In our ongoing Alternatives Watch 2022 Outlook series, we catch up with FTV Capital’s Brad Bernstein.
Bernstein has been a growth equity investor at FTV for over 18 years, leading investments in enterprise technology & services and financial services. Previously, he was a partner at Oak Hill Capital Management and its predecessors where he managed the business and financial services group.
He began his private equity career with Patricof & Company Ventures and started his professional career in the investment banking division of Merrill Lynch in New York.
In our discussion about what is on the horizon, Bernstein outlines some key trends in the U.S. healthcare landscape.
Over the next 12 months, what types of investments are you considering for your funds? What is top of mind right now?
Companies that serve the migration to e-commerce trade will be of great interest. Whether it’s AI-driven solutions that enhance the shopping/buying experience for consumers or companies that are fixing and enhancing the logistics challenges in our supply chain, these companies will have strong tailwinds and garner premium prices given their growth and the large total addressable market (TAM) they are tapping into.
Moreover, with the rising costs of healthcare in the U.S., we see a number of attractive investment opportunities within the healthcare market as self-insured employers seek solutions for cost containment; patients demand price transparency and real-time insights at the point of care; and providers leverage technology to engage patients, reduce costs and administrative burden, and engage patients on their care journey. We’re particularly excited about continuing to find opportunities within healthcare IT as we head into 2022.
As we approach the third year of the pandemic, what are your thoughts about the macroeconomic picture?
My greatest concern is always externalities, such as changing government policies on the regulatory front, tax policy and foreign policy that could disrupt markets we are trying to underwrite. Of course, new variants of COVID and inflation will also pose challenges, but both make enterprise clients more inclined to pursue digitization and adoption of innovation which is ideal for our high-growth portfolio.
What role do you see private capital playing in addressing our technology and healthcare future?
My expectation for 2022 is a torrid dealmaking pace continuing this quarter as people push to complete transactions that started in 2021 and work towards closings before tax rates change. Activity levels are a function of significant committed capital and a deep field of promising emerging companies, particularly in tech-enabled solutions that are transforming industries and taking share from incumbents.
As it relates to healthcare, this is an industry that has traditionally lagged behind in successfully adopting technology to create efficiencies and deliver a seamless, streamlined customer experience, especially when compared to other sectors like retail or travel. We see a lot of exciting opportunities in the rapidly changing healthcare market, whether it’s around claim processing, cost containment, patient experience, etc.
At FTV, we’ve been investing in enterprise technology and fintech for over two decades, and we anticipate private capital continuing to accelerate in these areas. We are very focused on carrying forward our time-tested investment strategy to accelerate the growth of innovative companies and bring them the support and networks they value most.
As an investor focused on science and technology, how do your measures of success differ in 2022 versus 2021?
At FTV we continue to be driven by a relentless commitment to helping entrepreneurs achieve their growth goals and ultimately make their dreams a reality. Our measures of financial success for our investors never change; we always expect to deliver top decile returns for our limited partners. This year, we will continue to emphasize and expand our ESG goals and focus on risk mitigation strategies that are important supplemental objectives for our investment activities.