Here is our Q3 2018 summary report on the health technology startup sector. The following report includes a sector overview and recent activity.
We’ve previously found that health technology funding is on an overall upward trend. Now we are taking a closer look on our health technology research platform to compare funding by category. Our analysis reveals two observations:
- The Genomics category leads the sector in Q2 funding
- The Digital Medical Devices category leads the sector in all-time funding
We’ll highlight these observations with some graphics and discussions below.
The Genomics Category Leads Health Technology In Q2 Funding
To start off, let’s review the amount of funding raised this quarter by each category within health technology.
The above graphic highlights that the Genomics category leads the sector in Q2 funding with just under $1B. Its funding is 1.4 times the funding of the next category, Digital Medical Devices at $700M.
Genomics companies utilize human genome data for analytics, prevention, and treatment. Some example companies in this category are 23andMe, Helix, and Counsyl.
Let’s now investigate how these categories’ funding compare with each other historically.
The Digital Medical Devices Category Leads the Sector in All-Time Funding
The graph below shows the all-time funding for different health technology categories. The Q2 funding and growth rates of these categories are also highlighted.
As the bar graph indicates, the Digital Medical Devices category leads the sector in total funding at almost $14B. The Genomics category follows in a close second place with an all-time funding of $13.6B. These two categories’ funding are more than twice the funding of the next category, IoT Fitness at $6.6B.
Digital Medical Device companies build IT-enabled medical and diagnostic devices for doctors. These devices include detection equipment, monitoring equipment, and surgical tools. Some example companies are Signostics, MediBeacon, Stimwave, and AliveCor.
In summary, it’s clear that the Genomics and Digital Medical Devices categories are leading the sector in funding. Let’s see how the the rest of 2018 shapes up for health technology!
As we previously noted, health technology funding is experiencing robust growth. We’ve now gone one level deeper in our analysis on our Health Technology Report and Research Platform and determined that the health technology sector is starting to mature.
This conclusion comes from two key observations:
- Funding amount percentages showed a slight shift to later stages
- Funding count percentages showed a clear shift to later stages
We’ll explain these key observations with some graphics and discussions below.
To help set the stage, the graphic below highlights health technology funding amounts over time. As you can see, the sector’s overall funding demonstrated consistent growth.
Health Technology Funding Amount Percentages Shifting Slightly to Later Stages
Let’s examine the health technology funding amounts by round as a percentage of the total funding amount by year.
The above graph indicates that there has been a slight shift to later-stage funding. In 2012, Seed and Series A funding amounts accounted for around 25% of total funding. By 2017, that total had dropped to under 20%. Consequently, the funding amounts from Series B onward grew from around 75% of total funding to over 80%.
Would the funding count percentages confirm this trend? Let’s examine in the the next section to find out.
Health Technology Funding Count Percentages Clearly Shifting to Later-Stage Events
The below graph shows the health technology funding event counts by round as a percentage of total events.
This graph paints a clearer picture of the funding shift than the previous funding amount graph. In particular, Seed funding count percentage decreased by more than half its size from 53% to 23%. The funding count percentages in all other rounds increased by various magnitudes from 2012 to 2017.
Conclusion: Health Technology Sector Matures As Funding Shifts to Later Stages
In summary, we have seen health technology funding amounts and funding event counts shift from the early-stage rounds to mid and late-stage rounds. These observations led us to conclude that the health technology sector is starting to mature.
Last quarter we reviewed insurance technology exit activity and saw its healthy upward trend. We are now going one step further on our insurtech report and research platform to examine exits by category. We conclude that the Insurance Backend and Auto Insurance categories are at the forefront of insurtech exit activity.
This conclusion was derived from two key data points:
- The Insurance Backend category leads in the number of exits
- The Auto Insurance category leads in acquisition amount
We’ll explore these takeaways in some more detail below.
To help set the stage, the graphic below shows insurtech exit activity over time. As you can see, the sector’s exit activity grew significantly over the past few years with a slight drop in 2017 from 2016.
Insurance Backend Leads Insurtech in the Number of Exits
The below graph highlights the number of insurtech exit events by category.
This graph shows that the Insurance Backend category leads the sector with 50 exit events. Its exit activity is more than 1.5 times the next category, Insurance Marketplace, which has 32 exit events.
Insurance Backend contains companies that help insurance companies with their day-to-day operations. They include CRMs for insurance agents, communication tools for insurance companies, and claim filing tools for customers. Some example companies are CHSI Connections, ClaimKit, Shift Technology, and Unirisx.
Let’s now see how insurtech categories compare with one another by acquisition amount.
Auto Insurance Leads Insurtech in Acquisition Amount
The graph below shows the acquisition amounts in different insurtech categories.
We can see from this graph that the Auto Insurance category leads insurtech in total acquisition amount with over $16 billion. Auto Insurance companies offer car insurance and car telematics products. These products generally detect your mileage and driving behavior to customize your insurance plan. Some example companies in this category include Metromile, The Zebra, Clearcover, and Cuvva.
Auto Insurance has seen some large acquisitions in recent years. Esurance was acquired by the Allstate Corporation in May 2011 for $1 billion. DriveFactor was acquired by CCC Information Services in May 2015 for $22 million. Tempcover was acquired by Connection Capital in January 2018 for $16 million.
The acquisition amount in Auto Insurance represents 30% of all insurtech acquisition activity. It’s noteworthy that its acquisition amount is more than 1.7 times the next category, Enterprise Insurance, which has just under $10 billion.
Conclusion: Insurance Backend and Auto Insurance Lead Insurtech Exit Activity
In summary, we have examined insurtech exit activity by the number of exit events and acquisition amount. The Insurance Backend category leads the sector in the number of exit events. The Auto Insurance category leads in acquisition amount.
Here is our Q1 2018 summary report on the health technology startup sector. The following report includes an overview, recent activity, and a category deep dive.
The following graph shows average and median age in the Health Technology sector. The graphic includes data through August 2017.
The above graph summarizes the average and median age of companies in each Health Technology category. The Electronic Health/Medical Records category has the highest average age at around 14 years, and the Healthcare Robotics category has the highest median age, also at around 14 years. On the other hand, Healthcare Search is the youngest Health Technology category with an average age of 6 years and a median age of 5 years.
We are currently tracking 1995 Health Technology companies in 22 categories across 57 countries, with a total of $50.4 Billion in funding. Click here to learn more about the full Health Technology market report.