AgeTech Startup Opportunities: Third Act Ventures’ Max Zamkow on Healthcare Staffing, Retirement Solutions, and Future Trends | The AgeTech Podcast S4E6

Max Zamkow: I had an experience like many entrepreneurs in the field where my grandmother just didn’t, wasn’t able to live by herself anymore. And she moved into a facility and unfortunately did not thrive. And that’s when I jumped into gear, looked around for things that could help, was surprised.

There was nothing. And that’s what turned me on to this field. And ever since then, I have been all AgeTech all the time.

Keren Etkin: Hello, and welcome to another episode of the AgeTech Podcast. My guest today is Max Zamkow, the founding partner of Third Act Ventures. Max, welcome to the show.

Max Zamkow: Thank you. Always good to be here.

Keren Etkin: So this is actually our second time on the podcast together. I think the first time was around five years ago, right around fund one. for third act. But give us like the high level overview about the fund and about yourself.

Max Zamkow: Sure. Yes. So regarding the fund, not a ton has changed. Fund one did stop investing at the end of 2022. That was the end of our window. Ended up making 37 investments in that time. I’m really excited about a lot of them, big ones being Kare with the K as well as some others too, which we can go into.

And then I raised fund two in 2023 and early 2024 to do more of the same. Still seed stage, still AgeTech. And the goal is another 40 plus deals over the next three ish years my background is, I started out as a Operator as an engineer. I thought I was gonna go and make software for doctors I had a job offer to go work at epic But then I graduated right and mobile was becoming a thing and it just seemed crazy not to jump on the mobile wave And so I was a software engineer and then founder and CTO at startups.

And then I had an experience like many entrepreneurs in the field where my grandmother just didn’t, wasn’t able to live by herself anymore. And she moved into a facility and unfortunately did not thrive. And that’s when I jumped into gear, looked around for things that could help, was surprised.

There was nothing. And that’s what turned me on to this field. And ever since then, I have been all AgeTech all the time.

Keren Etkin: That’s awesome. And during these few years, but somewhere between fund one and two, you actually moved from the East coast to the West coast. So does that change your deal flow in any way? Is there a difference?

Max Zamkow: There’s definitely a difference between East Coast and West Coast startups and East Coast are much more fundamentals driven because East Coast is much more at Wall Street financials, whereas West Coast is much more dream driven. But where I sit doesn’t really change my deal flow much.

And even before when I was on the East Coast, before COVID, I was making deals over Zoom already. So it’s really no different that, The good and bad thing about AgeTech is that there is no Silicon Valley for AgeTech. AgeTech startups are all over the country, all over the world, which means that, I have to get there either in person or really virtually to meet with these companies to evaluate them and to close deals.

And so where I sit, as long as I’m able to be awake at the right times, doesn’t really matter where in the world I am. So it hasn’t changed too much in terms of my deal flow, which has been nice.

Keren Etkin: And your fund does invest globally. So you see deal flow from all over the world. So you already made 37 investments from fund one, and you’re looking to make 30, 40 more on fund two. Is there a difference in the types of startups you’re looking for in terms of the challenges that they are solving? What has changed?

Max Zamkow: It’s a good question. Some has changed. Not as much as maybe we’d hope but I guess that’s typical for just us as humans where we always want things to happen faster. The big things that are the same issues that are still major in the industry. Staffing is still huge and just becoming more.

A renewed focus on Alzheimer’s dementia being pushed by actually not just the U. S. governments, but governments around the world, which has been really nice. So that’s another area we’re really focusing on. And then, when Fund One was just getting going, it was the beginning of the Medicare Advantage Supplemental Benefits boom.

That has now gone through a boom and then kind of bust cycle. And now it’s in a, it’s in a It’s unclear exactly where it is, but there’s still a lot of opportunity there. So we’re definitely leaning heavily into Medicare Advantage and payers being involved in the continuum somehow. And then there’s also a big focus now on not just Medicare, but Medicaid here in the U.

S. I think those dollars are harder to get than people think, but you can really do a lot of good and there are good businesses there. So those are a couple of the spots that are the same. Trying to age in place is still just as big of a topic as it used to be. I think it’s certainly gotten a lot easier, but there’s still a lot more that needs to be done.

Keren Etkin: So you touched on so many topics that I want to follow up on. Let’s start with Alzheimer’s and dementia. I feel like this is in many ways an underserved area of the market when it comes to startups, because there are startups who tackle these issues from various angles, but I feel that because this isn’t a huge problem in terms of that.

number of people who have Alzheimer’s or dementia relatively to like the total number of older adults. It may be harder for startups to raise funding for that. Is that a correct assumption?

Max Zamkow: I’m going to disagree with you. That’s true relative to the total number of older adults, the number of people with Alzheimer’s dementia is fewer. However, as a lot of people talk about, older adults is a pretty blanket term that really encompasses A lot of different groups of people in different stages.

There are the young, older adults who are 65, 75, sometimes even into their eighties, still quite healthy, very active, aren’t using a ton of care. And they’re the people at the very end, whether they’re, again, they could be 75, they could be 95, they could be 105 who are on hospice. And there are lots in between.

It’s not really a homogeneous group, and at least here in the U. S., something close to one in four older adults will experience some sort of mild cognitive impairment, if not more. So it is actually a pretty big number of individuals that are, will be affected by it, and if not directly, then even more indirectly, and so I actually think it is a pretty big group to

go after who don’t realize that, who think it’s much smaller. And so they might struggle a little bit to fundraise. However, I have seen a lot of Alzheimer’s dementia startups get funded, especially in the last year plus, which is surprising given how hard the fundraising cycle has been the last couple of years.

But because of the push happening from CMS, because of its new reimbursement model called Guide, which is quite interesting And because of advancements in AI that are people are trying to use to detect cognitive impairment earlier, treat it earlier, or at least slow down the progression, we’ve actually seen quite a few companies get funded and start to really accelerate.

Now, where those companies end up, we’ll see they’re all almost all early stage. So there’s still a long way ahead for them. But it has been great to see more happening in the space.

Keren Etkin: Awesome. I’m glad that you have shared your perspective on this with us because I think if we’ll give a lot of entrepreneurs out there just the push that they need to just go after this space, which is pretty much underserved. You touched a little bit about. Medicare Advantage and Medicaid and the reimbursements.

You’ve mentioned that, It may be harder for startups to get reimbursement from Medicare and that the Medicare Advantage boom is somewhat behind us. Are there still opportunities out there for startups in terms of technology that could be covered, but isn’t yet available commercially?

Max Zamkow: There’s definitely opportunity. What it really means is that you have to be going after one of the major concerns for the payers. So if you are helping with member enrollment, engagement, retention, huge. And even though the dollars are not flowing as freely to supplemental benefits, those will still be in high demand.

If you are going after any of the main classes of benefits that payers provide vision, dental even like OTC cards and some others still very much in demand. It does mean though that some of the more novel, experimental. or unclear benefits, benefits that maybe on paper make sense, but hard to prove in practice, those are not going to get the chance that they might have a few years ago.

And with the reassessment of Medicare Advantage star ratings, all the plans lost stars, which means they all lose these bonus payments from CMS. Those payments generally were what was funneled into supplemental benefits. So those are getting cut.

Keren Etkin: We Talked a little bit about the staffing crisis, which is still probably the biggest challenge for elder care providers and in the healthcare system in general. And you have some portfolio companies who are tackling this from various angles.

I would love to hear what is the most interesting solution or business model that you’ve seen, and also what are still some of the gaps. Like what types of startups would you love to see or what angles to this problem would you like to see startups solving, but you still haven’t seen?

Max Zamkow: It’s a great question. The first thing I’ll say is that I have no idea how to solve this. If I did, I would, go build a company, though I’m not a great operator, so maybe I wouldn’t, but I’d find someone who was doing it and fund it. Um, it’s just so multifaceted. The investments that I’ve made in the sector have mostly been, I call them band aids, but they’re band aids on a multi trillion dollar opportunity, so even band aids can be worth billions of dollars.

There are some interesting solutions out there now that are focusing on ways to better retain staff. I think those are really great. I think there are ones out there that are really good. Getting better at hiring and recruiting. That’s also very valuable. And we’re starting to see some that are trying to augment staff and use technology to more efficiently put staff where they need to be.

And I think those are the most interesting plays. But they are the hardest to sell and get someone on board with because what it requires is changing the way that they give care. It requires changing their operating system. And that’s a big ask for any organization. But the benefits are there. If you can do it successfully, you can make sure that people are getting exactly the amount of care they need, no more and no less.

And take away a lot of the administrative tasks that maybe a someone lower level or even a computer could do. That’s an area that we’re seeing a ton of investment. And I don’t love to talk about AI because it’s so buzzy. The area that is red hot for AI in senior care is where AI is. taking out or completing administrative tasks, whether that’s scheduling, whether it’s filling out required forms all sorts of things like that, credentialing, etcetera.

Those are areas that are really able to Reduce the amount of staff you need, or at least allow the staff you have to operate at the top of their license is the favorite term. So take out all the boring stuff that a computer could do.

Keren Etkin: And do you think that This type of technology is more likely to succeed if it is developed by a startup, or is it more likely to be adopted across an industry if it’s developed as a feature by one of the existing software providers?

Max Zamkow: That’s a good question. I think if one of the existing software providers could do it successfully, I think it would get adopted faster. That being said, unlike consumer technology players like Google, Apple, Amazon, the major players in these fields are not known for great technology or being very innovative.

And what I hear from operators often is that most of them use only a very small subset of the. Tens of hundreds of features that these products have because they’re just cumbersome and overcomplicated. And so just developing this system by the incumbents wouldn’t necessarily change anything because They don’t really trust them to do a good job of it.

I do think that a startup in this space really can have a great edge especially as long as it provides great customer service, and I wouldn’t be surprised to see them gobbled up by some of the bigger players once they start to see some traction. So I think that’s how it will get into the larger players, and then hopefully the larger players won’t just totally bungle it as they try to.

Distributed across their clients.

Keren Etkin: Fingers crossed. And it does make a lot of sense that the startup will develop it and then be merged into a larger industry. Software company. So let’s pivot to, uh, younger, maybe demographic in the older adult market segment. The younger, older adults who are not so much preoccupied by health and have some disposable income who maybe are.

More preoccupied with the sense of purpose and needs that are higher up the Maslow Pyramid of Needs. I feel like this is another underserved segment of the market. What’s your take on this? Have you seen any interesting startups? Or have you seen any, or are you looking for any interesting opportunities in this area?

Or is this even an opportunity? Maybe I’m just making this up

Max Zamkow: Sure. There are definitely opportunities there. There have been a number of startups that have tried to solve it in different ways. There’s one in New York called Hank that’s been somewhat successful. Another one, Element3 Health. All different startups mostly trying to solve that kind of the loneliness, isolation piece of it.

Helping keep these younger adults active. help them provide or find purpose. There’s definitely opportunity there and get set up, I think is also a great example of the opportunity and they’ve been able to scale very fast. There is a specific area that I have been really looking at that I think is quite interesting, which is assisting the transition from your period of career to retirement.

We’ve seen a number of universities start programs. All focused on this. So at Stanford, there’s the distinguished careers Institute. I know Notre Dame has a similar program and I believe Harvard and Columbia and a number of others have now started their own versions of it and it makes sense. I’ve, we’ve been talking about this since we first started talking, Keren, that there is no guidebook for retiring.

There’s no, nothing that tells you how to do it, how to thrive. The only cookie cutter that we have for it is. Move somewhere warm in the U. S. That’s typically Florida play golf and now pickleball and just enjoy a life of leisure and that does work for some people. My aunt and uncle live at the villages.

They have the best time there. I am ready to go retire there. My wife is not yet, but it was so much fun, but that doesn’t work for everyone. And there are a lot of people who need stimulation outside of just leisure and there’s no pickleball. No guide for that. There’s no path. And so that’s what these universities are trying to solve.

Interestingly, I’ve started to see some startups try to find ways of creating programs that are more scalable than going in person to a university as well as more cost effective. So do. Trying to do what online classes have done for universities and teaching in a way to scale it. So bringing that kind of learning online and I think it’s interesting.

It’s still early, but I think that’s an interesting spot. And the other area that is. What’s really needed are is helping older adults, the younger older adults, find ways to supplement their, whatever retirement income they have. And 50 percent of Americans who retire do not have any retirement income.

I know there are similar issues around the world. And the fact is that younger, older adults are still just as healthy as they were 5 10 years ago. They are still very much able to work and for better or for worse, they need to, in some degrees, and there are not many, if any, great solutions to help them find work and to help them stay engaged in the workforce and to help them retrain or reskill if that’s what’s necessary, or at least to stay up to date.

So that is a huge area of opportunity. that I’m starting to see some movement in, but still a lot of room.

Absolutely. And this is an issue that impacts countries on the macro economic level. It actually stunts the growth of economies like Japan. So I actually expect that some countries maybe in Asia will find startups who will tackle these this huge challenge from some angle, because it does impact the entire economy,

Yeah, and listen, Asian countries are known for being much kinder to their older adults generally, treating them with much more reverence than somehow we’ve lost here, at least in the U. S. So the West as well, so it makes sense that they would be a little bit on the forefront of figuring that out.

Keren Etkin: hopefully. So before we wrap up, I would like to ask you to take out your crystal ball and think about or try to imagine what the AgeTech ecosystem could look like 5, 10, or 20 years from now.

Max Zamkow: Sure. So best case scenario in, let’s say, it’s always not enough. So let’s say 15 years, the maximum you’ll give me. I think we’ll see a few things. One is that it’ll be more typical for people that keep working even at their primary career into their seventies, potentially even eighties.

And I know some people will hear that and think that’s terrible. But again, there are a lot of people who enjoy work, who find a lot of meaning in it, and it doesn’t mean that they’re still working 40, 60, 80 hours a week. It could be less. It could be more flexible, but they’re still utilizing all that knowledge and experience and able to also supplement their income.

So I think that’s one of the things. Another is that people are unsurprisingly aging in their homes longer. There is, we’re seeing, we’ll see more. Sort different types of remote monitoring, and I use that term loosely because really it’s just any way that can sense when something might be off.

Whether it’s someone is just sleeping more using the toilet more not going out as much, whatever it is. Ways that some intelligent system can notice that alert the right people and the right people could be neighbors or friends or family doesn’t have to be healthcare and get people checked out.

And I actually expect that we won’t just be seeing that in the homes of older adults. We’ll be seeing that in our homes as well. Because. If we can also detect things earlier that can prevent bigger issues down the road, we’re all going to want that. And we’ll be willing to sacrifice some level of privacy for it.

So people will be living in their homes longer. There will still be a high demand for senior living in retirement communities. Senior living itself will look a little bit differently. They’ll, in 15 years, I can only hope, I don’t think it’s going to happen, but I can only hope that at least they all have Wi Fi.

And then they all have, they’re all filled with baby boomers who have very different demands on what they want and where they will live. And I think there will be a lot of winners and a bunch of losers also in that field. And there’ll be a lot more what they’re calling active adult communities.

People who are tired of maintaining. Their childhood home or whatever home they raised their kids and all themselves move to a place where a lot more is done for them, but they’re still almost entirely independent. But if they need care, it’s there too. And then, the whole process of dying and preparing for it, I think it’s still going to be a hard thing for people to talk about, but I think they’re going to be a lot, they’re going to be many more options.

For people to pass the way they want and be where they want. We’re seeing a huge surgence in people deciding to be essentially composted or turned into diamonds. I think that’s a really interesting one. Much more interesting than. Being placed in an urn on a shelf which just seems strange and awkward, honestly so I think we’ll be seeing that.

I’m really interested to see parks entirely fed of, created by people and essentially a graveyard that is Not just a bunch of headstones that are morbid, but instead a park where people are playing and relaxing and enjoying. And I think that could be quite interesting.

Maybe that’s more on the pie in the sky area, but we’ll see.

Keren Etkin: I love that. I am definitely sold on this vision and hopefully we’ll get to see it in the future. So Max, is there anything that we didn’t talk about today that you would like to add?

Max Zamkow: No, I think we really mentioned a lot of it. I think, it’s nice to see there’s been a lot more investment. In this field, since we had our first interview five or so years ago, you’ve seen many more firms make actually dip their toes in and make investments in the space. A number of firms got started since that are focused exclusively on the space and looking at primetime partners specifically who are doing great things.

And so it’s been amazing to see so much more happening. I will say, I think we’re still in. The early days of AgeTech things are happening. It’s great, but. To use a baseball term or maybe an inning to, if we’re using a football term, maybe we’re in like 15 minutes into the first half, things are getting going, we’re getting warmed up, but there’s still a lot more of the game left.

And so I’m really excited to see what happens and to continue to be a part of it and to continue to see how we can help entrepreneurs do some amazing things and help a lot of people,

Keren Etkin: Awesome. Max, it is always a pleasure to chat with you. Thank you so much for joining me on the podcast today.

Max Zamkow: of course. Thanks for having me.