startup health insights 2016 q3 report

© 2016 StartUp Health, LLC

Published: April 1, 2015

StartUp Health Insights Digital Health Funding Rankings

Q3 2016

TM

A StartUp Health InsightsTM Report Published October 3, 2016 | Report data through September 30, 2016 Report is inclusive of seed, venture, corporate venture and private equity funding Sign up to receive weekly funding insights at startuphealth.com

INCLUDING CAREGIVING MARKET FUNDING SPONSORED BY

2016 is on track to be the biggest year yet for digital health funding. Q3 was significant with almost $2.4B in deals, nearly half of which were international. We continue to see the market expand globally, with several large deals taking place both in the US and overseas.

2016 Q3 Summary

12016 Grows in US and Globally: Digital health funding continues to grow in 2016, with an increase this year internationally. Early stage deals remain active with new investments flowing into Seed and Series A companies. Several late-stage deals have also been record-breaking, with two $500M rounds.

2Digital Health's First Wave: The digital health sector is very much in its first wave of innovation, with much of the activity still at the earliest stages and too few success stories. With several significant deals this quarter(and year), both in the US and globally, expect to see more breakouts as the market matures and we enter a second wave of health innovation.

3 An Active Investor Ecosystem: Over 500 unique investors poured capital into digital health so far this year. And 140+ investors put money into multiple deals in 2016, a sign of a diverse investor ecosystem.

4Unique Collaborations: A $500M investment by Google and Sanofi has broken ground on a very interesting relationship meant to tackle one of the world's greatest challenges: diabetes. This collaboration comes with very specialized expertise from both parties. Expect more unique collaborations as companies come together to focus on solving big health challenges ranging from Alzheimers and cancer to healthy aging and brain health.

5The Rise of the Rest: While the Coasts continue to attract the majority of capital in digital health, we are seeing deal counts pick up this quarter in places like Minnesota, Tennessee and Florida. New ecosystems are slowly growing and investors are increasingly supporting startups from places that previously have been overlooked.

DEALS & FUNDING INVESTORS

2

CAREGIVING

Source: StartUp Health Insights | startuphealth.com/insights Note: Report based on public data on seed, venture, corporate venture and private equity funding only through September 30, 2016. © 2016 StartUp Health LLC

Source: StartUp Health Insights | startuphealth.com/insights Note: Report based on public data on seed, venture, corporate venture and private equity funding only through September 30, 2016. © 2016 StartUp Health LLC 3

150

283

467

629574

523

394

Digital Health Funding Snapshot Year Over Year (2016 YTD)Fu

ndin

g ($

B)

$2

$4

$6

$8

2010 2011 2012 2013 2014 2015 2016 (YTD)

Q1 Q2 Q3 Q4

Digital health funding in Q3 2016 surpassed all previous third quarters. Q3 of 2016 has surpassed total funding for 2010 and 2011 and is on par with total funding of 2012. We are on track for the strongest year yet, with funding to date already passing 2015’s total of $6.1B.

Deal Count


$1.91B

Q3 $2.37B

$1.90B

$811M$619M

$687M$270M

CAREGIVING

$ 6.5B (YTD)$6.1B

$7.1B

$2.9B $2.4B

$1.9B

$1.1B


Digital Health Funding Snapshot Month Over Month

DEALS & FUNDING

$0

$250,000,000

$500,000,000

$750,000,000

$1,000,000,000

$1,250,000,000

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

2013 2014 2015 2016 YTD

INVESTORS CAREGIVING

$1.25B

$1.00B

$0.75B

$0.50B

$0.25B

This chart compares yearly funding on a monthly basis and reveals cyclical funding patterns. Total investment tends to spike in May and September, which may be helpful in guiding entrepreneurs’ fundraising planning. Five out of nine months this year have record-setting funding numbers.


$0

$250,000,000

$500,000,000

$750,000,000

$1,000,000,000

$1,250,000,000

2010 2011 2012 2013 2014 2015 2016

R² = 0.6614

Digital Health Funding Snapshot Month Over MonthDespite fluctuations month over month, our data has shown a steady increase in Digital Health funding. Q3 has also provided some of the largest deals to date (such as Ping An Good Doctor and Onduo); even the smallest deals from Q3 rival the largest deals from previous years.

DEALS & FUNDING

$320M Series B

$150M Series C

$37.5M Venture

$37.9M Venture

$101M Series B

$394M Venture

$33M Series B

$31M Series A

$400M Series C

$230M Series B

$500M Series C

R2 = 0.5564

$1.25B

$1.00B

$0.75B

$0.50B

$0.25B

$400M Venture

2016YTD


$448M Venture

$500M Venture

$500M Series A

Ping An Good Doctor


Company $ Invested Subsector Notable Investor

1 $500M Patient / Consumer Experience Undisclosed

1 $500M Patient / Consumer Experience


4 $400M Wellness

5 $220M Personalized Health


7 $160M Wellness




10 $100M Medical Device

Two $500M deals lead the pack — and these are two of the largest deals in digital health funding to date. These deals vary significantly, Ping An Good Doctor is focused on bringing medical services to the greater Chinese market via mobile, while Onduo focuses on solving one of America’s biggest chronic disease challenges.

The Top 10 Largest Deals of 2016 (YTD)

DEALS & FUNDING INVESTORS CAREGIVING

Subsector Total Raised YTD Deal Count Average Deal Size

1 Patient / Consumer Experience $2.53B 101 $25.1M

2 Wellness $918M 33 $27.8M

3 Personalized Health / Quantified-Self $634M 26 $24.4M

4 Big Data / Analytics $564M 40 $14.1M

5 Medical Device $478M 40 $12.0M

6 Workflow $419M 59 $7.1M

7 Clinical Decision Support $309M 20 $15.4M

8 Population Health $248M 31 $8.0M

9 E-commerce $242M 13 $18.6M

10 Research $107M 15 $7.1M

The Top 10 Most Active Subsectors of 2016 (YTD)

DEALS & FUNDING

The top-funded subsector currently shows a continued push towards patient/consumer experience, with almost triple the total funding of the second-most active focus area. Even if you exclude the two $500M deals in patient/consumer experience (Ping An Doctor and Onduo), it still remains the top funded market in digital health.




2010

2011

2012

2013

2014

2015

2016

0% 25% 50% 75% 100%

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

65% of all deals this year are at the Seed and Series A stage. We have seen a slight dip in seed funding as a percent of total deals, with deal volume increasing slightly in Series A deals. Series B funding continues to remain consistent year over year at 20% of total deals.

Deal Activity by Stage

30% 35% 9%20% 3%

Deal Count*

121

234

305

450

386

293

DEALS & FUNDING

*Deal count only includes Seed though Series G rounds

242 (YTD)



Market Maturity Map

47%

45%

Patient / consumer experience and workflow companies are the highest in deal count among early-stage rounds, while the highest concentration of post-Series D deals are occurring in the personalized health/quantified-self market. Education/training and research continue to be nascent markets.

Patient / Consumer Experience

Wellness

Personalized Health / Quantified-Self

Big Data / Analytics

Medical Devices

Clinical Decision Support

E-Commerce

17 23 12 4 3

14 12 9 4 1

8 12 7 0 2

10 8 4 2 0

7 9 4 4 1

4 7 3 2 6

1 3 4 3 0

6 3 0 0 0

3 4 2 2 3

0 3 1 0 1

2 0 0 0 0

0 1 1 1 0

Workflow

Research

Population Health

EHR

Education / Training

Seed Series A Series B Series C Series D-H

CAREGIVINGDEALS & FUNDING INVESTORS


2016 has shown a variety in deal sizes and stages. The median deal size for late stage deals is approximately twice the size of mid-stage deals. Interestingly, this year we have seen several early- and mid-stage deals larger than late-stage deals.

Deal Size Ranges & Medians by Stage for 2016 (YTD)

DEALS & FUNDING

$0

$11M $151M

$500K $220M

$52K $145M

$300M

Late-stage (Series D+)Mid-stage (Series B + Series C)Early-stage (Seed + Series A)Excludes Early-stage outliers: $400M Oscar, $500M Good Doctor

$15M

$3.0M

$28M


The Most Active US Metro Areas of 2016 (YTD)

DEALS & FUNDING

Region

1 SF Bay Area

2 New York City

3 Boston

4 Minneapolis

5 Philadelphia

6 Chicago

7 Los Angeles

8 Washington, DC

9 San Diego

10 Dallas

$54M

$868M

$704M

$70M

$1.2B

San Francisco Bay Area

Dallas Metro

San Diego Metro

New York City Metro

Boston Metro

$179MChicago Metro

$200M

Minneapolis / St. Paul Metro

$189M

Philadelphia Metro(7 Deals)

(7 Deals)

(79 Deals)

(13 Deals)

(10 Deals)

(15 Deals)(46 Deals)

(17 Deals)

Los Angeles Metro

$103M(15 Deals)

Washington, DC Metro$91M

(8 Deals)


Deal flow and funding continue to be significant in the San Francisco Bay Area and in the Northeast. These regions have yielded 142 deals (36% of all deals) and approximately $2.7B in funding year-to-date (42% of all funding).



The Top Venture Investors of 2016 (YTD)


Firm 2016 YTD Deals 2015 Deals StageEarly Mid Late

1 10 9

1 10 2

3 9 10

4 6 3

5 5 6

5 5 -

5 5 4

5 5 1

5 5 6

This year, StartUp Health has joined regulars GE Ventures and Khosla Ventures as one of the most active venture investors in digital health. We have also seen new players such as Index Ventures investing in the sector.

CAREGIVING


Investor Volume of 2016 (YTD)


0

50

100

150

200

2016

5290

523

1 2 3+

Inve

stor

Cou

nt

# of Deals by Investor

The appetite for investing in digital health continues to grow. So far, more than 500 unique investors have deployed capital in the sector year to date and we expect that number to continue to increase.



A Spotlight on Caregiving sponsored by

Data sourced and provided by:

* Data in following section is separate from StartUp Health Insights data

*


DEALS & FUNDING

The Caregiving Investment Landscape


By 2020, 117 million Americans are expected to need assistance of some kind, yet the overall number of unpaid caregivers is only expected to reach 45 million. Technology holds great promise for helping to reduce the complexities, stress, and sheer hard work of these caregivers. Companies from established multinationals to startups, mass-market firms to niche players, are recognizing this caregiving market opportunity that’s expected to reach $72 billion in 2020 alone.


Caregiving Market Investments

47%

45%

26%


Category Raised YTD Deal Count Average Deal Size Notable Deal

1 Daily Essential Activities* $1.4B 25 $62.4M

2 Care Coordination* $234M 10 $23.4M

3 Health & Safety Awareness* $84M 11 $7.7M

4 Caregiver Quality of Life* $64M 7 $9.2M

5 Transition Support* $15M 6 $1.3M

6 Social Wellbeing $6.5M 2 $3.3M

There is a focus on funding technologies that make daily essential activities easier, including transportation, food delivery and other services that provide value to everyday tasks and errands. Uber continues to dominate the ‘on-demand’ transportation market, viewing the aging population as a growth opportunity. Care Coordination remains an established sector as technology begins to play a bigger role in the caregiving market.

CAREGIVING

* Includes company funding in multiple categories


Caregiving Market Top Deals

47%

45%

26%


Notable Deal Total Raised YTD Notable Investor Category

1 $1.0B Daily Essential Activities

2 $189M Daily Essential Activities

3 $60M Care Coordination



6 $31M Health & Safety Awareness





While not counted in StartUp Health’s data as a digital health deal, Uber’s $1B deal and several other top deals this year could have a significant healthcare impact on the aging community. There is a healthy mix of hedge funds, venture firms and other investors interested in supporting the caregiving market.

CAREGIVING


Caregiving Market Maturity Map

47%

45%

There is a lot of early-mid stage activity in Daily Essential activities, while Care Coordination shows more mid-late activity. Transition Support and Social Wellbeing, however, have little activity - even in the earliest stages.


4 6 6 2 1

1 3 3 1 1

1 1 5 2 0

2 1 3 0 0

2 2 1 0 0

1 0 1 0 0

Seed/Angel Series A Series B Series C Series D

CAREGIVING

Care Coordination*

Caregiver Quality of Life

Daily Essential Activities*

Health & Safety Awareness*

Social Wellbeing*

Transition Support*

* Includes company funding in multiple categories


Four investor groups closed more than one deal in 2016 specifically within the caregiving market. Among these groups, only early and mid-stage deals took place.

Caregiving Market Venture Investors of 2016 YTD

Firm 2016 YTD Deals Notable Deal Stage

Early Mid Late

1 2

1 2

1 2

1 2


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 and specialties. 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 of 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.

Stage of Funding: • StartUp Health Insights

TM records only publicly available data on cash for equity investments as the cash is actually received by the company. StartUp Health Insights

TM

is inclusive of 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 Insights

TM, 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 Insights

TM, 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.

• Funding data for the Caregiving section was provided by CB Insights and AARP. This data is separate from StartUp Health’s Insight funding. • 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.

Our Methodologies


In 2011, StartUp Health introduced a new model for transforming health by organizing and supporting a global army of entrepreneurs called Health Transformers. StartUp Health is investing in 10 health moonshots with the long-term goal of improving the health and wellbeing of everyone in the world. With the world’s largest digital health portfolio (more than 165 companies spanning 5 continents, 16 countries and 60+ cities), StartUp Health’s long-term platform for entrepreneurs includes the StartUp Health Academy, StartUp Health Network, StartUp Health Media and StartUp Health Ventures. StartUp Health was founded 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, Aurora Health Care, California Health Care Foundation, Children’s Hospital Colorado, University of Colorado, UCHealth, Steve Case, Mark Cuban, Esther Dyson, Brad Feld, Genentech, GE Ventures, Johnson & Johnson, Kaiser Permanente Ventures, Robert Wood Johnson Foundation and SeventySix Capital.

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

StartUp Health InsightsTM Contributors : Troy Bannister, Mark Liber, Anne Dordai, Polina Hanin, Jennifer Hankin, Nicole Kinsey, Tara Salamone

About StartUp Health



StartUp Health Companies

© 2016 StartUp Health, LLC

Published: April 1, 2015

StartUp Health Insights Digital Health Funding Rankings

Q3 2016

TM

A StartUp Health InsightsTM Report Published October 3, 2016 | Report data through September 30, 2016 Report is inclusive of seed, venture, corporate venture and private equity funding Sign up to receive weekly funding insights at startuphealth.com

INCLUDING CAREGIVING MARKET FUNDING SPONSORED BY

startup health insights 2016 q3 report

Healthcare