Cigna joins the VC fray with new $250 million venture fund

Health insurance giant Cigna has launched a $250 million venture fund to invest in early-stage companies.

The new Cigna Ventures investment fund is centered across companies in three strategic areas: insights and analytics, digital health and retail, and care delivery and management, according to a news release.

The Bloomfield, Conn.-based company has already dipped its toe in the venture investing pool with early-stage support of companies like diabetes management company Omada Heath, predictive analytics startup Prognos and home hospitalization company Contessa Health and Cricket Health, a kidney specialty care provider.

“The venture fund will enable us to drive innovation beyond our existing core business operations, and incubate new ideas, opportunities and relationships that have the potential for long-term business growth and to help our customers,” Tom Richards, senior vice president and global lead, strategy and business development at Cigna said in a statement.

Cigna’s move is part of a growing trend for of payers launching early-stage investment funds as a way to head off potential disruption from startups and new entrants to the healthcare market like the Amazon-Berkshire-JPMorgan joint health venture.

A general criticism of the large incumbents in the payer space is their inability to be nimble and quickly respond to changing market trends.

Major competitors of Cigna which have already launched their own venture arms include Humana, Kaiser Permanente and UnitedHealthGroup’s Optum division, which launched their own $250 million venture fund last year.

“From a health plan perspective, it gives us an opportunity to have great partners that we can work with in developing new innovative solutions for that market,” Prognos co-founder and CEO Sundeep Bhan told MedCity News in an interview last year.

Cigna, which ranks as one of the country’s largest insurance providers, has already made recent moves to diversify its business through a proposed $54 billion acquisition of pharmacy benefit management company Express Scripts.

Earlier this year shareholders voted to approve the purchase and the deal overcame a major barrier when activist investor Carl Icahn dropped his bid to sink the merger.

The deal is expected to close by the end of the year, subject to regulatory approval.

Photo: Getty Images, bob_bosewell

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