't connect to what we're doing and our purpose didn't really make a lot of sense."
Powder said Advocate Aurora Enterprises plans to target partners nationally.
"The reality is a lot of the kinds of companies that we're looking at that are really pioneering – and Foodsmart being an example of this – consumer health and wellness are digitally native or digitally-based, which immediately makes them accessible via technology really across the country," Powder said. "That doesn't mean we won't specifically look for companies that have what I'd call synergistic opportunities in our Wisconsin/Illinois footprint, but we're not necessarily targeting that as our only focus."
Powder said Advocate Aurora Enterprises will also largely focus on companies that have advanced past the early stages and have high growth potential.
Foodsmart, he said, is a good example: The company is 8 years old, it's cash-flow positive, and it will be able to grow even more with the investment from Advocate Aurora.
"It's kind of that perfect stage," he said. "It's third, fourth or fifth round of financing, we can help propel it. It's not a complete shot in the dark, they have customers, but still tons of growth potential."
Advocate Aurora Enterprises is also interested in acquiring more mature companies, Powder said.
Early last year, Advocate Aurora executives unveiled an ambitious set of goals for the organization, including doubling its revenue and more than tripling the number of patients it serves by 2025, saying mergers and acquisitions will play a key role in reaching those targets.