startup health insights digital health funding for the 50+ market 2014 q3 ytd

StartUp Health Insights: Digital Health Funding for the 50+ Market 2014 Q3 YTD

© 2014 StartUp Health, LLC

Published: 11/19/2014

TM

A REPORT SPONSORED BY

A StartUp Health Insights Report

Source: StartUp Health Insights | www.startuphealth.com/insights Disclosure: Information, data and figures represent publicly available data. © 2014 StartUp Health, LLC

Q3 2014 SUMMARY

2014 is setting records for digital health funding, including many deals relevant to the 50+ market. Our quarterly report gives an overview of the most active 50+ areas, investors and more. Here are six trends we’re watching:

2

1 2014 Digital Health Funding Reaches Record Levels: Through Q3 2014, 347 companies have raised $5B. This level of growth demonstrates that 2014 is on track to nearly double the amount invested in 2013.

2 Funding for Startups in the 50+ Market Continues to Grow: Through Q3 2014, 186 deals relevant to the 50+ market have raised $2.2B. Of those, 21 have raised $269M for products and services specifically targeting the 50+.

3 The 50+ Opportunity Expands: 50+ consumers account for $3.1 trillion in consumer spending and $1.6 trillion in healthcare spending. Over the next 5 years, digital health spending by the 50+ could top $30 billion.*

4 Consumerism Grows: As a result of high-deductible plans, price transparency and new tech solutions, patients are more empowered. Consumers’ purchasing power is noticed by large companies like Facebook, Apple and Google.

5 ACA Spurs Innovation: Health reform continues to drive changes in the industry, encourages startup activity in the sector and pushes organizations to adopt new technology to improve quality of care for the 50+ market.

6 Global Innovation Accelerates: More than 7,500 startups around the world are developing new solutions in digital health, with broad opportunity to create technologies that are relevant to the 50+ market.

*From AARP’s Heath Innovation Frontiers Report, August 2014


DIGITAL HEALTH FUNDING SNAPSHOT (YTD)

3

Fund

ing

($B

)

$1B

$3B

$4B

$5B

Dea

ls

150

300

450

600

2010 2011 2012 2013 YTD 2014

Deals Funding

$5.0B

$2.8B$2.2B

$1.7B

$1.1B

533

447

242

142142

242

447

533

Funding in the first three quarters of the year has skyrocketed past the total invested in 2013. Although deal volume is lower, investors are putting more money in fewer startups, indicating the market’s gradual maturation.

347


DEFINING THE 50+ MARKET IN DIGITAL HEALTH

4

As the overall digital health industry continues to expand, startups serving 50+ consumers - either directly or through providers, payors and other healthcare stakeholders - are increasingly attracting investment.

This report spotlights two categories of startups: 50+ relevant companies and 50+ focused companies. Companies in both categories align with at least one of AARP’s 9 areas of opportunity:

The 50+ relevant category includes companies, both B2C and B2B2C, with products or services that could be used by 50+ consumers. This excludes practice management solutions, compliance software, lab support tools and other enterprise systems that do not have a consumer touchpoint, as well as companies specifically targeting other demographics like children and young families.

The 50+ focused category includes B2C companies that specifically target 50+ consumers and B2B2C companies that provide products and services to payors, providers and others that serve 50+ consumers.

Emergency Detection and Response

Physical Fitness

Diet and Nutrition

Behavioral and Emotional Health

Medical Management

Aging With Vitality

Social Engagement

Vital Sign Monitoring

Care Navigation


50+ MARKET FUNDING SNAPSHOT (YTD)

5

Fund

ing

($B

)

$0.5B

$1.0B

$1.5B

$2.0B

$2.5B

Dea

ls

75

150

225

300

2010 2011 2012 2013 Q1-3 2014

Deals Funding

$2.2B$1.3B$0.8B$0.8B$0.5B

253

189

101

5151

101

189

253

As of Q3, 2014 funding for startups relevant to the 50+ market has already exceeded the total amount invested last year. Consistent with the broader digital health sector, deal volume is down as investors put more money in fewer startups.

186


40%

55%

70%

42%47%

35%

45% 44%36%

42% 42%48%

54%

Deal Count Funding

50+ MARKET GROWTH RELATIVE TO ENTIRE DIGITAL HEALTH SECTOR

6

As consumerism for health solutions grows, capital continues to flow to the digital health sector and 50+ market alike.

$1.7B

50+ market investments as percentage of total investments in digital health

$0.8B $0.8B

Tota

l Fun

ding

Digital Health Market 50+ Market

2010 2012

$1.3B

2013

$2.2B

2014 YTD

$0.5B

2011

2010 2012 2013 2014 YTD2011

$1.1B $1.7B $2.2B $2.8B $5.0B


OPPORTUNITIES EMERGE FOR 50+ FOCUSED COMPANIES

7

While investment in the 50+ market accounts for 44% ($2.2B) of the overall YTD investment in Digital Health ($5.0B), it is estimated that 50+ focused companies comprise only 12% ($269M) of that subset. For consumers who spend $1.6 trillion on healthcare, this represents an unmet need for innovation and opportunity for growth.

50+ Focused Funding

50+ Relevant Funding

($269M)

($1.9B)

88%

12%

$5.0B


FUNDING FOR B2B2C COMPANIES DOMINATE IN THE 50+ MARKET

8

Not surprisingly, investors prefer B2B2C business models, where payment risk is shifted to a third party, rather than the patient / consumer.*

50+ Focused B2B2C Model Only

50+ Focused B2C Model Only

50+ Relevant B2B2C Model Only

50+ Relevant B2C Model Only50+ Relevant B2B2C & B2C Models

50+ Relevant Companies (2014 YTD)

*Business model classification based on publicly available information

50+ Focused Companies (2014 YTD)

($1.57B)

($483M)

($133M)

72%

22%

6%

30% 55%($80M) ($148M)

50+ Relevant B2B2C & B2C Models

15%($40M)


THE TOP 10 LARGEST 50+ MARKET DEALS OF 2014 (YTD)

9

The top 10 deals relevant to the 50+ market represent about 39% of all funding YTD.

Company $ Invested Area Notable Investor

1 $172M Vital Sign Monitoring Summit Partners

2 $135M Aging with Vitality Verizon

3 $105M Vital Sign Monitoring Capricorn Investment Group

4 $80M Navigating the Care System Founders Fund

5 $71M Navigating the Care System Camden Venture Partners

6 $70M Aging with Vitality Undisclosed

7 $66M Navigating the Care System Andreessen Horowitz

8 $51M Navigating the Care System Great Hill Partners

9 $50M Navigating the Care System Kleiner Perkins

10 $50M Aging with Vitality W Capital Partners


FUNDING FOR THE 9 50+ MARKET AREAS IN 2014 (YTD)

Care Navigation and Vital Sign Monitoring remain the top two subsectors in the 50+ market, consistent with the trends of preventative medicine and patient empowerment.

10Note: Investments in the above subsectors are not mutually exclusive as deals could pertain to multiple subsectors.

Area $ Invested # of Deals Notable Deals

1 Care Navigation $960M 75 Essence Healthcare

2 Vital Sign Monitoring $781M 62 Proteus Digital Health

3 Aging With Vitality $735M 41 Soundhawk

4 Physical Fitness $222M 25 Noom

5 Social Engagement $211M 29 MyHealthTeams

6 Behavioral & Emotional Health $168M 22 AbilTo

7 Diet & Nutrition $162M 21 Rise

8 Medication Management $114M 17 Mango Health

9 Emergency Detection & Response $38M 08 Healthsense


2014 50+ MARKET DEAL ACTIVITY BY STAGE (YTD)

Consistent with the broader digital health industry, mid-stage deals are gaining momentum, showing signs of a maturing market.

11

2010

2011

2012

2013

2014 YTD

0% 25% 50% 75% 100%

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

30% 38% 20% 6%

2% 3%


THE TOP 50+ MARKET VENTURE INVESTORS OF 2014 (YTD)

Many of Silicon Valley’s elite VCs are funding companies that address the needs of 50+ consumers, with notable involvement from strategic investors.

12

Investor 2014 YTD Deals Notable Deals

1 5 Oscar

2 4 Zenefits

3 4 Grand Rounds

4 4 Athos

5 4 Welltok

6 4 Voluntis

7 4 Counsyl

8 3 Sols

9 3 Chrono Therapeutics

10 3 Weave

11 3 Propeller Health

METHODOLOGIES

13

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.


The data presented herein is from StartUp Health Insights, which was gathered from public non-grant funding information from SEC filings, company press releases, CrunchBase, AngelList, and other news sources from January 1, 2014 through September 30, 2014. The dataset includes non-grant funding from startup incubators as well as international deals.

Some of the deals presented in sub-sector analyses may have been subject to double counting because of overlapping markets. VCs included in the top list comprised those that invested in the most deals within the 50+ market through Q3 2014.In tabulating deal activity by stage we excluded rounds not clearly associated with a specific stage and incubator rounds.

The 50+ market, as defined by AARP, includes companies in at least one of 9 areas of opportunity relevant to 50+ consumers: Care Navigation, Vital Sign Monitoring, Emergency Detection & Response, Physical Fitness, Diet & Nutrition, Social Engagement, Behavioral & Emotional Support. (More detail in table below.)

The 50+ relevant category includes all companies, both B2C and B2B2C, with products or services that could be used by 50+ consumers. This excludes practice management solutions, compliance software, lab support tools and other enterprise systems that do not have a consumer touchpoint, as well as companies explicitly targeting other demographics like children, young families and millennials.

The 50+ focused category includes B2C companies that explicitly target 50+ consumers and B2B2C companies that provide products and services to payors, providers and others that serve 50+ consumers.

Market Opportunity Examples of Needs Addressed

Social Engagement Staying connected socially Keeping mobilized Stimulating intellect

Medication Management Managing multiple medications Preventing in-home accidents Sharpening memory

Emergency Detection & Response Detecting falls Sending alerts when lost Preventing in-home accidents

Behavioral and Emotional Health Stress reduction Receiving divorce/grief support Managing life phase transitions

Physical Fitness Improving muscle strength Age-appropriate exercise Maintaining healthy weight

Diet & Nutrition Eating healthy and portion control Maintaining a healthy weight Reducing bad cholesterol

Navigating the Healthcare System Managing healthcare costs Evaluating quality of care Plan for end of life care

Aging with Vitality Aiding in memory and cognition Improving or aiding vision Improving or aiding hearing

Vital Sign Monitoring Keeping blood pressure in range Detecting skin problems Improving sleep quality

ABOUT AARP & STARTUP HEALTH

14

AARP’s vision is to stimulate innovation and entrepreneurship in the market place around breakthrough products, experiences, and business models for health technologies benefiting the 50+ market. Learn more at aarp.org and follow @AARPInnovation.

StartUp Health is a global growth platform for entrepreneurs transforming healthcare. StartUp Health’s long-term coaching program and trusted peer network include 165 entrepreneurs from 84 companies in 7 countries and 47 cities. StartUp Health's full-time team of entrepreneur coaches helps increase the equity value of its companies by providing structured programming and access to investors, customers and advisors for every stage of a company’s lifecycle. Learn more at startuphealth.com and follow @startuphealth.

StartUp Health Insights: Digital Health Funding for the 50+ Market 2014 Q3 YTD

© 2014 StartUp Health, LLC

A StartUp Health Insights Report Take the pledge at startuphealth.com/pledge for weekly funding insights

Published: 11/19/2014

TM

A REPORT SPONSORED BY

startup health insights digital health funding for the 50+ market 2014 q3 ytd

Health & Medicine

health reform

digital health spending

startup activity

relevant companies

deals funding

available data

digital health4as

deals relevant