Is the clock at the funding pub pointing to ‘last call’? (Updated)

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2012/12/crystal-ball.jpg” thumb_width=”150″ /]And we were having such a good time! UPDATED Having ridden a few hype curves (in health tech and out–remember airline deregulation?) and with the bruises to prove it, this Editor believes that she can spot a Cracking Market at forty paces. The hands on the clock appear to be near closing time, even as we party on. After all, DTC telehealth is forecast to be $25 bn in the US by 2025 (GrandView Research), if we make it that far!

Where are the sharp noises coming from?

• The continuing fail of unicorns like Theranos [TTA 4 May and prior], now resorting to bullying the Wall Street Journal and negotiating with the alphabet (SEC, DOJ, FDA, CMS…), and the troubles of Zenefits. 
• Another notable unicorn, the doctor booking site ZocDoc, being called out at last on their customer churn, low margins, and high customer acquisition costs. (As well as an irritant to doctors and office managers) New York Business Journal
• Extremely high and perhaps insane rounds of funding to young companies with a lot of competition or a questionable niche. Higi is an odd little kiosk + consumer engagement program located in primarily Rite Aid drugstores–odd enough to score $40 million in its first venture round. (Ed. note: I shop at Rite Aid–and have never seen one.)This is after the failure of HealthSpot Station, which burned through approximately $43 million through its entire short but showy life. The low-cost, largely exchange plan insurer Oscar Health raised $400 million this February  ($727 million total) while UnitedHealth and others are dropping money-losing plans in most states. Over 50 percent of exchange co-ops went out of business in 2015, leaving doctors, health systems and patients holding their baggage. Again, low margins, high cost and high customer acquisition costs.
• We’ve previously noted that funders are seeking ‘validation in similarity’–that a few targeted niches are piling up funding, such as doctor appointment setting, sleep trackers and wellness engagement [TTA 30 Dec 15]
• Tunstall’s continuing difficulty in a sale or additional financing, which influence the UK and EU markets.
• NEW More patent fights with the aim of draining or knocking out competition. We’re presently seeing it with American Well litigating Teladoc over patent infringement starting last year, which is only now (March) reaching court. It didn’t stop Teladoc’s IPO, but it publicly revealed the cost: $5 million in previously unplanned lobbying and legal costs, which include their fight with the Texas Medical Board on practicing telemedicine–which is beneficial for the entire industry. (But I would not want to be the one in the legal department explaining this budget line.) Politico, scroll down. But these lawsuits have unintended consequences–just ask the no-longer-extant Bosch Healthcare about the price of losing one.
• A continuing concentration of funding in seed/Series A rounds (54 percent), and a growing dearth in later rounds (D and above) which dropped to 13 percent in 2016 from 35 percent in 2015 [TTA 7 Apr]
• The consolidation/merger trend we have previously noted among companies.
• A vacuum due to the lack of a Next Big Thing, though telemedicine is trying very hard to be It.
• Odd departures and reorgs. One of the most prominent accelerators/venture funds/event producers, Rock Health, is reorganizing.Founder Halle Tecco, one of the few prominent women in Silicon Valley, revealed last week that she stepped down as managing director late last year and relocated to NYC. Their CEO also left late last year and the interim CEO stepped down two weeks ago. Now it is being run by its board after 93 investments in 80 companies including 10 acquisitions. MedCityNews
• One of their investments, Doctor on Demand, is also experiencing some management turmoil. A former PayPal consumer senior vice president, Hill Ferguson, is replacing co-founder and CEO Adam Jackson, who is ‘an entrepreneur at heart’ and is exiting nearly immediately. Over three years they raised $87 million through Series B from 21 investors. Some of this redirection is undoubtedly from the investors. BizJournals San Jose

Which is not necessarily wrong. When the up-rounds stop and young companies must rethink the wisdom of being on the burn-and-raise train, it can be time for a management change since founders are often too wedded to the way it was to change. Is the music still playing in 2016 for our dancing unicorns? In an US presidential election and Brexit year, it may play on–for awhile. Reader thoughts please.