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 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.