Digital health, Unicorns and what the smart money is chasing

*This content is brought to you by Orbvest

By Hennie Bezuidenhoudt*

The revolutionary advances that technology continues to make in healthcare, have resulted in many medical breakthroughs and innovations. These have been driven by data collection, AI (Artificial Intelligence), machine learning, robotics, 3D printing, stem cell technologies and genome sequencing… amongst others.

I would like to take a slightly different tack and pose the question. “Amongst all these huge developments in healthcare, what medical innovations will (or already do) win the most investment?”

To put it another way “What disruptive medical innovations are the smart money chasing?

This article, the first of two around this subject, focuses on two key areas of the massive advancements taking place and the investment in the healthcare sector. So let’s look at Digital health and Unicorns in 2019.

CB Insights and the USA

I would like to acknowledge and give credit to CB Insights, who devised a detailed report on this subject from which I have derived much of the information in this article. They are, in their own words, “a tech market intelligence platform” that analyses millions of data points on venture capital, start-ups, etc. most of the information derived from this report, is focussed around the USA, which is the global leader in many of the areas discussed.

Trends in Digital Health

Digital innovations have brought so many momentous changes to healthcare systems and these have just escalated through 2019. A good example is the use of software for the easier retrieving, tracking and saving of information regarding various illnesses and their treatment.

A few significant examples of Digital health innovations are:

• More focus on indicating the needs of patients.
• New innovations help doctors to offer better services to their clients in complex systems.
• Mobile apps offering more personalised health tips and solutions based on your nutrigenomics results, – for example is a personal home DNA test kit that allows you to identify your genes for better treatment therapy.
• Customised services for patients in Hospitals using patient-generated Data, for example, workforce management tools that help to determine the ideal number of caregivers required for better personalised patient services.

Financial trends in Digital health

This is one of the areas where the smart money is seen to be going. Even though in 2019 Digital health at 32% – is taking a slightly smaller share of the global overall healthcare pie – the funding is still escalating.

CB Insights summed up the phenomenal on-going rise in Digital health funding, as being ‘on the rise’ for the second straight quarter. Total Digital health funding was $3.5B, up 23% from the first quarter of 2019.

Further to this, there are more deals being done in this sector with 371 in the second quarter, as opposed to 354 in the first. North America still holds dominance for Digital health investments and New York is the hottest metro Digital health investment area.

The Unicorns – the USA lead

The last few years, as a result of the need for research and development as well as the implementing of all the medical advancements, the USA in particular has been a good time to be a healthcare or biotech start up business.

In the first half of 2018, healthcare start-ups globally raised $15 billion in funding. According to Forbes, this is the most raised in the first half of the year in the last decade. By July of 2018, a new crop of unicorns (these are start-ups with valuations of over $1 billion) were created, while some existing ones increased their already multi-billion-dollar valuations.

According to the CB Insights report, there are 38 VC-backed Digital health unicorns worth a combined $90.7B! Twenty-one of these are in the USA! Their total valuation in 2019 also continues to grow as a result of continued mega-rounds to existing unicorns, such as Tempus and Doctolib etc….

The value of these companies is immeasurable, as they are the major contributors to research and development. Just one example is Tempus – the start-up founded by Groupon founder Eric Lefkofsky – who’s aim is to use data to come up with better cancer treatments, using both clinical and genetic data from the tumours of cancer patients.

Global healthcare investment trends

I have just touched the tip of the iceberg here and will continue to show that global disruptors – in the world of healthcare – are drawing massive funding and inviting solid investment in its future.

Watch this space for my next article, which will give some insights into the roles being played by AI, MIP, Mental health and global healthcare investment trends. Unequivocally, this is what the smart money is chasing.

• Hennie Bezuidenhoudt, chairman, Orbvest