Transformation Capital, the largest dedicated digital health venture and growth equity firm, today announced the final close of Transformation Capital Fund IV (“Fund IV”) at its $850 million hard cap, exceeding its target in an oversubscribed fundraise completed this summer. Existing limited partners continued to back the strategy, and the fund also attracted a wave of new institutional investors joining Transformation Capital for the first time. The firm has already begun deploying Fund IV capital into new partner companies. Fund IV brings Transformation Capital’s total assets under management to more than $2.5 billion across four funds.
Since 2009, U.S. healthcare has been reshaped by four successive waves of change: the digitization of medical records that built healthcare’s data foundation, the shift toward value-based payment models that realigned incentives around outcomes, the pandemic-driven adoption of telehealth that made virtual care permanent, and, most recently, the rapid embrace of artificial intelligence to attack the more than $1 trillion in waste and inefficiency embedded in the system. Transformation Capital has invested behind each of these waves — including eight new AI-focused investments in the past year alone — and Fund IV will continue that strategy, backing commercial-stage companies using technology and AI to make healthcare more efficient, more accessible, and more accountable. That strategy has helped Transformation Capital become a magnet for some of the sector’s most sought-after founders — not only because of the capital, but because of what comes with it.
Well before a term sheet is on the table, many leading digital health entrepreneurs are familiar with Transformation Capital by reputation: for opening doors through strategic introductions across health insurance plans, hospital systems, self-insured employers, and biopharma companies; for rolling up its sleeves alongside management teams on the hard, unglamorous work of company-building, led by team members who have founded and successfully IPO’d and sold businesses just like theirs, taken care of patients, and invested in only this sector for 15+ years; and for helping partner companies recruit the executive talent they need to scale. Founders who have worked with the firm consistently describe its network as unmatched.
“The demand we saw for Fund IV is a strong endorsement of our strategy at a pivotal moment for innovation in our U.S. healthcare system,” said Jessica Pellegrini, Head of Capital Formation at Transformation Capital. “We are very pleased to have continued support from many of our existing partners, and we are equally energized by the caliber of new institutional investors who joined us for the first time. In a fundraising environment that has been genuinely difficult for many, that combination of loyalty and new demand is not something we take for granted.”
Transformation Capital is led by three Managing Partners: Todd Cozzens, a founder and CEO who built and sold two companies — Marquette Medical, which he took public before its acquisition by GE, and Picis, which was acquired by UnitedHealth Group — before joining Sequoia to invest in healthcare technology; Jared Kesselheim, M.D., a Harvard-trained physician who practiced internal medicine at Massachusetts General Hospital before spending seven years investing at Bain Capital Ventures including becoming a Partner and leading their healthcare practice; and Mike Dixon, a career investor who began as a public equities analyst at Fidelity Investments before spending a decade as a General Partner at Sequoia leading healthcare investing. The rest of the investment team are healthcare experts with a combination of operational, entrepreneurial, investing and healthcare banking experience from leading firms like Goldman Sachs, Deutsche Bank, Bain and Co, Evercore and others.
“We started this firm because we’d been the entrepreneurs, the clinicians, and the longtime focused investors in this industry, and we know exactly where technology can make the biggest difference: improving outcomes, lowering costs, and improving the patient experience,” the Managing Partners said in a joint statement. “Healthcare is one of the most complex industries in the world: more than 40 federal and state agencies regulate it, and the payment system remains labyrinthine and, frankly, enigmatic to most of the people working inside it. Healthcare also generates roughly 30% of the world’s data, and yet the industry meaningfully uses only about 3% of it. That gap is exactly where artificial intelligence is having its biggest impact yet — it is the single largest market driver we have seen in the nearly two decades we have been investing in this space, and our sector-focused network and knowledge positions us very well to assist founders building healthcare companies in an AI-powered world.”
About Transformation Capital
Transformation Capital is the largest dedicated digital health venture and growth equity firm, investing exclusively in commercial-stage companies transforming the delivery, cost, and quality of healthcare. Founded in 2016 and led by Managing Partners Todd Cozzens, Jared Kesselheim, M.D., and Mike Dixon, the firm manages more than $2.5 billion in assets across four funds and has invested in 50+ digital health and AI-driven healthcare partner companies, including Datavant, Judi Health, Sword Health, Grow Therapy, SmarterDx, and Parachute Health. Founders know the firm for its strategic network, hands-on company-building support, and executive recruiting help — delivered by a team that brings a breadth of successful entrepreneurial, operating, and clinical experience entirely focused on the healthcare sector. Transformation Capital is based in Boston and San Francisco. For more information, visit www.transformcap.com.
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