The questions I ask before I invest

Last week, we brought together an incredible room of 60 family offices, angel investors and leaders for Inside the Room: Where AI Meets Capital, an afternoon centred on how investment decisions are being made in a market being reshaped by AI, changing health outcomes and a new generation of capital.

I shared how we think about opportunities at Arāya Ventures, from the questions we ask before investing to what makes us back a company, and where we decide to pass. We also explored where AI is creating genuine investable change across women’s health, human health and the next generation of investors, alongside the implications of the largest wealth transfer in history.

One of the questions that came up repeatedly was a simple one: what makes a problem worth investing in?

It is a question I come back to before every deal, and it is the starting point for this week's Signal.

Not big in the abstract. Big in time, or money, or pain. Enough that the customer will actually do something about it, and enough that customer will pay for it to be solved. A product can be clever and well built, but if the problem underneath it is mild, people won't change their behaviour to adopt it.

There's a second half to that question, and it's the part that matters most. A big problem on its own isn't enough. You're looking for a big problem whose moment has arrived.

What made me back Aeon

Aeon is a company in the Arāya portfolio. It runs full-body MRI and health testing through partner clinics, currently in Switzerland and Germany, and builds a longitudinal health picture of each person over time. A single full-body scan that can flag over 500 early health risks.

The problem it solves is old: our health data has been fragmented forever, scattered across clinics and records that never connect, and most of us only act once something's already wrong.

What made Aeon investable was the timing. Coming out of COVID, people started treating their health differently. The old pattern of waiting to fall ill, then going to fix that one thing, has been giving way to people wanting to own their health and get ahead of it.

Institutional investors piling into this space have tuned into this too. Neko Health recently closed a $700 million Series C round, at a $7 billion valuation; and Function Health in the US is now valued at $2.5 billion after closing a $298 million Series B funding round. 

What stood out for with me Aeon, is that it solves a long-standing problem exactly as customer behaviour shifts toward it. The problem is big, and its moment has arrived at the same time.

That combination is what I'm really looking for on question one. A painful problem, and a reason it can be solved now that it couldn't have been a few years ago.

Our conviction was strong enough that we opened Aeon to House of Arāya members to co-invest alongside the fund. That round has just closed.

When you look at a deal, don't stop at "is this a real problem?" Ask two things:

The change might be a shift in behaviour, like Aeon's. It might be a new technology, like AI making something possible that wasn't. When a big problem meets a reason it can finally be solved, that's when a deal gets interesting.

If you can't answer why now, the problem might be real and the deal might still be too early.

I go into the other two questions I ask before every investment in this week's video.

Warmly,
Rupa

P.s. When you're ready, here are 3 ways I can help: