Global Digital Health Startup Activity Near All-time High

Global Digital Health Startup Activity Near All-time High. A person holds a tablet horizontally will a rocket launches from its surface and data is displayed.

It may be a brief snapshot in time, but second-quarter global venture capital investments in digital health startups provided another illustration of where many financiers believe the field is headed.

Global Digital Health Startup Activity Near All-time High chart. Top 5 U.S. health care unicorns by valuation. Samumed $12 Billion. Roivant $7 Billion. Intarcia $3.5 Billion. Oscar $3.2 Billion. Smile Direct Club $3.2 Billion.Global investor support for artificial intelligence in health care set a record in both deals and dollars while digital health startups targeting behavioral and women’s health continue to receive strong backing, according to a recent CB Insights report. And in perhaps the best demonstration of investors’ continued confidence in digital health, the report notes that there are now 38 health care “unicorns” (companies with $1 billion valuation or more) worldwide valued at $90.7 billion.

Many of these investments are flowing to software-as-a-service solutions or companies using AI to facilitate better clinical decision-making and applying technology to improve access to care for those with emotional, psychological or social behavior issues. Likewise, support is strong for tech-enabled, out-of-hospital solutions to complement or replace standard medical treatment for chronic conditions.

Second-quarter funding for health care AI startups surged to $864 million — up 13% from the same quarter a year ago, led by a $200 million round to Tempus. The company’s AI-based system gathers and analyzes clinical and molecular data at scale for precision medicine. Other top rounds for startups with clinical AI applications went to:

  • BlackThorn Therapeutics, a San Francisco-based neurobehavioral health company, uses AI technologies to develop targeted therapeutics for treating brain disorders. The company received $76 million in June from investors including Google Ventures, Johnson & Johnson Innovation and Scripps Research Institute.
  • Frontier Medicines, also based in San Francisco, received $67 million in June for its AI platform that integrates advanced computational approaches and machine learning to develop medicines for disease-causing proteins.
  • PathAI of Boston took in $60 million for its pathology research tools that are designed to provide faster, more accurate diagnosis of disease.
  • Finch Therapeutics of Somerville, Mass., received $53 million to support its machine learning platform that mines its unique datasets to determine the most effective therapy to drive improved outcomes.

Behavioral health and wellness funding also set a quarterly record, with $321 million invested in digital health startups — a 41% increase over the second quarter in 2018. Investors flocked to startups like Quartet Health, which received $60 million Series D funding in the quarter from firms like Google Ventures, Centene Corp. and Polaris Partners. The company has developed a suite of products to increase access to behavioral health resources. Quartet hopes to reduce costs by aligning payers, behavioral health clinicians, medical providers and patients. Talkspace, a telebehavioral health company, received $50 million in Series D funding. Its psychotherapy product connects users with a network of licensed therapists through a HIPAA-compliant web and mobile platform.

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