CHAPEL HILL — UNC Health is putting significantly more money behind the venture capital operation that began at Rex Healthcare more than a decade ago.
The health system has renamed Rex Health Ventures as UNC Health Ventures and set aside $125 million for investments in health care startups over the next decade. The money will come from reallocated capital reserves within UNC Health’s broader investment portfolio, rather than from an outside fundraise.
The new name reflects how far the venture operation has moved beyond its original Raleigh roots. Rex Health Ventures was created in 2012 with $10 million to invest in emerging health care companies, initially with a strong focus on the Triangle. At the time, it was among a relatively small group of venture capital funds launched by community nonprofit hospitals.
Its first investment came that summer, when the fund put $500,000 into Morrisville-based Aerial BioPharma. Since then, the venture arm has backed nearly 30 early-stage companies. UNC Health Ventures now has 12 active portfolio companies, according to the health system.
The investment strategy also has broadened geographically. UNC Health Ventures describes itself as a “geographically agnostic” investor and will consider companies outside North Carolina if their products or technology could improve patient care, clinical outcomes or health system operations.
The fund primarily targets Series A and Series B investments across medical technology, health technology and biotechnology. Its current portfolio includes Arrivo BioVentures, Baebies, Carta Healthcare, Phononic, Pryon, Reprieve Cardiovascular and Vergent Bioscience, among others.
Some of the earlier investments have gone on to acquisitions. Aerial’s assets were acquired by Jazz Pharmaceuticals in 2014. Bardy Diagnostics was acquired by Hillrom in 2021, Gauss Surgical by Stryker in 2021 and Veran Medical Technologies by Olympus in 2020.
Anita Watkins, managing director of UNC Health Ventures, told Axios the group pays close attention to ideas and technologies coming from physicians and nurses inside the UNC system, but investment decisions are not limited to companies with North Carolina addresses.
“The most important part of what we do … is to improve patient outcomes,” Watkins said.
That makes the fund different from a traditional investment portfolio built primarily around financial returns. UNC Health says each potential investment goes through due diligence that includes clinical and operational input and approval by a systemwide investment committee. The goal is to find companies that can produce a financial return while also addressing problems faced by clinicians, hospitals and patients.
All returns from UNC Health Ventures will be reinvested into the health system to support patient care, operations, research and future innovation.
One current portfolio company is Reprieve Cardiovascular, which is developing a system to personalize fluid removal for patients with acute decompensated heart failure. UNC Health says the technology could improve outcomes while reducing hospital stays and freeing capacity. Reprieve CEO Mark Pacyna said the relationship with UNC has included clinical collaboration and strategic guidance in addition to capital.
That access to clinicians is part of the investment model. UNC Health operates 20 hospitals and hundreds of clinics across the state, giving the venture team a large network of physicians, nurses and operational leaders who can help evaluate whether a product addresses a real problem in a health care setting.
“Novel technologies are essential to advancing the care we provide to our patients and communities,” UNC Health CEO Dr. Cristy Page said in announcing the change.
For UNC Health, the $125 million commitment is a substantial increase from the fund’s beginnings and moves the venture operation firmly out from under the Rex name and into the broader health system.
UNC Health Chief Financial Officer Will Bryant said the platform is intended to create both long-term financial value and improvements in care and operations.
The basic approach, however, remains much the same as when Rex launched the fund in 2012: put money into young health care companies, bring clinicians into the process and look for investments that can pay off both financially and inside the hospital.
