startup health | healthtech funding | q1 2017

© 2017 StartUp Health, LLC

A StartUp Health Insights Report Digital Health Funding Rankings

Data through March 31, 2017 Report is inclusive of seed, venture, corporate venture and private equity funding Sign up to receive weekly funding insights at startuphealth.com

Q1 2017

TM

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ABOUT STARTUP HEALTH

Pages Topic

2-3 ………………………………………….…………… About StartUp Health

4 ………………………………………….…………… Year End Summary

5-11 ………………………………………….…………… Deals and Funding

12 ………………………………………….…………… Geography

13 ………………………………………….…………… Investors

14 ………………………………………….…………… Methodology

Jennifer Hankin

Polina Hanin

Troy Bannister

Mark Liber

Anne Dordai

Nicole Kinsey

Tara Salamone

StartUp Health InsightsTM Contributors

Source: StartUp Health Insights | startuphealth.com/insights Note: Report based on public data on seed, venture, corporate venture and private equity funding only. © 2017 StartUp Health LLC

Niharika Gupta

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John Oro

In 2011, StartUp Health introduced a new model for transforming health by organizing and supporting a global army of entrepreneurs called Health Transformers. With the world’s largest digital health portfolio (nearly 200 companies spanning 5 continents, 18 countries and 60+ cities), StartUp Health is mobilizing this rapidly growing army along with the world’s ‘batteries included’ leaders, innovators and investors, to achieve 10 Health Moonshots, with a 25 year mission to improve the health and wellbeing of everyone in the world.

Learn more about how you can join this movement and support Health Transformers at www.startuphealth.com.


1Access to Care Moonshots Delivering quality care to everyone, regardless of location or income

2Cost to Zero Moonshots Radically reducing the cost of care by a factor of a million

3Cure Disease Moonshots Curing disease using data, technologies and personalized medicine

4Cancer Moonshots Ending cancer as we know it

5

Women’s Health Moonshots Prioritizing women’s health, including preventive care and new research

6Children’s Health Moonshots Ensuring every child has access to quality care, particularly in underserved areas

7Nutrition and Fitness Moonshots Providing access to a healthy environment and support an active lifestyle

8Brain Health Moonshots Unlocking the mysteries of the brain to improve health

9Mental Health and Wellbeing Moonshots Destigmatizing mental health and connect mind, body and spirit

10Longevity Moonshots Adding 50 healthy years to every human life

10 HEALTH MOONSHOTS THAT ARE CHANGING THE WORLDOne of the most exciting trends to emerge is an ambitious generation of entrepreneurs, leaders and investors focusing on bold ‘Health Moonshots’. StartUp Health is organizing and supporting its global army of Health Transformers to focus on achieving 10 Health Moonshots with a 25-year mission to improve the wellbeing of everyone in the world. Each Health Moonshot has the potential to help at least a billion people.

3Source: StartUp Health Insights | startuphealth.com/insights Note: Report based on public data on seed, venture, corporate venture and private equity funding only. © 2017 StartUp Health LLC


DEALS & FUNDING GEOGRAPHY INVESTORS

“Ultimately, this is a

revolution about

individuals and families

taking control of their health”

- Jerry Levin, Executive Chairman of the Board, StartUp Health

2017 Q1 SUMMARYIf the first quarter of 2017 is any indication of what’s to come, 2017 is going to be another important year for digital health funding. Among this quarter’s most notable developments, the population health sector saw a large number of deals, Los Angeles emerged as a hotspot of digital health funding, and cancer detection ‘startup’ GRAIL had a record-breaking Series B further displaying the inevitable trend of ‘digital’ weaving into the fabric of every other health/healthcare sector.

4

At $2.5 billion, Q1 2017 was the biggest first quarter recorded since 2010 due to a record breaking Series B funding round. This was largely responsible for turning what would have otherwise been a modest quarter into a record breaker.

Biggest Q1 Yet*

1

Biggest Deal Yet

GRAIL’s $914 million Series B was the largest digital health deal on record.The investment demonstrates the inevitable growing trend of ‘digital’ cross-pollinating with all sectors of health and healthcare.

2

With 25 deals recorded in Q1 2017, this was a breakout quarter for the population health sector.

Population Health Attracts Capital3

Are Series A’s becoming the new seed? With Series A rounds becoming more robust, seed stage funding is falling as a percentage of total investment.

Seed Deals Slow

4

After a remarkable first quarter, Los Angeles is quickly becoming one of the top destinations for digital health.

LA’s Hot for Digital Health

5

CAREGIVING


*Including GRAIL’s $914M funding round


2010 2011 2012 2013 2014 2015 2016 2017 YTD

Q1 Q2 Q3 Q4

DEALS & FUNDING GEOGRAPHY INVESTORS

158

300

499

668

589

526

606

124

Deal Count

$1.1B$2.0B

$1.5B$629M$572M$391M $192M

$8.2B

$6.0B

$7.1B

$2.9B

$2.4B$2.0B

$1.1B

DIGITAL HEALTH FUNDING SNAPSHOT: YEAR OVER YEAR

5

CAREGIVING


$2.5B

$2.5B

GRAIL’s $914 million Series B may be an outlier and skewed the overall funding numbers this quarter keeping it on track for another strong year overall, and turning an otherwise modest first quarter into a record-breaker.

While Q1 2017 had the lowest deal volume since 2011 - with only 124 deals this quarter - we’re seeing more and more $500-900M deals. What do less deals and more money mean? Even though VCs are betting less, they’re betting bigger. Also, the lines are blurring quickly as expected between “digital” and all other categories of health and healthcare.

“AI, virtual reality, mobile connectivity, genomics, and analytics are coming to

change healthcare, and that is creating a wave of innovation like we’ve never seen.”

-Unity Stoakes, President, StartUp Health


DEALS & FUNDING

$0B

$0.233B

$0.467B

$0.7B

$0.933B

$1.167B

$1.4B

2010 2011 2012 2013 2014 2015 2016 2017

$320M Series B

$150M Series C

$37.5M Venture

$37.9M Venture

$394M Venture

$33M Series B

$31M Series A

$400M Series C

$130M Series B

$500M Series C

R2 = 0.5564

$400M Venture $220M Series A

Good Doctor

$500M Venture

DIGITAL HEALTH FUNDING SNAPSHOT: MONTH OVER MONTH

GEOGRAPHY INVESTORS

6

$500M Series A


CAREGIVING

$914M Series B

The first three months of 2017 continue a varied, yet trending pattern with a positive regression value, serving as an indicator of a continuously growing industry. March of 2017 has proven to be the largest month on record.


DEALS & FUNDING

$0B

$0.23B

$0.47B

$0.7B

$0.93B

$1.17B

$1.4B

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2013 2014 2015 2016 2017 YTD

DIGITAL HEALTH FUNDING SNAPSHOT: MONTH OVER MONTH

GEOGRAPHY INVESTORS


CAREGIVING

It’s interesting to watch the evolution in funding year-over-year on a monthly basis as some months demonstrate consistency, others show wild variety and others prove to be big months for investors. We expect funding in the next three months to be on the rise.

March funding including GRAIL’s $900M Funding Round


Company $ Invested Subsector Notable Investor

1 $914M Big Data/Analytics

2 $115M Population Health

3 $100M Patient/Consumer Experience

4 $90M Big Data/Analytics

5 $85M EHR

6 $65M Research

7 $55M E-Commerce

8 $52M Population Health

9 $50M Medical Device

10 $41M Research

DEALS & FUNDING

THE TOP 10 LARGEST DEALS OF 2017

GEOGRAPHY INVESTORS

8


CAREGIVING

The top 10 deals of Q1 2017 included companies working in sectors in which big deals have been rare. What does this suggest? 2017 might be a breakout year in terms of funding for solutions focusing on population health, EHR innovation, and e-commerce.


DEALS & FUNDING

Subsector Total Raised YTD Deal Count Avg. Deal Size

1 Population Health $392M 25 $15.7M

2 Patient/Consumer Experience $226M 21 $10.7M

3 Research $184M 9 $20.4M

4 Medical Device $175M 16 $10.9M

5 Big Data/Analytics $170M 11 $15.5M

6 EHR $115M 2 $57.5M

7 Workflow $92M 18 $5.1M

8 E-Commerce $77M 3 $25.7M

9 Personalized Health/Quantified-Self $65M 9 $7.2M

10 Wellness $35M 4 $8.75M

THE TOP 10 MOST ACTIVE MARKETS OF Q1 2017

GEOGRAPHY INVESTORS


*Big Data/Analytics excludes GRAIL’s $900M funding round

CAREGIVING

In the first quarter of 2017, the population health sector took off, with 23 deals and almost double the year-to-date funding of any other sector.

Without a way to organize patient populations by risk, it becomes difficult for providers to triage patients, engage in prevention, and provide personalized care. Over the last year, a number of providers have adopted population health platforms, viewing them as a means of segmenting patient populations, as well as a foundation on which to build more advanced solutions.

“We have the opportunity to change our mindset to think about how we do things proactively.”

- Gil Peri, Chief Strategy Officer, Children’s Hospital Colorado


DEALS & FUNDING

2010

2011

2012

2013

2014

2015

2016

2017 YTD

0% 25% 50% 75% 100%

Seed Series A Series B Series C Series D Series E Series F + G + H

26% 33% 13%25% 4%

*Deal count only includes Seed though Series F+ rounds. Does not include venture rounds or growth equity.

Deal Count*

124

234

297

441

388

297

350

DEAL ACTIVITY BY STAGE

GEOGRAPHY INVESTORS


70

CAREGIVING

As a percentage of total deals, seed stage investment has steadily decreased since 2015, dropping from a third of all deals to a quarter. Compared to Q1 2016, funding dollars to seed stage companies have also dropped, down by nearly 50%. So where is the money flowing? Series A deals have become the most funded round, pulling in just over a quarter billion dollars.


47%

Workflow

Big Data/Analytics

Research

Patient/Consumer Experience

Medical Devices

E-Commerce

Diagnostics

5 3 2 1 03 8 3 2 1

4 5 2 1 0

2 4 4 0 0

1 1 3 2 1

3 1 1 2 0

2 1 1 1 0

1 1 1 0 0

0 0 1 0 1

0 0 0 1 0

0 1 0 0 0

0 1 0 0 0

Population Health

Personalized Health/Quantified Self

Wellness

Education/Training

Clinical Decision Support

Seed Series A Series B Series C Series D

DEALS & FUNDING

MARKET MATURITY MAP 2017

GEOGRAPHY INVESTORS

More funding activity Less funding activity


CAREGIVING

At 26 deals, Series A rounds were the most active stage of investment in the first quarter of 2017. By sector, population health and patient/consumer experience had the highest deal counts.


INVESTORS

Region Ranking by Deal Count

1 SF Bay

2 New York City

3 Boston

4 Los Angeles

5 Washington, DC

6 Chicago

7 Charlotte

8 Denver

9 Seattle

10 San Diego

$23M$48M

$181M

$10M

$408M

San Francisco Bay Area

Denver Metro

San Diego Metro

New York City Metro

Boston Metro

$54M

Chicago Metro

$14M

Seattle Metro

$14MCharlotte

Metro

(2 Deals)

(2 Deals)

(24 Deals)

(2 Deals)(3 Deals)

(3 Deals)

(8 Deals)

(6 Deals)

Los Angeles Metro

$120M(5 Deals)

Washington, DC Metro

$40M

(4 Deals)

DEALS & FUNDING GEOGRAPHY

THE MOST ACTIVE US METRO AREAS OF 2017


CAREGIVING

Excludes GRAIL’s $900M Funding Round

With five deals totaling $120 million in the first quarter of this year, Los Angeles continues to grow as a hotspot for digital health funding and is beginning to catch up to hubs like Boston and New York.


Firm 2017 YTD Deals 2016 Q1 Deals StageEarly Mid Late

1 4 1

2 3 -

2 3 3

DEALS & FUNDING

THE TOP INVESTORS OF 2017

INVESTORSGEOGRAPHY


CAREGIVING

Venrock leads the pack with four deals this quarter and many investors following suit with 2-3 deals - an increase from their previous Q1 deals.

22 other organizations invested in 2 deals this quarter*

*Excluding Pre-Seed and Accelerator Rounds

startuphealth.com/reports1

Sectors: • We have a broad view of digital health and believe that the current trend is a

cross-pollination of technology and data with all aspects of health and healthcare. StartUp Health InsightsTM tracks companies that enable health, wellness and the delivery of care through data / analytics, sensors, mobile, internet-of-things, 3D printing and genomics and personalized medicine.

• StartUp Health tracks companies based on their sectors, subsectors and specialties. Investments in subsectors and specialties are not mutually exclusive, as deals are tagged with multiple subsectors and specialties based on the company’s focus.

• 2015 brought with it an extensive database quality assessment. A new system was implemented allowing StartUp Health to track innovation with enhanced granularity. Additionally, gaps in funding data were researched and added into our database enabling us to identify fundings previously unaccounted for in previous reports.

Stages of Funding: • StartUp Health InsightsTM records only publicly available data on cash for equity

investments as the cash is actually received by the company. StartUp Health InsightsTM is inclusive of accelerator, pre-seed, seed, venture, corporate venture and private equity funding.

• Early stage: The company has raised a Seed or Series A round • Mid stage: The company has raised a Series B or Series C round • Late stage: The company has raised a Series D or other growth equity round • StartUp Health also tracks incubator rounds and other financings into privately-

held entities (e.g. “unnamed” venture rounds, strategic investments, growth equity and private equity).

• In tabulating deal activity by stage we excluded rounds not clearly associated with a specific stage.

Sources: • Funding data is from StartUp Health InsightsTM, the most comprehensive

funding database for digital health, and managed by the StartUp Health team. Information, data and figures represent only publicly available data.

• Data for acquisitions slide was provided by a range of sources including StartUp Health InsightsTM, CrunchBase, AngelList and news reports.

• StartUp Health works to ensure that the information contained in the StartUp Health InsightsTM Report has been obtained from reliable sources. However, StartUp Health cannot warrant the ultimate validity of the data obtained in this manner. All data is subject to verification with the venture capital firms and/or the investee companies. Results are updated periodically. Therefore, all data is subject to change at any time.

• If you find an error, please let us know so we can correct it.

This report is provided for informational purposes and was prepared in good faith on the basis of public information available at the time of publication without independent verification. StartUp Health does not guarantee or warrant the reliability or completeness of the data nor its usefulness in achieving any particular purposes. StartUp Health shall not be liable for any loss, damage, cost or expense incurred by reason of any persons use or reliance on this report. This report is a proprietary aggregation of publicly available data and shall not be forwarded or reproduced without the written consent of StartUp Health.

METHODOLOGIES



STARTUP HEALTH’S GROWING ARMY


startup health | healthtech funding | q1 2017

Health & Medicine