Analyzing Investments in Early Stage Dental Companies

An innovative product or service that revolutionizes its industry while earning investors significant returns.

Executive Summary:

The goal of our research is to understand the return, risk, and diversification an investor could expect from early-stage dental companies. To achieve this goal, we took a quantitative and qualitative approach to gathering and analyzing the requisite information. We spoke with industry experts with experience investing in the dental space, and combined those insights with data analysis of over 50 early-stage dental companies. We found that on average, investments in early-stage dental companies outperform both on a stand-alone basis and relative to other investments in the dental space. Dental also offers a unique diversification benefit as an industry that has been relatively resilient to economic recessions. The dental sector remains ripe for disruption, though has not seen the influx of investment capital that other industries, including similar healthcare industries, have seen in the recent past. Our research shows that an exceptional investment opportunity exists in the dental sector, particularly in early-stage companies. We believe that dental will become a key component of a well-balanced early-stage equity portfolio and continue to provide an excellent source of risk-adjusted return and diversification for investors.

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Over the last few decades, equity investments in early-stage companies have become standard among investors seeking to build balanced and diversified portfolios. Extremely profitable exits such as Uber, Facebook and Alibaba have grabbed the attention of the investment community. Large swaths of capital have poured into start-ups, as investors and entrepreneurs alike search for the next “unicorn” — An innovative product or service that revolutionizes its industry while earning investors significant returns.

average start up exits

A variety of the sectors and industries that comprise the private market have seen healthy, and in some cases overwhelming, inflows of capital investment in early-stage companies. This trend has fostered a culture that encourages innovation causing industries to evolve and experience significant boosts in productivity.Unfortunately, not all sectors have the same access to the capital required to innovate. Many industries ripe for disruption have been overlooked — This confluence of circumstances presents an excellent investment opportunity.

2018 venture capital deals

Dental is one of those industries. It has seen a substantial amount of innovation through the years and is poised to see much more. Dental companies in search of capital have often had to masquerade themselves as belonging to more “popular” industries such as technology, artificial intelligence, generic healthcare, or business services to garner investor attention.

As a subsector of healthcare, dental has and will continue to benefit from increased investment in the healthcare industry as a whole. While healthcare investment is smaller relative to other sectors, it is growing at a considerable pace and has become a staple among investors’ portfolios.

health care deals

Using knowledge of cyclical, structural trends and what investors have experienced in the past has allowed us to develop expectations around future performance. Pairing the intuition of industry experts with the results of data-driven analysis informs a granular understanding of the investment opportunities in the dental space.

In the research that follows, we explore three main objectives. First, a thorough analysis of the historical performance of start-up investments in the dental space. Second, to evaluate different strategies investors commonly use in the dental sector and understand how they compare to investing in dental start-ups. Finally, we explore the diversification benefits investment in the dental industry can offer,  particularly in start-ups. While we realize that investors commonly focus on return as the primary means of assessment, diversification is equally important.

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Vision
Our investment thesis

The dental sector remains ripe for disruption, though has not seen the influx of investment capital that many other industries, including similar healthcare industries, have seen in the recent past. Our research shows that an exceptional investment opportunity exists in the dental sector, particularly in early-stage companies. The dental industry consists of many large corporations, private practices, and start-ups with great ideas, but they are fragmented and disconnected. Revere seeks to bring those disparate pieces together — Connecting like-minded founders or compatible products and services with the investment dollars and industry leaders they require to grow their businesses. We identify and elevate high-growth product and service sectors within dentistry that can ultimately optimize outcomes for both providers and their patients, serving in all roles from lead investor to strategic investor to founder-friendly advisor— and are always looking for an opportunity to follow on in future rounds. 

Analyzing Investments in Early Stage Dental Companies

An innovative product or service that revolutionizes its industry while earning investors significant returns.
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Executive Summary:

The goal of our research is to understand the return, risk, and diversification an investor could expect from early-stage dental companies. To achieve this goal, we took a quantitative and qualitative approach to gathering and analyzing the requisite information. We spoke with industry experts with experience investing in the dental space, and combined those insights with data analysis of over 50 early-stage dental companies. We found that on average, investments in early-stage dental companies outperform both on a stand-alone basis and relative to other investments in the dental space. Dental also offers a unique diversification benefit as an industry that has been relatively resilient to economic recessions. The dental sector remains ripe for disruption, though has not seen the influx of investment capital that other industries, including similar healthcare industries, have seen in the recent past. Our research shows that an exceptional investment opportunity exists in the dental sector, particularly in early-stage companies. We believe that dental will become a key component of a well-balanced early-stage equity portfolio and continue to provide an excellent source of risk-adjusted return and diversification for investors.

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Over the last few decades, equity investments in early-stage companies have become standard among investors seeking to build balanced and diversified portfolios. Extremely profitable exits such as Uber, Facebook and Alibaba have grabbed the attention of the investment community. Large swaths of capital have poured into start-ups, as investors and entrepreneurs alike search for the next “unicorn” — An innovative product or service that revolutionizes its industry while earning investors significant returns.

average start up exits

A variety of the sectors and industries that comprise the private market have seen healthy, and in some cases overwhelming, inflows of capital investment in early-stage companies. This trend has fostered a culture that encourages innovation causing industries to evolve and experience significant boosts in productivity.Unfortunately, not all sectors have the same access to the capital required to innovate. Many industries ripe for disruption have been overlooked — This confluence of circumstances presents an excellent investment opportunity.

2018 venture capital deals

Dental is one of those industries. It has seen a substantial amount of innovation through the years and is poised to see much more. Dental companies in search of capital have often had to masquerade themselves as belonging to more “popular” industries such as technology, artificial intelligence, generic healthcare, or business services to garner investor attention.

As a subsector of healthcare, dental has and will continue to benefit from increased investment in the healthcare industry as a whole. While healthcare investment is smaller relative to other sectors, it is growing at a considerable pace and has become a staple among investors’ portfolios.

health care deals

Using knowledge of cyclical, structural trends and what investors have experienced in the past has allowed us to develop expectations around future performance. Pairing the intuition of industry experts with the results of data-driven analysis informs a granular understanding of the investment opportunities in the dental space.

In the research that follows, we explore three main objectives. First, a thorough analysis of the historical performance of start-up investments in the dental space. Second, to evaluate different strategies investors commonly use in the dental sector and understand how they compare to investing in dental start-ups. Finally, we explore the diversification benefits investment in the dental industry can offer,  particularly in start-ups. While we realize that investors commonly focus on return as the primary means of assessment, diversification is equally important.

David Arena
Chief Financial Officer
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