Health+Benefits Technosavvy the March 2017 issue

Digital Health Growing

A look at investments in digital health companies
By Michael Fitzpatrick Posted on February 27, 2017

Digital health is hot. Healthcare accounts for about 17.8% of U.S. gross domestic product. The U.S spends around $3.2 trillion a year on healthcare, or nearly $10,000 per person, the Centers for Medicare & Medicaid Services estimates.

The challenge of using digital technology to improve health is drawing plenty of ideas and money. More than $8 billion was invested in more than 500 digital health companies in 2016, according to StartUp Health, which seeks to foster digital health innovation. Earlier this year, for instance, StartUp Health announced a three-year partnership with Allianz to develop a portfolio of at least two dozen companies.

Among accelerators, which seek to nurture fledgling startups, Boston-based not-for-profit MassChallenge has a history of helping startups succeed in a variety of areas. Now, it’s turning its attention to digital health technology with the inaugural Pulse@MassChallenge digital health lab accelerator. The program pairs startups with corporations, the state of Massachusetts, pharmaceutical, healthcare and technology companies as well as other organizations. The digital health challenge winnowed more than 430 applicants to cull 31 startups that are participating in the program in the first half of this year.

The MassChallenge digital health startups include the two Liberty Mutual is working with, Gain Life, which uses digital tools to promote behavioral change, and VIT, which uses technology to improve back health. Other startups in the program are looking to use new technology to improve cancer testing, care coordination, fall monitoring, medication management, neonatal care and teledermatology.

What do startups want?

It’s complicated for startups and corporates. For startups, it can be hard to live with corporate partners—and impossible to live without them. Excluding the million-to-one story, startups need corporate partners if they want to survive and thrive. While startups know all about speed of development and speed to market, they find the wheels of corporate management don’t move at the same pace.

In a survey of more than 350 of its startup alumni, accelerator Startupbootcamp found 70% had experienced a long and complicated internal process in working with corporate partners. That’s the same proportion who say they believe it’s important to find a corporate partner. Just over half of startups surveyed say corporations need to do more to address the need to innovate and to disrupt their own markets or they’ll face threats from those more willing and able to do so. The “Collaborate to Innovate” survey found 45% of startups want to collaborate to sell their business and 30% look to corporations as potential customers for their technology and hope to secure pilot projects.

Money Flows into Insurtech

Early-stage startups are drawing not only more interest but also more money in initial funding rounds. Two out of every three insurance tech deals in 2016 took place at the early stage, which is where startups are just getting started in seed or Series A funding, CBInsights reports.

Early-stage insurance tech funding rose 56% year over year to $508 million in 2016.

Among the companies raising money last year, Hippo Analytics, which provides “smart” home insurance, announced $14 million in Series A funding; CoverWallet, which helps small businesses manage insurance, received $7.8 million; cloud-based business brokerage Embroker raised $12.2 million in its second venture capital round; digital life insurer Ladder closed a $14 million Series A financing; and advanced imagery firm Cape Analytics raised $14 million.

Michael Fitzpatrick Technology Editor Read More

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