Woman-led DigitalDx Ventures is going big with its sophomore fund

The woman-led firm, which raised about $24m for its debut vehicle, is targeting up to $150m for its sequel fund, its founder tells Venture Capital Journal exclusively.

DigitalDx Ventures, a woman-led firm focused on health technology companies that utilize artificial intelligence, aims to raise $100 million to $150 million for its second fund, a major step up from its first fund, firm founder Michele Colucci told Venture Capital Journal.

“The strategy doesn’t change” for Fund II, Colucci said. “The pandemic has only strengthened and validated our investment thesis.”

Michele Colucci, DigitalDx Ventures

After raising about $24 million for its debut fund in 2019, DigitalDx backed eight companies that have increased in value by about 29 percent over 24 months, according to the firm’s website.

Colucci, managing partner of the firm, believes Fund II may outperform its predecessor. “In this market there’s a lot of opportunity, especially in our vertical of AI enabled Healthcare, because everybody gets sick,” she said.

Based in Menlo Park, California, the firm primarily invests in early-stage healthcare companies that use AI to help doctors diagnose patients earlier, more accurately, less expensively and less invasively. Its portfolio companies are focused on a variety of health conditions. They include 20/20 GeneSystems, which uses one-test liquid biopsies to provide early detection for multiple types of cancers; Aeena Diagnostics, which uses algorithms to detect multiple cancers in saliva through RNA and mRNA markers; and Optina Diagnostics, which uses a two-second hyperspectral imaging eye scan to diagnose brain health (and early detection of Alzheimer’s).

DigitalDx disclosed its fundraising plans for Fund II on July 25, but its SEC filing doesn’t list a target amount.

The new fund will charge the standard 2 percent management fee and 20 percent carried interest to make it “as easy for people to support us as possible with vanilla terms,” Colucci said.

The woman-led firm plans to continue targeting a diverse LP base, specifically focusing on bringing more women into venture capital as investors. Half of the LPs in its debut fund were women, and Fund II already has a number of investors from Fund I, Colucci told Venture Capital Journal.

Colucci explained the relationship between the firm’s focus on women investors and its target verticals. “Women probably make 80 percent to 90 percent of healthcare decisions. If somebody gets sick, who’s leaving their job to care for them? If it’s a child that’s sick, a spouse that’s sick, a parent that’s sick, it’s women who have to shoulder that burden, generally speaking,” she said.

“We understand how important it is to diagnose things earlier, less invasively, more accurately and how data and technology is changing our ability to do that. We’re able to find things pre-symptomatic or asymptomatic with technology, so a big part of getting more women on board is the recognition that this is making their lives easier and improving the quality of life for their family.”

In addition to Colucci, who has a JD from the Georgetown University Law Center and master’s from The American Film Institute, DigitalDx has four investment professionals with advanced science degrees, including Anula Jayasuriya, David Kirk, Vanessa Small and Eric Weiss. The team also includes venture partner Maureen Downey, a specialist in secondaries and emerging markets, and marketing fellow Vivian Lu, who is currently studying strategic management at The Wharton School.

Update: The size of DigitalDx’s debut fund has been updated in the subhead and third paragraph of this story. Fund I held a first close on $9.7 million and now has about $24 million in AUM, the firm said.

More VCJ coverage of DigitalDx

How venture can move the board diversity needle
Six bright ideas to boost diversity in VC
DigitalDx Ventures rakes in over $9.7m for maiden fund