In a post-pandemic world, VCs say it isn’t as easy to get excited about investing in digital health. The number of healthcare IT transactions in the first quarter of 2024 remained relatively stable at 74 transactions with a total value of roughly $1 billion, an increase of only 3% compared to the same quarter last yr. according to PitchBook data.
Nevertheless, this yr, promising startups caught the attention of investors. TechCrunch spoke to greater than a dozen healthcare VCs about the firms they imagine have the most promising futures. While their recommendations were dominated by recently launched AI startups that are solving mind-boggling administrative challenges in the US health care system, additionally they mentioned a few barely older firms that are not focused on AI.
We narrowed down their suggestions to a list of names that were mentioned by greater than one VC and that were reported to as many as 10 firms. VC investors talked to us about firms that were and weren’t in their portfolios.
Restrict
What it does: It uses artificial intelligence to automate medical records based on conversations between doctors and patients.
Founded in 2018 by practicing cardiologist Shiv Rao, Abridge is one of the first medical notetaking players to integrate with Epic Systems’ comprehensive medical records software.
Why it’s promising: The Pittsburgh-based startup is generating excitement among investors and hospital systems that want to unencumber doctors’ note-taking time. Abridge is a startup from the health technology industry that was most continuously mentioned among the investors we talked to.
Some investors said Abridge is a leader in its category. Other firms competing to dominate the AI-powered medical notes market include Ambience, Nabla, Microsoft-owned Nuance and Suki.
Financing: In February, Abridge raised $150 million in Series C funding led by Lightspeed Ventures at an $850 million valuation, just 4 months after the virtual doctor startup raised $30 million in Series B funding from Spark Capital, Bessemer Venture Partners, CVS Health Ventures and others.
KodaMetrix
What it does: Founded in 2019, KodaMetrix uses artificial intelligence to automate medical coding. The company’s technology translates physician notes stored in electronic health records into diagnosis codes, helping reduce errors and administrative burdens.
Why it’s promising: Medical coding is tedious and error-prone. Entering an incorrect condition or treatment code may result in claims being denied by the insurer and other administrative problems. Moreover, the burden of entering codes falls on already busy doctors and nurses, leading to increased stress and burnout.
The company has competitors, including Fathom Health, but investors say CodaMetrix has one of the largest annotated coding datasets.
Financing and pricing: In March, CodaMetrix acquired a $40 million Series B fund from Transformation Capital with participation from returning investors SignalFire and Cressey Ventures. According to PitchBook, the value of the transaction is valued at $220 million by the Boston-based company.
Cohere Health
What it does: Cohere Health hastens the medical insurance approval process, called advance authorization, for medical conditions using artificial intelligence.
Why it’s promising: Managing prior authorizations can take many hours for medical and administrative staff because it requires collecting appropriate documentation for submission to health insurers or Medicaid. Cohere Health’s AI can reduce the time it takes to complete these tasks to minutes, saving medical and administrative staff hours on these tasks.
Investors say Cohere is currently a leader in this space, but other startups that are speeding up medical insurance approval for medical conditions include Anterior and Alaffia Health.
Financing: Earlier this yr, Cohere Health raised $50 million in Series B funding from Deerfield Management with participation from Define Ventures, Polaris Partners, Longitude Capital and Flare Capital Partners.
Growth therapy
What it does: Growth Therapy connects therapists who want to start independent practice with patients and insurers. The startup founded in 2020 uses the so-called a business-in-box model because it provides mental health professionals with the tools to submit claims, receive payments, and match with patients.
Why it’s promising: The company says its business model gives therapists more flexibility than if they were to provide their services through marketplaces like Headway or Lyra. While it’s unclear whether that’s the case, Grow, true to its name, is growing rapidly, investors say.
Financing and pricing: In April, Grow closed an $88 million Series C led by Sequoia, valuing it at $1.4 billion, according to PitchBook data.
Equip
What it does: Four-year-old Equip provides online treatment for children, teens, and adults in all 50 states and accepts most medical insurance plans. Equipment providers are also trained to treat co-occurring conditions corresponding to anxiety, depression and obsessive-compulsive disorder (OCD).
Why it is promising: About 10% of the U.S. population will develop an eating disorder in their lifetime, but only a fraction of them receive help. according to the National Eating Disorders Association. The company’s offer provides care to individuals who do not live near eating disorder treatment centers or prefer to be treated online.
Financing and pricing: Equip was recently valued at $505 million, according to PitchBook data, and has secured a total of $135 million in funding from investors including Optum Ventures and General Catalyst.
Maven
What it does: The New York-based health and advantages clinic platform offers fertility, adoption, parenting, pediatrics and menopause services through employers including Microsoft and AT&T. Maven also serves Medicaid patients.
Why it’s promising: Investors say the 10-year-old Maven continues to grow, on condition that its area of focus – digital health services for women and families – has been undervalued in the past. One sec (*10*)VC’s interest in women’s health has increased In recent years, the U.S. Supreme Court’s decision to overturn Roe v. Wade in 2022 has shed an even brighter light on the need for technology to serve the female population.
Financing and pricing: Since its inception, Maven has raised nearly $300 million in financing, most recently valued at $1.35 billion in late 2022 in a Series E round led by General Catalyst with participation from VCs including Lux Capital, Oak HC/FT and Sequoia.
Memory health
What it does: Memory health offers virtual care coordination based on artificial intelligence, reducing the administrative burden on medical staff. The company’s technology uses text messaging to communicate with patients, automating tasks corresponding to appointment reminders, answering common patient questions and collecting data about symptoms and post-procedure recovery.
Why it’s promising: Like many other AI-powered healthcare startups, Memora saves medical staff time. The company also helps patients feel higher supported on their health journey.
Financing: The company spun off from the Harvard Innovation Lab and went through Y Combinator in 2018. Since then, it has raised almost $80 million, and according to PitchBook data, it was valued at $430 million in April 2023. Memory’s investors include General Catalyst and Andreessen Horowitz.
SmarterDx
What it does: Founded in 2020, SmarterDx uses artificial intelligence to help hospitals avoid losing revenue by analyzing patient lab results, medications, and doctors’ notes to find minor errors and omissions in patient diagnoses and related medical codes. The company’s technology checks the accuracy of patient charts before a claim is submitted to medical insurance or Medicare.
Why it’s promising: Investors say the value of the company’s technology is easy to measure because Smarter Dx helps health systems earn more revenue.
Financing: SmarterDx in May raised $50 million in Series B funding round led by Transformation Capital, with participation from Bessemer Venture Partners, Flare Capital Partners and Floodgate Fund. The latest capital injection brings the company’s total funding to $71 million.
Summer health
What it does: Two-year-old Summer health connects parents with pediatricians who respond to urgent care and behavioral issues in minutes. The company provides text messaging services directly to consumers and through employers who offer access to Summer Health as a profit.
Why it is promising: Busy and frightened parents want immediate, 24/7 answers to their kid’s health concerns. Summer Health reduces parents’ worries as they’ll quickly get answers to their questions through the app.
Financing: In April, Summer Health raised $12 million in Series A funding led by 7wireVentures and existing investors including Sequoia, Lux Capital and Chelsea Clinton’s Metrodora Ventures.
Transparent
What it does: Four-year-old Transparent helps large firms get monetary savings on worker insurance. The startup gives employees access to cheaper medicines, telehealth services and personalized AI-generated answers about their medical insurance.
Why it’s promising: The company’s rapid growth could be partially attributed to its founder, Glen Tullman, who previously founded Livongo, a chronic disease management company that Teledoc acquired in 2020 for $18.5 billion.
The company also recently introduced an artificial intelligence platform that answers members’ questions about insurance, shares clinical information and connects them with medical staff when needed.
Financing and pricing: In May, the company raised a $450 million Series D at a $2.2 billion valuation led by General Catalyst and 7wireVentures.