City tech mogul Kevin Ryan, to expand health care investing – Crain’s New York Business

AlleyCorp, the firm co-founded by tech entrepreneur Kevin Ryan, is planning a bigger push into health care with its early-stage investments.

The Manhattan-based company has hired Dr. Brenton Fargnoli, formerly a senior medical director at oncology startup Flatiron Health, as a partner to lead its health care investments.

Ryan led advertising-tech company DoubleClick, which was acquired by a private equity firm for $1.1 billion in 2005. It eventually went public and sold to Google for $3.1 billion. He has since co-founded companies such as online retailer Gilt, database company MongoDB and Business Insider.

Fargnoli is also an attending physician in internal medicine at Memorial Sloan Kettering Cancer Center. He said he’s interested in developing companies that create new care delivery models, improve labor productivity and bring a better consumer experience to health care.

Fargnoli’s role will involve building out ideas within AlleyCorp that could be matched with a leadership team to bring them to market as well as identifying promising early-stage companies to invest in. The companies that he’s interested in would improve the accessibility and affordability of care, Fargnoli said. At the oncology data company Flatiron he had led value-based initiatives and a partnership with community cancer practices. 

“This is a way for me to branch out beyond oncology and focus on other disease areas and care-delivery problems,” Fargnoli said.

The companies AlleyCorp has invested in and developed have raised more than $800 million since AlleyCorp was founded in 2007.

In 2015 Ryan co-founded Nomad Health, an online job marketplace for doctors and nurses. It also has invested in Spring Health, which offers a package of mental health benefits to employers.

Ryan said he has been pitched a number of digital health and medical device ideas but hasn’t been comfortable to invest because he lacks expertise in that area. Adding Fargnoli, who has an MBA in addition to a medical degree, provides “the perfect combination,” Ryan said.

Ryan said he plans to invest $100 million of his money into city startups in the next four years, with health care ventures representing about 20% to 40%.

“I don’t think of myself as an investor. I think of myself as a founder,” Ryan said. “About 75% of my time is spent on companies I founded.”

New York health startups, including biotech and digital health firms, received nearly $1.9 billion in investments last year, according to an analysis by the group New York City Health Business Leaders using Pitchbook data. Many of the firms funding startups were focused on investing in technology more generally before moving into health care, said Bunny Ellerin, president of New York City Health Business Leaders and director of the health care and pharmaceutical management program at Columbia Business School.

Fargnoli’s move from Flatiron to AlleyCorp is a positive development for the city’s health tech scene, she said. Flatiron was acquired by Roche Pharmaceuticals last year for $1.9 billion.

Executives from mature tech companies can supply expertise to newer ventures. “That’s exactly how you’ll see the ecosystem truly come into its own,” Ellerin said. “I think it’s a great sign.”