Venture capitalists believe it will be harder to get excited about funding digital health in the post-COVID landscape. Using PitchBook data, transaction activity in healthcare IT was quite flat in Q1 2024 at 74 total agreements, valued at over $1 billion total, up only 3% from the year-ago quarter.
Still, this year’s attracting investors for promising startups About a dozen healthcare VCs were contacted by TechCrunch regarding the businesses they believe have the most potential for success. Although freshly founded AI-driven startups facing shockingly high administrative hurdles in the U.S. healthcare system dominated their recommendations, they also included many rather older, non-AI-oriented companies.
We reduced their recommendations to the list of prospects that more than one VC mentioned—which came in at an even 10 companies. VCs spoke with us about the companies that fell both inside and outside of their portfolios.
Abbridge
It uses artificial intelligence to automatically update medical records depending on interactions between patients and clinicians. Established in 2018 by practicing cardiologist Shiv Rao, Abridge is an early participant in the medical note-taking market and one that has guaranteed connection with the all-powerful Epic Systems health records system.
Why it’s exciting: The Pittsburgh-based company excites hospital systems ready to release doctors’ time spent on notes as well as investors. Among the health IT startups we spoke with, Abridge was the most often named among investors.
Some investors claimed Abridge is topping its category. Other companies competing for dominance in the AI-driven medical note-taking business are Suki, Ambience, Nabla, and Microsoft-owned Nuance.
Funding: Abridge obtained a $150 million Series C headed by Lightspeed Ventures at a valuation of $850 million in February; only four months after Spark Capital, Bessemer Venture Partners, CVS Health Ventures, and others invested $30 million in the virtual medical scribe company.
CodaMatrix
Founded in 2019, CodaMetrix automaton medical coding using artificial intelligence. By converting medical notes kept in electronic health records into diagnostic codes, the company’s technology helps to lower administrative loads and mistakes.
Medical coding is tiresome and prone to mistakes, which makes it interesting. Entering a wrong code for a condition or therapy could cause other administrative issues and insurance rejection of claims. Moreover, already overworked doctors and nurses have to enter codes, which increases stress and burnout. Although the company faces rivals like Fathom Health, investors claim that CodaMetrix boasts one of the biggest annotated coding datasets.
Funding and valuation: March saw CodaMetrix acquire a $40 million Series B from Transformation Capital with involvement of Cressey Ventures and returning investors SignalFire. PitchBook claims the deal valued the Boston-based company at $220 million.
Cohere Health
Using artificial intelligence, Coherence Health speeds up the prior authorization—the procedure of approving health insurance for medical issues. Why it’s promising: Since prior authorization management needs gathering suitable documentation for submission to Medicaid or health insurers, medical and administrative staff hours could be used.
By using AI, Cohere Health can save medical and administrative workers hours on these chores by cutting the time it takes to complete these activities to minutes. While other businesses like Anterior and Alaffia Health speed health insurance acceptance for medical issues, investors claim Cohere is for now the top in the field.
Funding: Coherence Health obtained a $50 million Series B earlier this year from Deerfield Management in conjunction with Define Ventures, Polaris Partners, Longitude Capital, and Flare Capital Partners.
Growth Therapy
Grow Therapy connects consumers and insurance companies with therapists looking to start their own independent enterprises. Established in 2020, the startup uses the so-called business-in—box approach since it provides mental health practitioners with tools for claims filing, payment processing, patient matching.
The company says that its business model gives therapists more freedom than if they were offering their services via marketplaces like Lyra or Headway. Grow, true to its name, is expanding rapidly, according to investors, although it’s not obvious whether that is truly the case.
Funding and valuation: PitchBook data indicates Grow closed a $88 million Series C led by Sequoia at a $1.4 billion valuation in April.
Equip
Four-year-old Equip accepts most health insurances and treats adults, children, and teenagers in all 50 states online. Trainers for equip providers also teach co-occurring disorders like anxiety, depression, and obsessive-compulsive disorder (OCD).
Why is it encouraging? The National Eating Disorders Association estimates that only a small fraction of the approximately 10% of Americans who develop an eating problem get treatment. For people who prefer to be treated online or live far from an eating disorder facility, the company’s offer shows consideration.
Funding and valuation: PitchBook data shows Equip last valued at $505 million and has attracted a total of $135 million in investor funding from Optum Ventures and General Catalyst.
Maven
Using companies including Microsoft and AT&T, the New York-based health clinic and benefits platform provides services for fertility, adoption, parenting, paediatrics, and menopause. Maven also looks after Medicaid recipients.
Why should it be promising? Investors claim that Maven, a 10-year-old company with an emphasis on digital health services for women and families, keeps expanding since its area of focus has been traditionally neglected. Although VC interest in women’s health has expanded recently, the U.S. Supreme Court’s ruling reversing Roe v. Wade in 2022 highlights even more the need of solutions catering to the female population.
Funding and valuation: Maven was last valued in late 2022 at $1.35 billion in a Series E round run led by General Catalyst with the involvement of VCs including Lux Capital, Oak HC/FT, and Sequoia. Since its creation, Maven has raised around $300 million.
Memora Health
Memora Health provides virtual artificial intelligence-based care coordination, therefore lightening medical personnel administrative responsibilities. The company’s technology automates chores like appointment reminders, answers common queries, and gathers data about symptoms and post-procedural recovery using text messaging to interact with patients.
Like many other AI-based healthcare companies, Memora saves medical personnel time. The organisation also assists in patients’ increased sense of support on their health path.
Funding: The startup spun out of Harvard Innovation Lab and underwent Y Combinator in 2018. PitchBook data shows that it raised around $80 million since then and valued in April 2023 at $430 million. Investors of Memora include Andreessen Horowitz and General Catalyst.
SmaterDx
Founded in 2020, SmarterDx uses AI to assist hospitals not miss out on revenues by analysing patients’ lab results, prescriptions and doctor’s notes to discover minor errors and omissions in patients’s diagnosis and related medical codes. Before a claim is issued to Medicare or health insurance, the company analyses patient charts for accuracy using its technological tools.
Investors claim that since Smarter Dx enables health systems to realise more income, the value of the company’s technology is easily quantifiable.
Funding: Under the direction of Transformation Capital, SmarterDx received a $50 million Series B financing in May including Bessemer Venture Partners, Flare Capital Partners, and Floodgate Fund. With the most recent cash infusion, the company’s overall financing comes to $71 million.
Summer Medical Care
The two-year-old Summer Health links parents to paediatricians who, in minutes, answer behavioural questions and urgent care concerns. The company offers its text message service straight to customers and via companies who give access to Summer Health as a bonus.
Why it’s promising: Busy and anxious parents seek quick answers for their children’s health concerns around-the-clock. Summer Health addresses parents’ worries since an app allows them quick answers to their issues.
Funding: Summer Health raised $12 million Series A headed by Sequoia, Lux Capital, Chelsea Clinton’s Metrodora Ventures, and previous investors including 7wireVentures in April.
Transcarent
Four-year-old Transcarent helps large corporations reduce the cost of employee health insurance.
The company provides staff members access to discounted drugs, telehealth tools, and tailored responses produced by artificial intelligence about their health insurance.
Why it’s promising: Glen Tullman, the founder of Glen Tullman, a chronic illness management business Teledoc bought for $18.5 billion in 2020, may have had some influence on the company’s explosive growth. Recently, the company also unveiled an artificial intelligence platform that provides clinical information, responds to members’ coverage-related inquiries, and links them with medical professionals as needed.
Funding and value: General Catalyst and 7wireVentures led the company to raise a $450 million Series D at a $2.2 billion valuation in May.