And you thought Q2 was ‘crazy’? There’s no cooling in StartUp Health’s reported digital health funding activity in Q3, which at $9bn is already past 2016’s $8.1bn and is poised to cross the $10bn bar by end of year.
- Q3 charted $2.5bn in funding, less than Q2 ($3.8bn) but above Q3 2016 ($2.2bn).
- Series C and D deals led the funding charge at 15 percent of deals, with Series D on average $113 million. It’s an indicator of market maturity, though A rounds were still in the lead at 35 percent and 21 percent in Series B.
- Deals are bigger than ever at an average $18 million versus $14 million in 2016
- Half the deals they tracked were in personalized health and patient/consumer experience, a distinct difference from Rock Health’s shift to B2B. Population health held its own.
- They tracked more mega-deals YTD due to broader category and ex-US. Rock Health’s lead this quarter of 23andMe was only #6 on the list, surpassed by Auris, Peloton, Guardant Health, Outcome Health, and Grail.
- The Bay Area leads for deals substantially YTD, with NYC, Boston, and Chicago combined still trailing
Remember that StartUp Health takes a wider sample than Rock Health [TTA 3 Oct], tracking over 500 international company deals, including those below $2 million as well as both service and biotech/diagnostic companies. StartUp Health on Slideshare.
StartUp Health’s and Rock Health’s investment/M&A roundups from Q1 2017 have just hit the deck. Before we dig into them, let’s start with the differences in methodology:
- Rock Health tracks deals only over $2 million in value; StartUp Health seems to have no minimum or maximum; the latter includes early stage deals at a lower value.
- StartUp Health gathers in international deals at all levels, whereas Rock Health includes only US-funded ventures.
- Rock Health omits healthcare services companies (citing Forward, Oscar), biotech/diagnostic companies (GRAIL, Theranos), and software companies not solely focused on healthcare (Zenefits)
- StartUp Health defines ‘digital health’ differently than Rock Health, with categories of ‘patient/consumer experience’, ‘wellness’, ‘personalized health/quantified self’, and ‘research’
StartUp Health is ‘over the moon’, breathlessly (appropriately as the home of the 25-year Health Moonshot) with Q1 trending, seeing the biggest investment quarter since 2010 at $2.5 bn. Topping up this number was GRAIL, which is developing a blood test for early cancer detection, with a massive Series B at $914 million. Far behind it in the $85-110 million range were (in descending order) Alignment Healthcare (population health), PatientsLikeMe (patient/consumer experience), Nuna (big data/analytics), and PointClickCare (EHR). Population health, patient/consumer experience, and research top their investment activity. Most deals are still seed and Series A (59 percent), but that is down five points from full year 2016; Series B’s share is up three points to 25 percent. But it remains a difficult bridge to cross to C+ rounds.
Rock Health splits the difference and calls it ‘business as usual’, surprised that there hasn’t been a tailspin. Its Q1 sandwiches between 2016 and 2015, well above 2015 but trending 23 percent below Q1 2016. Their biggest deals include the aforementioned Alignment, PatientsLikeMe and Nuna, omitting GRAIL and PointClickCare. Their top three investment categories are analytics/big data, care coordination, and telemedicine (over $50 million). Rock Health tracked almost 20 M&A, noting that many transactions are now ex-California. They also uniquely track public company performance. Here in 2016 is where Readers first noted weakness in NantHealth, but Fitbit and Castlight Health also had miserable quarters. Teladoc, Evolent Health (consulting), and Care.com had a good winter as well. Let’s see what Q2 brings.