We recently welcomed Dr. Zack Scott as a general partner to our growing healthcare team. Zack is an ambitious investor with decades of experience in the healthcare industry. Most recently, he was a managing partner and co-founder of Revelation Partners, a healthcare focused investment firm that specializes in secondary transactions. Drawing from his days in residency, Zack has a keen eye for pragmatic solutions and novel ideas that could create profound change in healthcare.
Read our Q&A with Zack to find out what led him to Norwest, which healthcare trends he’s excited about, and how he’d advise entrepreneurs.
Q: What drew you to the General Partner opportunity at Norwest?
The culture; it’s a big differentiator that separates the great firms from the OK firms and I think Norwest has captured that equation better than any firm I’ve seen.
Zack: There are several factors that drove my decision to join Norwest. I was one of the co-founders of my last firm, so it wasn’t something that I took lightly. The way I found out about the opportunity was through Tiba Aynechi. Tiba and I started our careers together at Burrill & Company and, after we had both left Burrill, invested together when we were at different firms. When Tiba called to tell me that she had joined Norwest, she mentioned the open medtech partner role and said that she thought I would be a perfect candidate. I initially didn’t think I would be interested because of what we had accomplished at Revelation Partners, but Norwest has a great healthcare team and has built a very successful investment platform. It’s one of the most experienced and successful venture capital firms in the United States with over 65 years of investing history. I was attracted to a platform that has proven its longevity; I knew the firm had just raised its 16th fund. It all resonated with me.
Culture was also a critical component. Culture is not only how you interact with your colleagues when you’re looking at investment, but how you establish and maintain a level of candor and friendliness. It’s a tough balance to keep in a venture capital firm—even for the most successful firms. I’m turning 50 in November, and I’ve instituted a rule: I will only work with people I like and who I think are high quality. I spent a lot of time vetting the Norwest team and appreciate the firm’s results and collaborative culture. It’s a big differentiator that separates the great firms from the OK firms and I think Norwest has captured that equation better than any firm I’ve seen.
Lastly, there’s always a debate in the venture community about whether it’s better for a firm to be highly specialized in just one vertical like healthcare or if there are complimentary benefits to having a more diversified approach, which Norwest has. I’m a firm believer in the latter. The healthcare sector is going through a digital transformation and entered a period of rapid evolution that was triggered by the challenges of the pandemic. I saw Norwest’s multi-sector investment team as a competitive advantage where I can leverage the expertise from the other verticals to make better investments in healthcare.
Q: What will be your investment focus in this new role?
My focus will be on devices, diagnostics, and healthtech. Within the healthtech sector, I focus on two areas. One is provider focused businesses, selling to hospital systems and physicians, where I can tap into my experience and understanding of the realities of practicing medicine. The other area I focus on is pharmatech and real-world evidence businesses.
Zack: My focus will be on devices, diagnostics, and healthtech or tech-enabled services. Within the healthtech sector, I focus on two areas. One is provider focused businesses, selling to hospital systems and physicians, where I can tap into my experience and understanding of the realities of practicing medicine. The other area I focus on is pharmatech and real-world evidence businesses. Even though I specialize in medical devices and healthtech, I’ve done a fair bit of investing in biopharmaceuticals in my career. I’m aware of my limitations as an investor in biopharmaceuticals; however, there are clear areas in drug development where we know there’s a need for improvements—identifying new targets, improving the efficiency of research and development, innovating better ways to execute clinical trials—where technology can play a significant role. Tiba, my biopharma partner, will be leading the firm’s efforts in the biotech space, and I’m looking forward to collaborating with her in that. I am also excited about working closely with the other two partners on the healthcare team, Ryan Harris and Casper de Clercq, who are both very accomplished healthcare investors. I really value their experience and appreciate their complementary views when looking at new investment opportunities. Across the healthcare team at Norwest, we have extensive experience across all of the subsectors in the healthcare market which I believe will help us make smarter decisions and generate an overall better return for our investors.
Q: How does your background in medicine influence your approach to investing?
I try to overlay the practicalities of a physician practice, whether that has to do with the nuances of a procedure or understanding the landscape of alternative therapies and incorporate that all into—what I would hope is—a realistic view of what is a good technology.
Zack: I first take a critical clinical approach when I look at an investment, both in terms evaluating the patient outcomes and clinical benefits of a procedure and in weighing the risks of that therapy. Then, I try to overlay the practicalities of a physician practice, whether that has to do with the nuances of a procedure or understanding the landscape of alternative therapies and incorporate that all into—what I would hope is—a realistic view of what is a good technology.
Overall, I would say I tend to gravitate toward technologies that result in more profound changes in clinical practice. I do not like investing in technologies that are slightly better improvements on existing therapies; I like to invest in companies and products that I think will have a meaningful impact for the healthcare system as a whole. I think that’s where you can make the most money and have the biggest impact.
Q: What are the most impactful healthcare trends you anticipate in the next few years?
The work being done in real-world evidence is compelling. When physicians see a patient in clinic, they are only getting a snapshot of that patient’s clinical journey. It’s the patient’s experience outside the clinic that matters more—and real-world data gives us a view of the patient journey that we haven’t had before.
Zack: In general, we’re approaching the critical time where the Baby Boomer population is coming through the healthcare system and they’re consuming the largest parts of its resources, which are constrained by definition. As a result, there is going to be an increased focus on the level of clinical evidence that medical products have before you see widespread adoption. A few decades ago, there was a trend where companies could get a quicker FDA approval for products called the 510(k) pathway which doesn’t require the level of clinical evidence that you would see for a novel product. Companies tried to quickly commercialize products through that regulatory pathway, which at the time probably sounded smart, but in the long run led to many commercial challenges. Companies that have focused on the science and sound clinical data are going to be the long-term winners within the medical device sector.
Similarly, within the healthtech sector, the work being done in real-world evidence is very compelling to me. When physicians see a patient in clinic, they are only getting a snapshot of that patient’s clinical journey. It’s the patient’s experience outside the clinic that matters more—and real-world data gives us a view of the patient journey that we haven’t had before. An example of this is my investment in Evidation Health. Evidation uses data collected from your mobile device, with your permission, and couples it with sophisticated analytics to get a more holistic view of the patient journey. In one of the company’s published studies, they reported that they were able to identify elderly patients with early signs of dementia or Alzheimer’s by how they interacted with their phone—and it was more accurate than some of the standard questionnaires and tests that physicians do. The ability to use that real-world data to identify patients with a disease earlier can eventually help them get treated quicker and hopefully have a better outcome.
Q: What one piece of advice would you share with entrepreneurs in the healthcare space?
Honesty and candor are key. In the startup world, there’s a tendency to want to “fake it ‘till you make it.” Nothing turns me off more as an investor than to have an entrepreneur who pretends they know what they don’t know.
Zack: For me, honesty and candor are key. In the startup world, there’s a tendency to want to “fake it ‘till you make it.” Nothing turns me off more as an investor than to have an entrepreneur who pretends they know what they don’t know. The greatest partnerships I’ve had with CEOs and management teams are ones where they feel comfortable enough with me to share their questions and their challenges—even if it’s just to use me as a sounding board. I’d like to think one of my differentiating characteristics as an investor is to take things in stride, not overreact, and engage in the problems. And hopefully instill that trust with entrepreneurs. It makes the harder conversations easier and allows you to run a business much more efficiently, from both a capital and human capital perspective. Candor is important. That’s number one.
Number two is a realistic understanding of the market and the time to get there. And, lastly, what probably ties to both is a willingness to take feedback and incorporate it. You may disagree but try to entertain different perspectives.
Q: What is your perfect day off?
My wife and I hosted a reunion for my family in July up in Tahoe, my favorite day of the reunion was when we spent the morning boating on the lake, and then enjoyed an afternoon lounging at the beach and paddleboarding. It was pretty perfect.
Zack: I’m very close with my family, especially my two brothers, and it’s similar with my wife’s side of the family, and so we spend a lot of our time off with them. My wife and I hosted a reunion for my family in July up in Tahoe, my favorite day of the reunion was when we spent the morning boating on the lake, and then enjoyed an afternoon lounging at the beach and paddleboarding. It was pretty perfect. My brothers joke that it was like going to camp. I half-joke that I was reliving my first and favorite job ever, which was as a camp counselor from sixth grade all the way through high school.
About Zack Scott
Dr. Zack Scott previously served on the board of directors for Cianna Medical, Coherex Medical, Evidation Health, Providence Medical Technology, Respicardia, Spiration, and Syapse.
Prior to joining Norwest, Zack was the co-founder and managing partner of Revelation Partners, a dedicated secondary investor specializing in shareholder liquidity and growth capital for healthcare companies. During his time at Revelation Partners, he made notable investments in Omada Health, iRhythm Technologies (IPO), SetPoint Medical, and Respicardia (acquired by Zoll Medical).
Before working in private equity, Zack was a General Surgery resident at Oregon Health & Science University in Portland, Oregon. He earned his M.D. from the University of Texas Health Science Center at San Antonio where he was a member of the AOA Medical Honors Society, and subsequently earned an M.B.A. with a specialized certificate in Health Sector Management from The Fuqua School of Business at Duke University where he was a Fuqua Scholar.