startup health insights - digital health funding rankings q3 2014

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StartUp Health Insights: Digital Health Funding Rankings Q3 2014 © 2014 StartUp Health, LLC A StartUp Health Insights Report Take the pledge at startuphealth.com/pledge for weekly funding insights Published: 10/1/2014 TM

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If you thought last year was big for digital health funding, take a look at this year's numbers. According to StartUp Health's Q3 funding report, investors have already poured $5 billion into digital health companies. That means funding in the sector isn't just higher than last year's total, it's on track to double it. Our new report includes the top 10 largest deals, as well as the top 10 (or so) most active investors, subsectors and metro areas. And it’s free - so dive in!

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Page 1: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

StartUp Health Insights: Digital Health Funding Rankings Q3 2014

© 2014 StartUp Health, LLC

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

Published: 10/1/2014

TM

Page 2: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

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 shaping up to be another record year for digital health, with funding in the first three quarters already far exceeding the total amount invested in 2013. Our quarterly report gives a snapshot of the sector’s “top 10” (give or take) investors, subsectors, deals and more. Here are eight trends we’re watching:

DEALS & FUNDING INVESTORS MOMENTUM

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1 2014 Funding Reaches Record Levels: Through Q3, 347 companies have raised $5B from investors including Founders Fund, Khosla Ventures and Sequoia Capital. 2014 is on track to nearly double the total invested in 2013.

2 Deal Sizes Increase: Investment size continues to climb as the market matures and more private equity firms pour capital into the sector. As startups raise more cash, speculation is also building about the next wave of IPOs.

3 M&A Activity Picks Up: Even though summer activity tends to be slow, Q3 saw 15 acquisitions by companies including Google, Practice Fusion, Cerner and WebMD/Medscape.

4 ACA Spurs Innovation: Health reform continues to drive changes in the industry and encourages startup activity in the sector.

5 Consumerism Grows: As a result of high-deductible plans, price transparency and new tech solutions, patients are becoming more empowered. Brands like Apple, Facebook and Google are making bigger waves in healthcare.

6 Privacy Concerns Mount: As the Apple iCloud hacking scandal underscored, keeping health data safe in the cloud is becoming more top-of-mind for consumers and companies.

7 Wearables Move Into the Mainstream: We’re not there yet, but the debut of the Apple Watch, Basis Peak, Moto 360 and Samsung Gear Live show that wearables are clearly moving closer to the mainstream.

8 Global Innovation Accelerates: More than 5,000 startups around the world are developing new solutions in digital health, based on data from the StartUp Health Network.

Page 3: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

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

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

347

533

447

242

142142

242

447

533

347

DEALS & FUNDING

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.

INVESTORS MOMENTUM

Page 4: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

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

DIGITAL HEALTH FUNDING SNAPSHOT Q3 YEAR OVER YEAR

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DEALS & FUNDING

Funding in the third quarter of 2014 nearly doubled over the same period last year, from $946M to $1.7B, mostly because of a few notably large deals. 111 deals closed in Q3 2014, compared with 156 closed in Q3 2013.

Fund

ing

($B

)

$2

$3

$5

$6

2010 2011 2012 2013 2014 YTD

Q1 Q2 Q3 Q4

$946M

$1.7B

$650M

$550M$230M

INVESTORS MOMENTUM

Q3 Funding Year Over Year

Page 5: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

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

THE TOP 10 LARGEST DEALS OF 2014 (YTD)

DEALS & FUNDING

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The top five companies have received more than 20% of all funding invested this year. The top 10 deals represent about one-third of all funding YTD.

Company $ Invested Subsector Notable Investor

1 $400M Practice Management Cardinal Partners

2 $230M Patient Engagement Undisclosed

3 $172M Sensors & Diagnostics Essex Woodlands

4 $135M Clinical Decision Support Kuwait Investment Authority

5 $130M Big Data Google Ventures

6 $125M Population Health General Atlantic

7 $105M Diagnostics Capricorn Investment Group

8 $100M Big Data General Atlantic

9 $89M Workflow Systems Hutton Collins

10 $80M Insurance Founders Fund

INVESTORS MOMENTUM

Page 6: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

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

THE TOP 10 MOST ACTIVE SUBSECTORS OF 2014 (YTD)

Big data is clearly a big winner. Even if companies don’t primarily identify with the subsector, they’re encouraged to show a big data and analytics play to attract investor support.

DEALS & FUNDING

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Subsector $ Invested # of Deals Largest Deals

1 Big Data / Analytics $1.17B 77 • Flatiron Health • Alignment Healthcare

2 Navigating the Care System $794M 40 • Preventice • Oscar

3 Practice Management $598M 26 • Privia Health • Zenefits

4 Sensors / Diagnostics $498M 25 • NantHealth • Flatiron Health

5 Patient Engagement $440M 38 • Preventice • One Medical

6 Consumer Health $439M 46 • Zenefits • Bswift

7 Insurance $381M 9 • Oscar • Zenefits

8 Vital Sign Monitoring $284M 17 • Proteus Digital Health • Omada Health

9 Aging with Vitality $242M 14 • NantHealth • Audax Health

10 Genomics $200M 14 • Human Longevity • Quantapore

Note: Investments in the above subsectors are not mutually exclusive as deals are tagged with multiple subsectors.

INVESTORS MOMENTUM

Page 7: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

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

Metro Area $ Invested # of Deals

1 SF Bay Area $948M 62

2 New York City $584M 33

3 DC / MD $536M 14

4 Los Angeles $341M 9

5 Minneapolis $242M 3

6 Boston $189M 26

7 San Diego $155M 13

8 Chicago $101M 5

9 Louisville $76M 2

10 Austin $56M 4

THE TOP 10 MOST ACTIVE METRO AREAS OF 2014 (YTD)

The Bay Area continues to attract the most funding, as interest in New York startups grows. The DC area rounds out the top three by funding amount, while Boston is the third most active area by deal count.

DEALS & FUNDING

7

$341M

$584M

$536M$948M

$242M

INVESTORS MOMENTUM

Page 8: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

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

2014 DEAL SIZE RANGES & MEDIANS BY STAGE (YTD)

$3.0M $7.3M $15.0M

$3.0M $8.0M $20.7M $50.0M

$40M

$41.7M

$0 $80M$20M

$2.6M

$400M

$0 $70M

$10M

$12.0M$0 $400M

$13.5M$0 $50M

Early Stage (Seed + Series A) Mid Stage (Series B + Series C) Late Stage (Series D+)

DEALS & FUNDING INVESTORS MOMENTUM

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Given that the digital health sector is relatively young, the market is seeing a broad range of deal sizes per stage. We expect the variance to subside as the sector matures.

Page 9: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

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

2014 DEAL ACTIVITY BY STAGE (YTD)

Mid-stage deals continue to gain momentum, with 31% of companies receiving follow-on funding in the first three quarters of 2014.

2010

2011

2012

2013

2014 YTD

0% 25% 50% 75% 100%

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

DEALS & FUNDING

9

INVESTORS MOMENTUM

Page 10: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

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

THE TOP VENTURE INVESTORS OF 2014 (YTD)

In addition to traditional tech VCs, a few corporate VC firms are ramping up activity in the sector. And, with the year not quite done, several firms have already surpassed their digital health deal count of 2013.

INVESTORS

10

Investor 2014 YTD Deals 2013 Deals StageEarly Mid Late

1 6 7 ✔ ️ ✔ ️

2 6 9 ✔ ️ ✔ ️

3 6 4 ✔ ️ ✔ ️

4 6 7 ✔ ️ ✔ ️ ✔ ️

5 5 9 ✔ ️ ✔ ️

6 5 2 ✔ ️ ✔ ️

7 5 1 ✔ ️ ✔ ️

8 5 5 ✔ ️ ✔ ️

9 4 5 ✔ ️ ✔ ️

10 4 1 ✔ ️ ✔ ️

11 4 6 ✔ ️ ✔ ️ ✔ ️

12 4 3 ✔ ️ ✔ ️

13 4 7 ✔ ️ ✔ ️

14 4 1 ✔ ️ ✔ ️

DEALS & FUNDING MOMENTUM

Page 11: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

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

Digital health continues its march into the mainstream as more consumer brands -- like Intel, Google, Facebook and Weight Watchers -- make their way into the industry. Q3 2014 saw 15 acquisitions.

MOMENTUM

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Q3 2014 DIGITAL HEALTH ACQUISITIONS

Acquirer Company Acquired Primary SubsectorBest Doctors Rise Health Practice Management

Cerner Siemens Health Services Technology

Cognizant TriZetto Payor Solutions

Conifer Health Solutions SPi Healthcare Provider Solutions

GetWellNetworks Marbella Technologies Practice Management

Google Lift Labs Sensors

Health Insurance Innovations HealthPocket Navigating the Care System

MedAssets SG2 Big Data / Analytics

Practice Fusion Ringadoc Practice Mgmt / Communications

Premier TheraDoc Practice Management

Validic Infometers Vital sign monitoring

Varian Medical Systems Transpire Diagnostics

Viverae OneHealth Patient Engagement

WebMD/Medscape TheraSim Technology (Simulation)

3D Systems Simbionix Technology (Simulation)

INVESTORSDEALS & FUNDING

2014 Notable Acquirers:

*Indicates money raised prior to acquisition

Page 12: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

METHODOLOGIES

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• Funding data is from StartUp Health Insights, the most comprehensive funding database for digital health, and managed by the StartUp Health team. Information, data and figures represent publicly available data.

!• Total deals and funding amounts include growth / private equity deals. !

• Investments in subsectors are not mutually exclusive as deals are tagged with multiple subsectors. !• Early stage is defined as seed and Series A, mid stage includes Series B and C, and late stage includes Series

D and above. !

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

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

!!!!!!!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.

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

Page 13: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

ABOUT STARTUP HEALTH

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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 from the StartUp Health Network, for every stage of a company’s lifecycle. !StartUp Health companies have cumulatively raised over $155M and to date, three have been acquired - Basis Science by Intel, Avado by WebMD and Arpeggi by Gene by Gene. StartUp Health was founded by health tech entrepreneurs, Steven Krein and Unity Stoakes, and is chaired by former Time Warner Chairman and CEO, Jerry Levin. Investors include Mark Cuban, Esther Dyson, Roger Ehrenberg, Brad Feld, Richard Forman, Jason Finger, Linda Holliday, Jon Kaplan, Howard Krein, MD, PhD, Jon Miller, Jeff Stewart and Wayne Kimmel. !Learn more at startuphealth.com and follow @startuphealth. For press inquiries, email [email protected] !!!!!

Page 14: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

STARTUP HEALTH COMPANIES

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ACQUIRED COMPANIES

Page 15: StartUp Health Insights  - Digital Health Funding Rankings Q3 2014

StartUp Health Insights: Digital Health Funding Rankings Q3 2014

© 2014 StartUp Health, LLC

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

Published: 10/1/2014

TM