StartUp Health Insights Digital Health Funding Rankings Q1 2016

© 2016 StartUp Health, LLC

Published: April 1, 2015

StartUp Health Insights Digital Health Funding Rankings Q1 2016

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A StartUp Health InsightsTM Report Published April 1, 2016 | Report data through March 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 50+ MARKET FUNDING SPONSORED BY

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

2015 was the year digital health funding hit its stride and 2016 is stepping it up a notch with a record-setting first quarter. Signs continue to point to a market transitioning from something reminiscent of the Wild West to the early stages of maturity.

2016 Q1 Summary

1 2016 Starts Strong: With a record $1.8B in funding, Q1 2016 started with big numbers. 2016 already saw 4 deals over $100M, as compared to 7 in all of 2015.

2Big Data / Analytics No Longer a Buzzword: We’ve seen buzzwords come and go, but big data has become a household name. As a robust ecosystem of startups begins to mature, we’re seeing data wranglers establish real ROI, both on the clinical and financial realms, and receive the financing they need to grow. We expect to see the days of point solutions disappear as more versatile data analytics companies begin to proliferate and gain significant market share.

3Nuanced Investors: The most active investors in 2016 include institutional VCs, as well as a hospital system and a payor, continuing the trend of previous years of a diverse investor base. Large organizations ramp up their investments and begin placing bets as they increasingly look externally for innovation. With such a disruptive digital health landscape, looking outside the walls of an institution is becoming an important strategy.

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Drop in Deal Volume, Increase in Funding: We tracked approximately $600M and 600 deals in 2013 - ever since, funding has swelled and deal volume has dropped. While there is still an extremely active Seed ecosystem, all signs point to venture learning - learning what a successfully positioned digital health startup looks like, learning about competition dynamics, about what solutions have business models that work and who can prove ROI. With that learning comes backing for more mid-stage and late-stage deals.

5New York Takes the Lead: New York overtook the San Francisco Bay Area in funding amount this quarter, in large part due to Oscar’s $400M funding. Los Angeles, Salt Lake City and Chicago are also great examples of new bustling health tech hubs that 5 years ago were not on the map.

DEALS & FUNDING INVESTORS

2

50+ MARKET


150

280

465

617561

490

100

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

ndin

g ($

B)

$2

$4

$6

$8

2010 2011 2012 2013 2014 2015 2016YTD

Q1 Q2 Q3 Q4

2016 starts off with a record setting $1.8B quarter. While 22% of that funding was directed to the insurance upstart, Oscar Health, the remaining funding was distributed in increasingly mature rounds.

Q1 Deal Count


$1.1B $1.8B

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$1.7B$618M$553M$389M$194M

50+ MARKET


$0

$250,000,000

$500,000,000

$750,000,000

$1,000,000,000

$1,250,000,000

2010 2011 2012 2013 2014 2015

R² = 0.5582

Digital Health Funding Snapshot Month Over Month

As the market continues to progress, monthly ups and downs have begun to trend at $700M/month.

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 = 0.5582

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$1.25B

$1.00B

$0.75B

$0.50B

$0.25B

$400M Venture

2016YTD

INVESTORS 50+ MARKET


Digital Health Funding Snapshot Month Over Month

DEALS & FUNDING

5

$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


$1.25B

$1.00B

$0.75B

$0.50B

$0.25B

Over the past three years, some months repetitively correlate to dips and peaks. Starting in 2014, we have seen an emerging trend in venture funding, indicating a rhythm to the digital health investment landscape at large.


Market Total Raised YTD Deal Count Average Deal Size

1 Big Data / Analytics $286M 8 $35.7M

2 Medical Device $198M 11 $17.9M

3 Patient / Consumer Experience $195M 20 $9.8M

4 Personalized Health / Quantified-Self $162M 11 $14.7M

5 Wellness $141M 8 $17.7M

6 Workflow $132M 17 $7.8M

7 Clinical Decision Support $109M 8 $13.6M

8 E-commerce* $102M 5 $16.9M

9 Population Health $26M 5 $5.2M

10 50Plus $6M 2 $2.9M

The Top 10 Most Active Markets of 2016

DEALS & FUNDING

Big data / analytics is the most active market, partially due to Flatiron’s $175M raise, increasing 42% over Q1 2015. Average deal sizes fluctuate substantially based on the market.

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*Excludes outliers: $400M Oscar



Company $ Invested Subsector Notable Investor

1 $400M E-Commerce

2 $175M Big Data / Analytics

3 $100M Personalized Health

3 $100M Behavioral and Mental Health

5 $95M Patient / Consumer Experience

6 $70M Big Data / Analytics

7 $45M Wellness

8 $40M Patient / Consumer Experience Undisclosed

9 $35M Workflow

9 $35M Clinical Decision Support

9 $35M Wellness

With 4 deals over the $100M mark, as compared to 7 in all of 2015, companies that are proving their models are attracting investors willing to invest heavily on larger rounds.

The Top 10 Largest Deals of 2016 (YTD)

DEALS & FUNDING

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Early-stage deals grew in size, increasing from $3.1M in 2015 to $3.9M in 2016. This 26% increase is a strong signal investors are continuing to support the wave of emerging health innovation.

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

DEALS & FUNDING

$0

$11M $100M

$3.1M $45M

$120K $34M

$100M

Late-stage (Series D+)Mid-stage (Series B + Series C)Early-stage (Seed + Series A)

8

$22M

$3.9M

$45M


*Excludes outliers: $400M Oscar

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

The Series A segment has increased from 35% in 2015 to 41% in 2016, representing the largest Series A volume as a percent of total deal counts to date.

Deal Activity by Stage for 2016 (YTD)

32% 41% 10%11% 5%

Deal Count*

123

232

305

443

378

279

DEALS & FUNDING

9Deal count only includes Seed though Series G rounds

63 (YTD)




The Top 10 Most Active US Metro Areas of 2016 (YTD)

DEALS & FUNDING

Metro Area

1 New York City

2 San Francisco

3 Boston

4 Salt Lake City

5 Chicago

6 Los Angeles

7 Dallas

8 San Diego

9 Plano

10 Minneapolis$25M

$656M

$79M

$70M$525M

SF Bay

Dallas

Salt Lake City

New York City

Boston

$58MChicago

$21MM

Minneapolis

$22M

Plano

(3 Deals)

(3 Deals)

(23 Deals)(1 Deal)

(2 Deals)

(5 Deals)

(11 Deals)

(6 Deals)

San Diego

$23M

(5 Deals)

Los Angeles

$40M(2 Deals)

Innovation hubs around the country continue to be active. New York takes #1 for the first time, mostly due to Oscar Health’s $400M raise.

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The Top Investors of Q1 2016


Organization 2016 YTD Deals 2015 Deals Stage

Early Mid Late

1 4 9

1 4 -

1 4 2

2 3 5

2 3 10

2 3 -

2 3 6

2 3 6

2 3 1

2 3 -

Q1 2016 has seen some of last year’s top investors maintain their high frequency investment habits, but we’ve also seen new players enter the scene in the first few months of the year.

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50+ MARKET


Investor Volume of Q1 2016


12

50+ MARKET

0

50

100

150

200

2016

1 2 3+

Inve

stor

Cou

nt

# of Deals by Investor

So far in 2016, more than 200 investors have deployed capital in digital health, with more than 29 organizations investing in 2 or more deals in Q1 already.

821

178


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As the overall digital health industry continues to expand, startups serving 50+ consumers - either directly or through providers, payors and other healthcare stakeholders - are increasingly attracting investment.

This report spotlights two categories of startups: 50+ relevant companies and 50+ focused companies. Companies in both categories align with at least one of AARP’s 9 areas of opportunity:

The 50+ relevant category includes companies, both B2C and B2B2C, with products or services that could be used by 50+ consumers. This excludes practice management solutions, compliance software, lab support tools and other enterprise systems that do not have a consumer touchpoint, as well as companies specifically targeting other demographics like children and young families.

The 50+ focused category includes B2C companies that specifically target 50+ consumers and B2B2C companies that provide products and services to payors, providers and others that serve 50+ consumers.

Emergency Detection and Response

Physical Fitness

Diet and Nutrition

Behavioral and Emotional Health

Medical Management

Aging With Vitality

Social Engagement

Vital Sign Monitoring

Care Navigation

DEALS & FUNDING

The 50+ Digital Health Investment Landscape



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Emergency Detection and Response

Physical Fitness

Diet and Nutrition

Behavioral and Emotional Health

Medical Management

Aging With Vitality

Social Engagement

Vital Sign Monitoring

Care Navigation

48 deals

201 deals

189 deals

74 deals169 deals

114 deals

111 deals

90 deals

85 deals

50+ MARKETDEALS & FUNDING INVESTORS

Total Deals Since 2010 of AARP’s 9 Areas of Opportunity


45%

50%

55%

60%

65%

70%

53%

63%

60%

54% 54%

51%

46%46%

51%49%

45%

52%

48%49%

Deals Funding

50+ Market Investments as % of Total Investments in Digital Health

50+ MARKET

2010 2012 2013 20142011 2015

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2016YTD

The graph below looks at companies that fit the 50+ relevant definition as a percentage of the total investment landscape. Investors in 2016 have continued to focus approximately half of their funds and half of their deals on 50+ relevant companies.


40%


Investors around the globe are funding companies that address the needs of 50+ consumers at all stages, with notable involvement from corporate and strategic investors.

The Top 50+ Market Investors of 2016 YTD

50+ MARKET

16

Firm 2015 YTD Deals Notable Deal Stage

Early Mid Late

1 2

1 2

1 2

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 markets, 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 InsightsTM records only publicly available data on cash for equity investments as the cash is actually received by the company.

StartUp Health InsightsTM 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 InsightsTM, 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 InsightsTM, 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.

• 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

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StartUp Health is a global health innovation company. The StartUp Health Platform, including its Academy, Network and Innovation Fund, is empowering a global network of entrepreneurs and innovators to transform health. StartUp Health has the world’s largest portfolio of digital health companies, at more than 135, from 12 countries and 50 cities. StartUp Health was founded in 2011 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, AON, Aurora Health Care, California Healthcare Foundation, Steve Case, Cleveland Clinic, Conifer Health Solutions, Mark Cuban, Esther Dyson, Roger Ehrenberg, Brad Feld, GE Ventures, Kaiser Permanente Ventures, Robert Wood Johnson Foundation, SeventySix Capital and Stericycle.

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

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

About StartUp Health

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StartUp Health Insights Digital Health Funding Rankings Q1 2016

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