startup health insights funding report q3 2017 ytd

© 2017 StartUp Health, LLC

STARTUP HEALTH INSIGHTS Global Digital Health Funding Report

Data through September 30, 2017 Report is inclusive of all publicly available seed, venture, corporate venture and private equity funding Sign up to receive weekly funding insights at startuphealth.com

Q3 2017 YTD

TM

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ABOUT STARTUP HEALTH

Pages

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

4 ………………………………………….…………… Year to Date Summary

5-12 ………………………………………….…………… Deals and Funding

13-14 ………………………………………….…………… Geography

15-16 ………………………………………….…………… Investors

17-19 ………………………………………….…………… Health Transformers

20 ………………………………………….…………… Methodologies

Jennifer Hankin

Polina Hanin

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 through 9/30/17 on seed(incl. accelerator), venture, corporate venture and private equity funding only. © 2017 StartUp Health LLC 2

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 (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 startuphealth.com.

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

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

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

4Cancer Moonshot Ending cancer as we know it

5

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

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

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

8Brain Health Moonshot Unlocking the mysteries of the brain to improve health, wellness and mental health

9Happiness and Mental Health Moonshot Connecting mind, body and spirit in the pursuit of happiness

10Longevity Moonshot Adding 50 healthy years to every human life

ON A MISSION TO ACHIEVE 10 HEALTH MOONSHOTSOne of the most exciting trends to emerge over the past few years 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 these 10 Health Moonshots to improve the health and wellbeing of everyone in the world.

3Source: StartUp Health Insights | startuphealth.com/insights Note: Report based on public data through 9/30/17 on seed(incl. accelerator), venture, corporate venture and private equity funding only. © 2017 StartUp Health LLC



4 Investors Bet on Personalized FutureHalf of this years top deals are in personalized health and patient/consumer experience, a clear signal that investors are focused on a consumer-centric, personalized future for health and wellness.

5 Rise of the Rest: South Florida Heats UpWith over $231M raised YTD, the Miami metro area is back on the digital health funding map, another example of the rise of emerging innovation hubs across the country.

DEALS & FUNDING GEOGRAPHY INVESTORS

Digital health funding broke all previous records in Q3, with 2017 YTD funding surpassing $9.0B. Assuming momentum continues through Q4, we’ll finish 2017 well past $10B, a significant signal of support for entrepreneurs working to achieve their Health Moonshots. Despite the headlines and uncertainty surrounding healthcare reform, investment into digital health companies continues to accelerate.

4

Q3 2017 YTD SUMMARY: MOMENTUM TO PASS $10 BILLION

1 Another Record-Breaking YearWith $9B invested YTD, digital health funding is $2.6B ahead of where it was at the end of Q3 2016, and has already surpassed any total annual funding amount on record.

2 Later-Stage Deals IncreaseWe’ve seen an increase in late-stage deals this year, with 75% of sectors receiving funding in a series D round or later, compared to only 50% at the end of 2016, showing a steadily maturing market.

3 Deal Sizes Charge UpwardsAverage deal size increased from $14M in 2016 to over $18M this year, signaling that investors are willing to put more money into companies with clear potential.

Source: StartUp Health Insights | startuphealth.com/insights Note: Report based on public data through 9/30/17 on seed(incl. accelerator), venture, corporate venture and private equity funding only. © 2017 StartUp Health LLC



DIGITAL HEALTH FUNDING SNAPSHOT: YEAR OVER YEAR

5

As we head into the final quarter of 2017, a new benchmark has been set in digital health, with funding having already surpassed 2016’s year-end total. Q3 2017 is the largest third quarter on record, exceeding last year’s Q3 by approximately $300M and catapulting this year’s totals to over $9B in funding.


158

288

501

661602

538

632

530

Deal Count

2010 2011 2012 2013 2014 2015 2016 2017 YTD

Q1 Q2 Q3 Q4

$1.7B

$2.2B

$2.0B

$833M$592M

$669M $258M

$8.1B

$6.1B

$7.3B

$2.9B$2.3B

$2.0B

$1.2B

$9.0B (YTD)

$2.5B




$.0B

$.5B

$1.0B

$1.5B

$2.0B

$2.5B

2010 2011 2012 2013 2014 2015 2016 2017

$150M Series C

$37.5M Venture

$37.9M Venture

$394M Venture

$33M Series B

$31M Series A

$400M Series C

$500M Series C

R2 = 0.5564

$220M Series A

Good Doctor

$500M Venture

DIGITAL HEALTH FUNDING SNAPSHOT: MONTHLY COMPARISON

6

$500M Series A

$130M Series B

$914M Series B

While we tend to see funding totals dip during the summer months, an uptick in investment occurred in August. This September was the strongest on record, largely due to the $280M series D round raised by Auris Surgical Robotics, which is working towards the Cure Disease Moonshot.

$600M Venture$360M Series E

$280M Series D



YTD



$.0B

$.5B

$1.0B

$1.5B

$2.0B

$2.5B

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

2013 2014 2015 2016 2017 YTD

7

August and September were both decisive contributors to this year’s record level of funding. Almost $215M more was invested in each of these months than in any other August or September to date.

Funding including GRAIL’s $900M Funding Round and Health Outcome’s $600M Funding Round


DIGITAL HEALTH FUNDING SNAPSHOT: MONTHLY COMPARISON




Company Total Raised Subsector

1 $914M Big Data/Analytics

2 $600M Education/Training

3 $360M Personalized Health

4 $325M Wellness

5 $280M Medical Device


7 $231M EMR

8 $200M Patient/Consumer Experience



THE TOP 10 LARGEST DEALS OF 2017 YTDA wide range of startups around the world are landing larger and larger deals, with companies like Auris, 23andMe and WuXiNextCODE closing mega rounds in Q3 2017.

8



http://startuphealth.com/reports



THE TOP 10 MOST ACTIVE SECTORS OF 2017 YTD

9

Subsector Total Raised YTD Deal Count Avg. Deal Size

1 Big Data/Analytics $1.3B 44 $30.9M

2 Personalized Health $1.2B 41 $28.2M

3 Medical Device $1.0B 61 $17.0M

4 Patient/Consumer Experience $953M 121 $7.9M

5 Research $791M 28 $28.3M

6 Workflow $671M 89 $7.5M

7 Education/Training $632M 12 $52.7M

8 Wellness $631M 54 $11.7M

9 Population Health $570M 44 $13.0M

10 EHR $381M 9 $42.3M

Having received $585M+ in investments in Q3 alone, the digital med-device sector has rocketed up the list to $1B in total funding year to date. It is also among the most active sectors by deal count. While big data/analytics still tops the charts for total raised, the sector only recorded 13 deals, for a total of $138M in Q3 2017.


“The future is bright, when it comes to how we’re going to receive

care and how we’re going to care for

ourselves.”- Sathya Elumalai, Co-founder & CEO of Multisensor

Diagnostics, a StartUp Health company





2010

2011

2012

2013

2014

2015

2016

2017

0% 25% 50% 75% 100%

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

28% 35% 10%21% 5%

*Deal count only includes Seed though Series H rounds and does not include venture rounds, accelerator funding or growth equity.

Deal Count*

123

227

307

445

396

311

362

Though 2017 has seen a slight decline in seed deals, there has been a surge in series C & D deals, which accounts for the increase in deal size and total funding this year. Notably, Q3 2017 had the largest count of mid stage (32) and late stage (5) deals than any other Q3 on record.

DEAL ACTIVITY BY STAGE

322 YTD

10






Fund

ing

($M

)

$0M

$13M

$25M

$38M

$50M

2014 2015 2016 2017 YTDAvg. Deal Size Avg. Seed Avg. Series A Avg. Series B Avg. Series C Avg. Series D

AVERAGE ROUND SIZE: A YEARLY COMPARISON

“Digital health today reminds me of ’94 internet. It’s early - the pipes are still being connected, the business

models are in flux and armies of future Jeff Bezoses are in their

garages leading us into an exciting new future. While there’s already

been years of hard work and billions invested, it’s the essential foundation

for extraordinary leaps forward."

- Unity Stoakes Co-Founder and President, StartUp Health

11

Average round size continues to grow, a trend driven by the increase in both the amount and size of later-stage deals. Series D funding rounds are steadily getting bigger, a sign that more companies are maturing. On average, series D rounds were $113M in Q3 2017.



*Overall average deal size is inclusive of all tracked round types.




Digital health market maturation is a continuing trend, with nearly all sector segments seeing series A investment activity in Q3 2017. A few sectors are also seeing notable deal volume at the series B level, including patient/consumer experience, medical devices and population health.

47%

Patient/Consumer Experience

Wellness

Personalized Health/Quantified-Self

Big Data/Analytics

Medical Devices

Clinical Decision Support

E-Commerce

21 26 10 3 3 017 19 5 4 0 012 7 11 6 4 1

11 14 6 2 1 0

6 12 9 1 1 0

5 12 9 4 1 0

4 7 4 3 3 2

5 4 4 5 1 02 4 2 0 1 0

0 3 4 1 1 0

4 1 1 0 0 02 1 1 0 0 0

Workflow

Research

Population Health

EHR

Education/Training

Seed Series A Series B Series D Series E-H

SECTOR MATURITY MAP 2017

More funding activity Less funding activity

12

Series C






$119M

$778M

$539M

$138M

$3.4B

San Francisco Bay

Seattle

San Diego

New York City

Boston

$231M

Miami

$197M

Minneapolis/ St. Paul

$223M

Denver

(8 Deals)

(12 Deals)

(101 Deals)

(9 Deals)

(5 Deals)

(2 Deals)

(37 Deals)

(23 Deals)

Los Angeles

$267M(11 Deals)

Chicago

$737M(14 Deals)

Though Q3 deals have propelled metro areas like Chicago and Miami up the list, deal volume continues to be strongest in the Bay Area and the Northeast regions. Emergent hubs Seattle, Denver and Minneapolis/St. Paul continue to see deal volume, though of these, only Seattle recorded multiple deals this quarter.

THE MOST ACTIVE US METRO AREAS OF 2017

13


* Map shows Top 10 Metro Areas by Total Dollars

RegionMidyear

Deal Count YTD

1 SF Bay Area 65 1012 New York City 22 373 Boston 13 234 Chicago 5 14

5 Seattle 7 126 Los Angeles 8 11

7 Philadelphia 6 10

8 San Diego 7 9

9 Baltimore 3 8

9 Austin 7 89 Minneapolis 7 8





NOTABLE GLOBAL ACTIVITY IN 2017

$100M Venture

$200M Venture

$85M Venture $30M Venture

$60M Series B

$50M Venture

$55M Series D

$40M Venture

Canada

United Kingdom

Switzerland

Israel

India

China

China

Australia

Global investment in digital health is robust, with several significant deals occurring in Europe, Asia and Australia this year. China boasts five of 2017’s top 12 international deals, including Ankon Technologies’ huge Q3 venture round.


Source: StartUp Health Insights | startuphealth.com/insights Note: Report based on public data through 9/30/17 on seed(incl. accelerator), venture, corporate venture and private equity funding only. © 2017 StartUp Health LLC 14




Firm 2017 YTD Deals* StageEarly Mid Late

1 82 72 72 72 73 63 63 63 63 63 6

THE TOP INVESTORS OF 2017 YTD

New investors continue to pour money into digital health, notably F-Prime, which made five investments in Q3 2017. Although new firms continue to appear, many on the list are regulars, demonstrating confidence in the industry among investors.


15


*2017 YTD deal counts excludes accelerator rounds




The biggest investors of 2017 have invested across a broad spectrum of digital health sectors. Of these, Khosla Ventures leads the group, having invested in seven sectors this year. Other investors appear to be taking a more focused approach. Y Combinator, for example, has invested in only three sectors -- all in Q3 of this year.

Inve

stor

s

THE TOP INVESTORS OF 2017 BY SECTOR

16

Workflow Research E-CommerceMedical Device

Population Health EHR

Clinical Decision Support

Personalized Health/

Quantified-self

Big Data/ Analytics

Patient/ Consumer Experience

Wellness






STARTUP HEALTH COMPANY MERGERS & ACQUISITIONS

September 2017

acquired by

January 2017

acquired by

October 2016

acquired by

July 2016

acquired by

May 2016

acquired by

March 2016

acquired by

June 2016

acquired by

May 2015

acquired by

March 2014

acquired by

October 2013

acquired by

July 2013

acquired by

April 2017

merged with

October 2016

merged with

October 2016

acquired by





STARTUP HEALTH’S GROWING ARMY




startuphealth.com/reports 19

Read HEALTH TRANSFORMER, the digital magazine featuring the people and trends transforming health!




https://healthtransformer.co/startup-health-company-carelinx-acquired-by-one-of-the-worlds-largest-insurers-d2401249ef32


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, specialties technology type and end user. Investments in subsectors and specialties are not mutually exclusive, as deals are tagged with multiple subsectors and specialties based on the company’s focus.

• Q2 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.

• Q3 2017 also brought with it an extensive database and global industry review. A new database was implemented allowing StartUp Health to track funding records and investors from around the world more efficiently. Any inaccuracies were corrected with the transition of systems.

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

equity investments when 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 insights funding report q3 2017 ytd

Healthcare