CB Insights Market Data Shows Strength of AI Health Investment in 2019
AI-backed healthcare startups reached a record high of investment in the second quarter of 2019 at $26.9 billion. Of that, a record $864 million went to mental health, wellness and supporting tech companies, according to CB Insights, a tech market intelligence platform that analyzes millions of data points on venture capital, startups, patents, partnerships, and news mentions to analyze investment opportunities.
Companies based in North America drew the most dollars for investment, far exceeding all other continents. Companies in China posted a fraction of the deals in digital healthcare compared to the United States⏤24 in the first quarter and 26 in the second quarter. The United States had 168 in the first quarter and 186 in the second quarter, primarily in Silicon Valley.
The top five digital health deals in 2019 included: $520 million to Tempus, which gathers and analyzes clinical and molecular data at scale for precision medicine; $434 million to Collective Health, which provides employers with an integrated software platform to administer their benefits plans, take better care of their people and optimize their investments all in one place; $299 million to Cure.fit, a healthcare and fitness start-up targeting residents of cities in India and the United Arab Emirates (similar to Peleton) that offers products and solutions for preventive and curative healthcare, combining engagement, coaching and delivery through online and offline channels; $201 million for Omada, a digital behavioral medicine company that helps people manage chronic disease; and Weimai, a Chinese platform that provides medical services, including online consulting, payment, and appointment scheduling.
Several technology disruptors of current healthcare, especially targeting women, attracted deals and funding, including:
- Fertility tech and wellness platforms
- Maternal platforms for breastfeeding, fetal monitoring and pregnancy tracking
- Direct-to-Consumer platforms for menopause tracking
Here are the highlights:
- AI in healthcare startups and mental health & wellness startups reached funding highs in the second quarter of 2019: Healthcare AI companies raised $864 million in the second quarter, led by a $200 million round to Tempus in May. Mental health & wellness companies raised $321 million across 26 deals, with large rounds going to Quartet and Talkspace.
- Healthcare racked up a first half record in both deals and dollars: The amount invested in healthcare companies globally rose to $26.9 billion in the first quarter of the year compared to $26.5 billion in the same period of 2018. Deals increased from 2,223 to 2,258.
- Digital health funding is on the rise for the second straight quarter: Total digital health funding was $3.5 billion, up 23% versus the first quarter of 2019. There were 371 digital health deals compared to 354 in the first quarter.
- Venture capitalists backed 38 digital health unicorns worth a combined $90.7 billion: The cohort’s total valuation in 2019 continues to grow as a result of continued mega-rounds to existing unicorns, such as Tempus and Doctolib, among others.
- Second quarter 2019 clinical trial deals went to startups expediting patient recruitment and enrollment: From recruitment marketplaces to provider tools, offerings are increasing for the healthcare industry to revamp this area.
- Hemp/CBD startups take a record 25% of cannabis funding: In the second quarter of 2019, 27 (25%) of the 107 cannabis deals were for startups with a hemp and/or CBD business component. That compares to only 11 (15%) of the 73 deals in the second quarter of 2018.
- The application of emerging technologies in genomics is picking up: New platforms such as telegenomics and blockchain-enabled networks are becoming more prevalent.
- Digital therapeutics continue to offer new avenues of treatment for chronic disease management: This quarter has seen deals going to startups pursuing more specific health issues such as joint pain and respiratory disorders.
- First Round Capital and Jumpstart Foundry participated in the most digital health rounds in Q2’19: Overlapping targets for the top investors included CureFit and SigTuple. Other leading digital health investors included Chiratae Ventures, Civilization Ventures, and Perceptive Advisers.