Complex Made Simple

Digital health start-ups: Who will manage our health and make a killing?

Digital health is here to stay and investors are lining up to pay

Digital health startups raised a record $14.8 Bn across nearly 1500 deals in 2018 The top-funded company is cancer detection startup Grail, with $1.6 Bn in total disclosed equity funding Digital health companies raised $4.2 bn across 180 deals in H1 2019, and could reach $8.4 billion at year end

The UAE has a thriving health start-up eco-system.

But globally is where the action, and when it comes to health, something dear to each one of us, innovators, pharma companies, and technology firms have been working together none-stop like clockwork.

A recent article in CBinsights caught my attention as it highlighted the top 10 highest-funded digital health startups in the US every year since 2015.

We share some highlight below and look at why investors are not exiting this sector easily. The industry just keeps breathing life into capital investments, if you’ll excuse the pun. 

Read: Five minutes: How much is it worth to you?

The digital health space

The digital health space  includes everything from disease diagnostics and management, to health insurance built on a new tech infrastructure, to AI tools for drug discovery, remote therapy, body hacking and more. 

Digital health startups raised a record $14.8 Bn across nearly 1500 deals in 2018 — a 113% uptick in funding since 2015, according to CBinsights.

Cancer detection

The top-funded company is cancer detection startup Grail, with $1.6 Bn in total disclosed equity funding. Grail first appeared in the top 10 highest-funded digital health startups list in 2017, when it raised 3 tranches of Series B funding totaling $1.2 Bn. Grail has secured the top spot on the funding list ever since.

Grail is currently valued at $3.2 Bn.

Read: Looking for an App idea and depressed about not finding it? We have it

Worthy mentions 

Biotech data company Tempus Labs ($3.1 Bn valuation), D2C genetics startup 23andMe ($2.5 Bn), and medical appointment booking platform Zocdoc ($1.8 Bn) round out the top 5 highest-valued companies in our graphic.

Notably, in 2015, the top-funded digital health startup was care coordination platform Privia Health, with $414 Million in disclosed equity funding. As funding has flowed into the sector, those numbers have dramatically gone up: the #10 company in 2019 YTD (Bright Health, with $440 Million) has more funding than Privia did as #1 in 2015.

Funding to the top-funded company has jumped 286% over the same time period.

Health insurance 

Health insurance is a common category on our graphic, especially in more recent years.

Three of the 10 top-funded digital health startups in 2019 YTD fit into this category: Oscar, a tech-enabled health insurer with a focus on telemedicine; Clover, which offers Medicare Advantage plans; and Bright Health, with offers both individual & family and Medicare Advantage plans.

Genomics is another popular focus, being explored by startups like Grail, 23andMe, and Human Longevity.

Another popular category is health record management: Kareo, Accelera, Modernizing Medicine, and Essence Group Holdings all focus at least in part on EHR management. However, these companies have seen relatively less funding than their top-funded counterparts, and none have made it into the top 5 in any year shown.

Raising but not exiting

Through the first half of 2019, digital health companies have raised as much as $4.2 billion across 180 deals, and could reach a record-breaking $8.4 billion by year end. 

Of that financing, 69% is coming from return investors, a sign of a maturing investment sector that isn’t just receiving a flood of cash from new, inexperienced investors, according to Rock Health

Since 2011, $36.3 billion has been invested in digital health startups. Of the $36.3 billion total invested, $4.1 billion has been realized through M&As as exits compared to just $1.3 billion for IPOs.  

Of the $36.3 billion venture capital invested in digital health startups since 2011, $29.4 billion has yet to find an exit option, meaning there is still a lot of value in the industry remaining to be unlocked.