Spectrum Insights| March 2025
Q&A: Jeff Haywood & Steve LeSieur on Partnering in Healthcare
Managing Directors Jeff Haywood and Steve LeSieur came up together at Spectrum Equity – Steve joined the firm in 2005, Jeff came on board in 2007. While both investors partner with companies across sectors, they gravitated toward healthcare. The two now co-lead Spectrum’s healthcare investments, working with companies like GoodRx, Definitive Healthcare, Payer Compass, RxVantage and PWN Health (Everlywell).
On the heels of their third year placing on GrowthCap’s Top 25 Healthcare Investors list, Jeff and Steve sat down for an interview with RJ Lumba, Managing Partner at GrowthCap. The following has been condensed and edited for clarity; listen to the full recording here.
RJ: Let’s start with the fact that you’re co-heads of healthcare investing at Spectrum – and have been for many years. Tell us about that partnership.
STEVE: First of all, we have a very un-siloed approach to investing across the firm – no one owns a category. Our underlying partnership approach – low silos, no walled gardens – helps us work collaboratively across the firm.
JEFF: I don’t think either of us have gone deep on a healthcare company without a lot of dialogue – we rely on the shared experiences to (hopefully) make good decisions. Even if one of us is “leading” an investment, we’re all up to speed on the entire portfolio, and we draw on our experiences as a firm.
So, we aren’t just drawing on our own insights; we’re trying to apply the lessons that our other partners have learned from across the portfolio.
We try to pick our spots in the areas where we think there are innovative solutions and there’s real growth. We also try not to get caught up in a lot of the noise." - Steve LeSieur
RJ: Healthcare is such a big space, it could be somewhat daunting to start investing in – the different segments, the new technologies that are coming about, the always-changing dynamics… How do you approach that on a continuous basis?
STEVE: To start, we’ve been served well by knowing what we don’t invest in. We focus on software and data businesses that are driving efficiency in the healthcare system, whether they’re addressing a specific pain point like Definitive Healthcare or creating more pricing transparency like GoodRx.
We try to pick our spots in the areas where we think there are innovative solutions and there’s real growth. We also try not to get caught up in a lot of the noise – really understanding the core business models that are driving efficiency and solving the problems that we focus on.
JEFF: In our stage of investing, we’re of course interested in what’s new and exciting – but we have the luxury of being able to see those trends play out over time, and then start to go deep. So, while we’re continually revisiting the strategy, we haven’t had a “pivot” in a long time. In particular, we’ve seen persistent themes around transparency – like lowering the cost of care and reducing administrative waste.
“Clever things pop up in any industry, but are those ideas strategically durable over time?” -Steve LeSieur
RJ: Given the number of years you’ve been focused on the healthcare space, how has your approach or judgment changed? Are there certain things that have made you a better investor today?
STEVE: We take a lot of pride in the fact that we haven’t shifted. Not to say that we haven’t made mistakes along the way, or had to refine our view, but we’ve stayed true to what we believe in. In this economy, for better or worse, there is a lot of whipsawing. Business model durability, core sound unit economics…the fundamental elements of our strategy have stayed our true north.
With that said, there has been real evolution in this market – the clinical record and EMR category is less robust now, for example, but there may be a new wave of data capture and tooling of EMRs through AI. But the foundational elements of what we look for – the revenue retention dynamics, the growth rate aperture, the fundamental bias towards profitability – hasn’t shifted.
JEFF: Ultimately, the question we care about most is: Does this company, or this value prop, help the healthcare system? Is this something that is sustainably beneficial?
When we invest, we generally hold companies for anywhere from four to seven eight years. So, we back businesses that ultimately benefit the healthcare continuum and have sustainable value.
STEVE: There are two macro vectors that we look at: ‘Are you improving outcomes?’ and ‘Are you increasing access?’ If a business lines up across those two core foundational elements, we’re going to find it interesting. Clever things pop up in any industry, but are those ideas strategically durable over time?
RJ: To achieve outsized returns there’s usually some element of thinking differently — maybe being contrarian in certain situations. Could you share a time when you saw an opportunity differently than other investors?
JEFF: I can speak to one, which happens to be one of our more successful healthcare companies — a business called Definitive Healthcare. Definitive is a data business selling into many constituents in the healthcare ecosystem. We invested when the business was quite small – but profitable and growing nicely.
A theme that comes up a lot in healthcare is addressable market size, or TAM. Healthcare is a big market, but often when you start to break down healthcare companies — whether they’re selling into the provider space, the payer space, consumers, pharma, life sciences — the end buyers can actually start to feel small and constrained. With Definitive, Steve and I worked on together and had a lot of conversations — asking “What is the real market size? Who are the real end buying entities of this product?”
It’s funny to say that was a consideration then, given how many customers the company has now.
Definitive Healthcare celebrating their IPO in 2021
STEVE: The other place we are sometimes willing to accept differentiated risk is around company formation. In the continuum of private investing you’ve got the venture folks that ultimately raise capital and build businesses, even in advance of revenue. We’re often doing the opposite of that — finding these businesses that have established, through founder and early team ingenuity, a product that has outpaced the infrastructure of the company. These are often companies that have been built on the backs of super-efficient, bootstrapping type founders.
The company may be sub-optimized in terms of the finance function; there may be a founder and their spouse doing invoicing on their refrigerator. And often we’ll step into that and see some flywheel happening, either through product adoption, word of mouth, community… something that’s propagating the product.
“Founders need to make sure that then it comes to the thesis for the company — the bets that you’re making, the bedrock of the investment — you’re on the same page as the investor.” – Jeff Haywood
RJ: One area I like to touch on is the founder’s perspective — particularly when they need or are looking for a capital partner. What’s the message you’d give founders as they make that decision?
JEFF: The way we approach investing, we spend a lot of time getting to know these businesses. If you look back at our investments, usually we know those companies for between 2-3 years before we actually invest. That allows us as investors — but also those founders and leaders of companies — to get to know each other on another level.
Founders need to make sure that then it comes to the thesis for the company — the bets that you’re making, the bedrock of the investment — you’re on the same page as the investor. Those things that sound pretty elementary, but they’re really critical. Make sure you have the same thought process as your financial partner: how you’re going to grow the business, the risks and opportunities that you’re willing to take on, and the ones that you’re not.
STEVE: There’s a bi-directional matching here: Founders have a lot of choices, and they need to align their risk aperture and their view of the business with that of their investors. If someone is on a venture path — a serial capital raiser with a pretty wide view of outcomes — that’s probably not what we’re best suited for. Over the initial courtship period, we’re looking for signs that a founder is delivering on their plans, that they’re like-minded, that they think about product the same way, and that they’re building deep engagement with their customers.
On the other side of that, we’re very proud of the Spectrum network of executives and founders. We’ve been very lucky to continue to build companies with a growing list of folks, and there’s a lot of serial partnerships with people joining multiple companies in our portfolio over time. Part of that is just qualitative: you find the people that you share a worldview with.
We’re not the kind of firm that can get you a term sheet in one week. There are very smart people that operate that way, but our way has served us well.
JEFF: The only other thing I’d say about founder decision-making: it’s particularly helpful for entrepreneurs to talk to other founders and leaders that we’ve worked with. They can speak to how we behave, our approach to partnership, our approach to building businesses, and our approach to healthcare investing. Those entrepreneurs are our best calling card.
RJ: Spectrum has done a really good job of retaining its people — which isn’t always the case. How has Spectrum been able to do that successfully?
STEVE: Firms learn lessons from the mistakes they make — it’s the hard metal that forms your view as an investor. Like a lot of firms, we got caught up in the excesses of the first internet bubble…investing in infrastructure, building overlaid networks before the customers showed up. Coming out of that, we really focused on business model, software and SaaS, connected software, and data products.
“We don’t have a cookie cutter, 90-day plan that is instituted at all of our companies.” – Jeff Haywood
JEFF: We’ve never lost our entrepreneurship as individuals. We’re able to draw on the platform and the successes of the many businesses that we’ve partnered with, but we also enjoy some latitude in the way we partner.
We don’t have a cookie cutter, 90-day plan that is instituted at all of our companies. We have best practices and areas that we try to standardize, but it’s a very much a bespoke approach. The types of companies that we invest in are very individual; the founders know that their companies are specific and unique.
STEVE: Across our firm, we have a tightly aligned partnership. We don’t have one half of our firm going off and doing venture — it’s all about growth stage investing as we define it, and that’s run through the veins of our firm for over 20 years. There are no factions. There’s shared thinking and singular focus. We seek each other’s advice. We want input. Also, we genuinely like each other.
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