First ‘Lucky Thirteen’ StartUp Health/GE program company sold

August 7, 2013 | by

Breaking News

One of the ‘Lucky Thirteen’ companies, Arpeggi, which entered the joint StartUp Health/GE Ventures program back in April [TTA 4 Apr], has been sold to another early-stage company in the genetics analytics, data management and diagnostic space, Gene by Gene. It is the first acquisition of one of the joint program companies and according to StartUp Health spokesperson Nicole Kinsey, “this is a strong sign of how well the program is is working to accelerate and scale digital health startups. This new combined company will be a major competitor to companies like 23andme and will really offer the consumer market much greater access and affordability to DNA testing and sequencing services.” The Arpeggi group and tech platform will be incorporated fully into Gene by Gene, and according to Unity Stoakes, President of StartUp Health, the latter will now enter the StartUp Health/GE Ventures program. Release (PDF)

Snowden and digital health – the FT finds a worrying connection

August 2, 2013 | by

The FT’s excellent journalist Gillian Tett has written a thought-provoking article on how increasing privacy concerns brought about by recent cyber surveillance revelations are threatening the ability to use ‘big data’ to connect specific genomic features with individual health conditions.  This in turn is threatening the ability to find and improve treatments and cures for many ailments.  All is not lost though; she describes a number of possible solutions, most notably a “people’s movement”.

Well worth a read even though it fits more under a wider definition of Digital Health than is conventional on TTA.

Is health IT funding hot and not just warm?

July 18, 2013 | by

Mercom Capital Group has also been on the trail health IT/digital health investment trends–we last looked at their 2012 report in January— and finds the opposite from the mid-year ‘warm not hot’ RockHealth digital health investment report [TTA 9 July]. They see sizzle in the $1.1 billion invested to date ($623 million in 2nd Quarter alone) in 272 deals done, versus RockHealth’s $849 million. This may all be in the definitions and the composition of companies surveyed–they had commonality on only two of the five leading deals (the leading deal for both was Proteus, the other was Watermark). Mercom is also predicting a bullish $2 billion this year which would double their 2012 market total ($200 million lower than RockHealth’s). They both see a shift from practice-focused to consumer-focused technologies–and the concentration in deals by 11 funders. Executive summary, announcement, FierceHealthIT article.

Related: A sobering article in Wired depicts the ‘series A crunch’ affecting now over-valued Silicon Valley tech startups moving from overly generous angel and private investors to hard-nosed venture capital companies. Part of the problem is, ironically, accelerators, which polish start-up founders’ presentation and business planning skills to the point where they look better than they should to angels, and perhaps get more than they should. Investors are still ‘dabbling in digital health’ (RockHealth’s POV), and that may actually be…healthy. A Fleet Street (or NY Post)-worthy lurid headline: The Screams of Crushed Startups Echo Across Silicon Valley

RockHealth mid-year 2013 digital health report; warm, not hot

July 9, 2013 | by

RockHealth is back again with its 2013 Midyear Digital Health Funding Report (SlideShare link). The good news from 2012 [TTA 8 Jan] continues, but the growth rate for the half-year is down from the torrid pace of +45 percent increased funding 2012/2011 to a more modest +12 percent versus prior year, with 25 percent more deals done. Former darlings biotech and medical devices continue to sink like stones, down 2 and 29 percent respectively (PwC MoneyTree; also TTA 26 April). What is notable is the ‘small world’ concentration:

  • 90 digital health companies raised in excess of $2 million to date in 2013
  • 20 percent of all funding went into five deals: Proteus, Health Catalyst, Watermark Medical, NantHealth, HealthTap
  • 20 funders did two to three deals each
  • Remote patient monitoring, hospital administration, big data, EHRs and wellness by far lead the way
  • Maturity is still hard to find: only three 2012 A-round deals have proceeded to B round so far this year; seven 2012 B rounds have moved to C round
  • Crowdfunding has partially filled the ‘angel gap’ for companies in wearable fitness tech like Misfit and Amigo (plus HAPIfork), but the bulk of the action has been at non-healthcare specific sites like Indiegogo versus Medstartr and HealthTechHatch which take on a wider variety of health tech such as health management platforms, HIT and even education videos. The reality is that 40 percent do not meet their fundraising goals in an ‘all-or-nothing’ setup.

The cool-off reflects RockHealth’s chief Halle Tecco’s POV that both VC and angel investors are still dabbling in digital health–without a billion dollar success story, there’s still reluctance to put money where sentiment may be. Further at VentureBeat, but the reasons may go deeper….

Update 10 July: Long term, are VCs cooling because fundraising is off? Digital health is one of the few points of growth in a contracting VC investment market. Second quarter fundraising by US VCs dropped 54 percent to $2.88 billion, the weakest quarter for fundraising in almost two years, according to the National Venture Capital Association and Thomson Reuters. In addition, return performance for VC-funded companies has been off relative to the stock market. Less money=less funding. The ‘smaller, more agile fund’ trends may conversely help the smaller funding required for A and B (and modest C) rounds where digital health is still, but the Magic 8 Ball says ‘continue to dabble’. More room for crowdfunding? Reuters