GE lights up with health care fund

Although the pace of fund-raising has slowed in the venture industry, General Electric seems to be anxious to get its hooks into technology startups.

The company last week announced it has launched a $250 million health care technology fund, called Healthymagination, which will focus on diagnostics, health care-focused information technologies and other life science initiatives, such as vaccine development and stem cell research.

The fund comes on the heels of governmental plans to stimulate the market for modernization in the health care industry. The U.S. Congress passed measures to tackle the modernization of the health system in February as part of the American Recovery and Reinvestment Act, which designated $19 billion for the digitalization of medical files.

GE will also be entering into an industry that hasn’t been as hard hit by the global financial crisis as other industries. Health care investment dollars have accounted for 19% of total VC investments to date in 2009, compared to health care deals accounting for 16% of activity in 2008, according to Thomson Reuters (publisher of PE Week).

GE promises to startups that it finances more than just cash.

“We offer entrepreneurs the opportunity to work directly with a global leader in health care technology in areas of mutual interest,” says CEO Jeffrey Immelt. At GE’s Healthymagination conference last week, Immelt noted that most of the health care expenditures in the United States is spent on chronic disease.

“We need to focus on chronic disease and preventing disease,” he said.

The corporation has already lent its considerable energy expertise to startups developing clean technologies. GE invested in battery maker A123 Systems’ $70 million Series D round in 2007 and followed on in its $102 million Series E round in 2008 and its $69 million expansion round in April 2009.

Also, GE backed windmill maker Southwest Windpower in April 2009 in a $10 million expansion round and also invested $4 million in sterilization and pollution abatement startup Advanced Electron Beams and followed on as part of a $14.2 million Series C investment round in July 2009, according to regulatory documents.

GE has also invested in more consumer-focused companies. It backed now-defunct airline security screener Clear in its Series B, C and D rounds from 2006 through 2008, records show.

Most of GE’s venture investments in consumer-focused technology startups come through Peacock Equity Fund, which invests from a $250 million fund launched by GE Capital and NBC Universal in 2007. Peacock has invested in nearly a dozen Internet advertising, media and gaming companies, based on Thomson Reuters data and the firm’s website, including the Rubicon Project, a provider of Internet advertising optimizing services; Trion World Network, a maker of video games; and BlogHer, an operator of a community of blogs.GE’s new fund comes as venture fund-raising has dipped considerably this year. Just 17 venture funds raised $1.6 billion in the third quarter, making it the worst three months since 1994, according to the National Venture Capital Association, based on Thomson Reuters data. —Alexander Haislip