startup health insights digital health funding rankings q3 2015 report

© 2015 StartUp Health, LLC

Published: April 1, 2015

TM

A StartUp Health InsightsTM Report Published October 1, 2015 | Report data through September 30, 2015 Report is inclusive of seed, venture, corporate venture and private equity funding Sign up to receive weekly funding insights at startuphealth.com

StartUp Health Insights Digital Health Funding Rankings Q3 2015 Report

INCLUDING 50+ MARKET FUNDING SPONSORED BY

Source: StartUp Health Insights | www.startuphealth.com/insights • Disclosure: Information, data and figures represent only publicly available data. © 2015 StartUp Health, LLCNote: StartUp Health InsightsTM is inclusive of all seed, venture, corporate venture and private equity funding.

Overall 2015 funding year to date is slightly behind that of the same time last year. After a slower start to the year, Q3 funding increased and is on par with Q3 2014.

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2015 Year to Date and Q3 Summary

1Signs of a Maturing Market: The market continues to see a steady increase in mid stage (Series B and C) deals with 31%, as early stage deals hold strong with 64% of this year’s volume. With the continued growth of Series A rounds, we predict that follow-on rounds will increase in pace as entrepreneurs are able to prove significant traction to gain investors’ confidence.

2A Diverse Investor Landscape: A few years ago, it was incredibly rare to see traditional tech VCs and corporate VCs investing in healthcare. Today, both of these groups are integral in the market. This quarter, however, saw the advent of a non-venture investment firm and a holding company entering the ranks of top investors for the year.

3Personalized Medicine Gains Traction: Genomics and diagnostics as subsectors make up a large portion of both early and late stage deals. As cancer paves the way for personalized DNA-based therapies, we expect to see opportunities focused on newborns, immunology and infectious disease begin to gain steam.

4Wellness and Patient / Consumer Experience Sectors Are on Top: Although big data still continues to garner a lot of interest from investors, wellness solutions and patient / consumer experience companies have picked up momentum.

5Global Innovation: More than 7,700 startups around the world are developing solutions in digital health, based on StartUp Health Insights data. Innovation continues to thrive as borders between technologies, talent and nations blur to spur real change in medical systems at home and abroad.

DEALS & FUNDING INVESTORS 50+ MARKET


151

279

468

616559

312

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Digital Health Funding Snapshot Year Over YearFu

ndin

g ($

B)

$2

$4

$6

$8

2010 2011 2012 2013 2014 2015 YTD

Q1 Q2 Q3 Q4

$1.2B

$2.0B$2.5B

$2.9B

$6.9B

$1.89B

$646M

$1.85B

$821M

$681M$265M

Q3 2015 continues to demonstrate a trend towards digital health market maturity with an increase of investment dollars combined with larger, less frequent deals.

Deal Count

$4.7B



The Top 10 Most Active Sectors of 2015 YTD


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Sector $ Invested # of Deals Notable Deals

1 Patient / Consumer Experience $1.1B 62 • Guahao • Omada Health

2 Wellness $876M 32 • Headspace • KFit

3 Personalized Health / Quantified Self $461M 23 • Helix • 23andMe

4 E-Commerce $409M 17 • PokitDoc • Practo Technologies

5 Workflows $406M 38 • Care at Hand • Kyruus

6 Big Data / Analytics $395M 30 • LaunchPoint • Metabiota

7 Medical Devices $329M 34 • InfoBionic • Virtual Incision

8 Clinical Decision Support $196M 18 • lifeIMAGE • MedCPU

9 Population Health $185M 13 • Grand Rounds • Advance Health

10 Research $90M 8 • Codagenix • Mousera

*

* Refer to the methodologies for which subsectors make up the broader sectors listed here

The leading sector of 2014, big data / analytics, dropped in funding activity for 2015, with much of the focus around patient experience, wellness and other preventative solutions.


Company $ Invested Subsector Notable Investment

1 $500M Benefits

2 $394M Navigating the Healthcare System

3 $145M Insurance


5 $108M Genomics

6 $100M Personalized Health Undisclosed

6 $100M Insurance


9 $79M Genomics Undisclosed

10 $70M Big Data / Analytics

10 $70M Benefits

Benefits and insurance solutions remain at the top of the list, particularly as the businesses become more capital intensive. Genomics companies are beginning to attract funding as the line between biotech and consumer health continues to blur.

The Top 10 Largest Deals of 2015 YTD

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*Clover Health deal is a combination of equity and debt.


Company $ Invested Subsector Notable Investor

1 $9.6M Sensors

2 $9.5M Navigating the Healthcare System Angels

2 $9.5M Mental Health

4 $9.4M Diagnostics

5 $9.1M Pharmaceuticals

6 $9.0M Corporate Wellness

7 $8.7M Wearables

8 $8.6M Navigating the Healthcare System

9 $8.4M Diagnostics

10 $8.0M Diagnostics Undisclosed

10 $8.0M Health IT

10 $8.0M Social Engagement

10 $8.0M Big Data / Analytics

Mirroring the broader digital health market, deals under $10M show the rise in popularity of funding of patient / consumer experience startups.

The Top 10 Deals Under $10M of 2015 YTD


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The Top 10 Most Active US Metro Areas of 2015 YTD


Metro Area

1 SF Bay Area

2 NYC Metro Area

3 Boston

4 South Florida

5 Los Angeles

6 Chicago

7 Salt Lake City

8 San Diego

9 DC Metro Area

10 Seattle

While it’s no surprise that the Bay Area continues to bring the most funding YTD, emerging regions continue to grow. With Chicago, Salt Lake City and South Florida each taking in over $125M, it’s clear that investment opportunities are everywhere.

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$90M

$508M

$318M

$134M$1.6B

SF Bay Area

San Diego

Salt Lake City

New York City

Boston

$148M

$248M

South Florida

$87M

DC Metro Area

(12 Deals)

(4 Deals)

(81 Deals)(8 Deals)

(5 Deals)(14 Deals)

(37 Deals)

(28 Deals)

Seattle$80M (8 Deals)

Los Angeles

$245M

(12 Deals)

Chicago


Keeping with last year’s trend, Seed and Series A rounds comprised 64% of funding activity in 2015 YTD. Meanwhile, Series B and C rounds are continuing to increase their share of total 2015 deals, demonstrating the maturation of the market.

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Deal Activity by Stage for 2015 YTD

2010

2011

2012

2013

2014

2015 YTD

0% 25% 50% 75% 100%

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


29% 35% 11%20% 2%


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Funding Deep Dive: Funding of the Top 3 Specialties 2015 YTD


While the total dollars in oncology, cardiology and diabetes has decreased since 2014, funding in these chronic diseases continues to be the leading areas of interest for investors. The biggest challenge for entrepreneurs will be differentiating themselves in the market, as investors learn more about the landscape.

$0.3B$0.00B

$0.25B

$0.50B

$0.75B

$1.00B

2010 2011 2012 2013 2014 2015 YTD

Oncology Cardiology Diabetes


$1M

$2M

$3M

$4M

$5M

$6M

$7M

2010 2011 2012 2013 2014 2015 YTD

$4.5 $4.6

$3.4

$4.0

$5.5

$6.0

$1.0$0.8 $0.6 $0.8

$1.3

$1.7

Seed Round Series A

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Funding Deep Dive: Early Stage Median Investment Landscape


The abundance of capital for innovation in digital health, coupled with investors wanting to see more traction at the Series A round stage, have contributed to Seed round median size growing faster than Series A deals.

9%

36%

38%

80%


The Top 12 Most Active Venture Investors of 2015 YTD


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Firm 2015 YTD Deals 2014 Deals Stage

Early Mid Late

1 9 7

2 8 103 7 13 7 63 7 73 7 33 7 73 7 29 6 49 6 49 6 12

12 5 712 5 8

12 5 3

Investors outside of traditional venture firms are placing significant bets within digital health with corporate VCs, aninvestment firm and a holdings company making our top 12 most active list YTD.


50+ Market Funding Snapshot for 2015 YTD

186


Fund

ing

($B

)

$0.8B

$1.6B

$2.4B

$3.2B

$4.0B

Dea

ls

70

140

210

280

2010 2011 2012 2013 2014 2015 YTD

Deals Funding

$1.7B$3.5B$1.6B$1.5B$1.3B$0.7B

152

267254

212

148

7373

148

212

254267

152

50+ market funding in Q3 2015 gained momentum, with a 50% increase over the funding averages of Q1 and Q2 2015.

$1.7B

12


20%

40%

60%

80%

100%

56% 58% 58%

49% 50% 49%50% 51% 50%44%

50%54%

% of Total Deal Count % of Total Funding

50+ Market Investments as % of Total Investments in Digital Health


47%

45%

2010 2012 2013 20142011 2015 YTD

26%

Investments relevant to the 50+ market have contributed to nearly half the funding in the last five years, with the number of deals as a percent of all digital health hovering around 50%.

13

50%

50%


Investors around the globe are funding companies that address the needs of 50+ consumers at all stages, with notable involvement from corporate and strategic investors.

The Top 50+ Market Venture Investors of 2015 YTD


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Firm 2015 YTD Deals Notable Deal Stage

Early Mid Late

1 7 HeartFlow

2 6 Doctor on Demand

3 5 Caremerge

3 5 Stride Health

3 5 Noom

6 4 PillPack

6 4 Wildflower Health

6 4 Accolade

6 4 Stride Health

6 4 Omada Health


General: • StartUp Health has 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

Insights 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. • Q2 & Q3 2015 brought with it an extensive database quality assessment. A new, evolving 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 past reports.

Sectors: • StartUp Health defines “sector” as one of the below 13 major markets that make up the bulk of funding in digital health. Each sector, is also broken into subsectors, which can crossover

among sectors. A list of the sectors and examples of subsectors are below: • Big Data / Analytics: Pharma, Predictive, Research • Clinical Decision Support: EMR, Physician Tools, Point of Care • E-commerce: Marketplaces, Media, Supply Chain • Education / Training: Gamification, Medical Device, Mobile Apps • EMR: Fraud, Patient Portals, Workflows / Interoperability • Medical Devices: Diagnostics, Medical Imaging, Sensors • Patient / Consumer Experience: Medication Adherence, Navigating the Healthcare System, Telemedicine • Personalized Health / Quantified Self: Genomics, Personalized Medicine, Wearables • Population Health: Big Data / Analytics, EMR, Patient Engagement • Research: Clinical Trials, Genomics, Pharma • Wellness: Benefits, Mental Health, Nutrition • Workflows: Scheduling, Care Coordination, Billing • 50 Plus: Behavioral Health, Medication Adherence, Vital Signs Monitoring

• Investments in subsectors are not mutually exclusive as deals are tagged with multiple subsectors.

Stage of funding: • StartUp Health Insights records only publicly available data on cash for equity investments as the cash is actually received by the company. StartUp Health Insights is inclusive of all

accelerator, seed, venture, corporate venture and private equity funding. Funding from accelerators is not included in these quarterly reports. • 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 Insights, the most comprehensive funding database for digital health, and managed by the StartUp Health team. Information, data and figures represent

only publicly available data, unless otherwise confirmed by the company receiving capital or a participating investor. • Data for acquisitions slide was provided by a range of sources including StartUp Health Insights, CrunchBase, AngelList and news reports. • StartUp Health works to ensure that the information contained in the StartUp Health Insights 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.

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Our Methodologies


StartUp Health is a global health innovation company. The StartUp Health Platform, including its Academy, Network and Innovation Fund, is empowering a global network of entrepreneurs and innovators to transform healthcare. With over 100 companies, StartUp Health has the world’s largest portfolio of digital health companies from 11 countries and 50 cities. StartUp Health was founded in 2011 by Steven Krein and Unity Stoakes and is chaired by former Time Warner CEO, Jerry Levin. StartUp Health’s notable strategic partners and investors include AARP, AON, Aurora Health Care, California Healthcare Foundation, Steve Case, Cleveland Clinic, Conifer Health Solutions, Mark Cuban, Esther Dyson, Roger Ehrenberg, Brad Feld, GE Ventures, Kaiser Permanente Ventures, Robert Wood Johnson Foundation, SeventySix Capital and Stericycle.

Learn more at startuphealth.com and follow @startuphealth. For press inquiries, email [email protected]

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startup health insights digital health funding rankings q3 2015 report

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