{"id":1161,"date":"2014-01-24T12:17:44","date_gmt":"2014-01-24T01:17:44","guid":{"rendered":"http:\/\/blog.panicola.com\/?p=1161"},"modified":"2014-01-24T12:17:44","modified_gmt":"2014-01-24T01:17:44","slug":"vcs-investing-in-us-healthcare","status":"publish","type":"post","link":"https:\/\/blog.panicola.com\/?p=1161","title":{"rendered":"VCs investing in US Healthcare"},"content":{"rendered":"<ul>\n<li>US investment in health care was triggered by the affordable care act<\/li>\n<li>health is a bigger sector than tech<\/li>\n<li>investing in a health insurance start-up presents an interesting strategic level<\/li>\n<\/ul>\n<p><a style=\"line-height: 1.5;\" href=\"http:\/\/techcrunch.com\/2014\/01\/15\/vcs-investing-to-heal-u-s-healthcare\/\">http:\/\/techcrunch.com\/2014\/01\/15\/vcs-investing-to-heal-u-s-healthcare\/<\/a><\/p>\n<p><span style=\"font-size: 26px; font-weight: bold; line-height: 1.3846153846;\">VCs Investing To Heal U.S. Healthcare<\/span><\/p>\n<header>\n<div>\n<div>Posted\u00a0<time datetime=\"2014-01-15\">Jan 15, 2014<\/time>\u00a0by\u00a0<a title=\"Posts by Jonathan Shieber\" href=\"http:\/\/techcrunch.com\/author\/jonathan-shieber\/\" rel=\"author\">Jonathan Shieber<\/a>\u00a0(<a href=\"http:\/\/twitter.com\/jshieber\" rel=\"external\">@jshieber<\/a>)<\/div>\n<div><\/div>\n<\/div>\n<\/header>\n<div><img decoding=\"async\" alt=\"\" src=\"http:\/\/tctechcrunch2011.files.wordpress.com\/2014\/01\/11756578346_7cea3bdc8a.jpg?w=400\" \/>The U.S. healthcare system\u00a0<a href=\"http:\/\/www.iom.edu\/Reports\/2013\/US-Health-in-International-Perspective-Shorter-Lives-Poorer-Health.aspx\" target=\"_blank\">is sick<\/a>, but increasingly early stage investors are spending money on new technology companies they believe can help provide a cure.<\/p>\n<p>Earlier this week, Greylock Partners, one of the investors behind Facebook and LinkedIn, and the Russian billionaire technology investor Yuri Milner\u00a0<a href=\"http:\/\/techcrunch.com\/2014\/01\/14\/with-1-2m-from-greylock-yuri-milner-and-500-startups-first-opinion-lets-you-text-a-doctor-anytime\/\">put together a $1.2 million round<\/a>\u00a0alongside a group of co-investors to back First Opinion \u2013 a consumer facing service selling a way to text message doctors anytime of day or night.<\/p>\n<p>Greylock and Milner join a growing roster of technology investors focused on healthcare in recent years. The number of companies raising money from investors for the first or second time has skyrocketed since the passage of the\u00a0<a href=\"http:\/\/www.politico.com\/obamacare-guide\/\" target=\"_blank\">Affordable Care Act<\/a>, according to data from CrunchBase.<\/p>\n<p>In 2010, the year in which President Obama signed the ACA into law, there were only 17 seed- and Series A-stage healthcare-focused software and application development companies which had raised money from investors. By the end of last year, that number jumped to 89 companies tackling problems specifically related to the healthcare industry, according to CrunchBase metrics.<\/p>\n<p>Across all categories, investors spent over $1.9 billion in 195 deals with commitments over $2 million,\u00a0<a href=\"http:\/\/rockhealth.com\/2014\/01\/2013-digital-health-funding-report\/\" target=\"_blank\">according to a report<\/a>\u00a0from early stage investment firm Rock Health. Funding was up 39% from 2012 and 119% from 2011, the Rock Health report said.<\/p>\n<form id=\"wpcom-iframe-form-6c87218984e647b79c41783e0eb67802\" action=\"http:\/\/wpcomwidgets.com\/\" method=\"post\" target=\"wpcom-iframe-6c87218984e647b79c41783e0eb67802\"><\/form>\n<p>And there\u2019s plenty of room for the market to grow, according to <a href=\"http:\/\/blog.panicola.com\/wp-content\/uploads\/2014\/01\/HealthSoftwareAppsEarlyFunding0913.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-1162\" alt=\"HealthSoftwareAppsEarlyFunding0913\" src=\"http:\/\/blog.panicola.com\/wp-content\/uploads\/2014\/01\/HealthSoftwareAppsEarlyFunding0913.png\" width=\"688\" height=\"446\" srcset=\"https:\/\/blog.panicola.com\/wp-content\/uploads\/2014\/01\/HealthSoftwareAppsEarlyFunding0913.png 688w, https:\/\/blog.panicola.com\/wp-content\/uploads\/2014\/01\/HealthSoftwareAppsEarlyFunding0913-300x194.png 300w\" sizes=\"auto, (max-width: 688px) 100vw, 688px\" \/><\/a>Google Ventures\u2019 general partner Dr. Krishna Yeshwant. \u201cWe\u2019re still at the very beginning of what this is going to look like,\u201d said Dr. Yeshwant.<\/p>\n<p>Google Ventures is addressing the nation\u2019s healthcare dilemma with investments in companies like the physicians\u2019 office and network\u00a0<a href=\"http:\/\/www.crunchbase.com\/company\/one-medical-group\" target=\"_blank\">One Medical Group<\/a>, which raised a later stage $30 million last March. At the opposite end of the spectrum in December 2013 Google invested in the $3 million seed financing of\u00a0<a href=\"http:\/\/www.crunchbase.com\/company\/doctor-on-demand\" target=\"_blank\">Doctor on Demand<\/a>, which sells a service enabling users to video chat with doctors.<\/p>\n<p>Unsurprisingly, the explosion in healthcare investments tracks directly back to the passage of the Affordable Care Act, investors said. \u201cThe incentives brought forward by the ACA shift what makes sense,\u201d in healthcare, Dr. Yeshwant said.<\/p>\n<p>\u201cAt the highest level there\u2019s now a forcing function to take advantage of the efficiency technology provides,\u201d said Bill Ericson, a general partner with Mohr Davidow Ventures, who led the firm\u2019s investment in\u00a0<a href=\"http:\/\/www.crunchbase.com\/company\/healthtap\" target=\"_blank\">HealthTap<\/a>, a service for consumers to message doctors with healthcare questions.<\/p>\n<p>Overwhelmingly, Silicon Valley is leading the charge in these innovations, according to CrunchBase.<\/p>\n<form id=\"wpcom-iframe-form-5732edaca239b5fbb0803179991047c8\" action=\"http:\/\/wpcomwidgets.com\/\" method=\"post\" target=\"wpcom-iframe-5732edaca239b5fbb0803179991047c8\"><\/form>\n<p><a href=\"http:\/\/blog.panicola.com\/wp-content\/uploads\/2014\/01\/HealthSoftwareAppsTotalFunding0913.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-1163\" alt=\"HealthSoftwareAppsTotalFunding0913\" src=\"http:\/\/blog.panicola.com\/wp-content\/uploads\/2014\/01\/HealthSoftwareAppsTotalFunding0913.png\" width=\"690\" height=\"452\" srcset=\"https:\/\/blog.panicola.com\/wp-content\/uploads\/2014\/01\/HealthSoftwareAppsTotalFunding0913.png 690w, https:\/\/blog.panicola.com\/wp-content\/uploads\/2014\/01\/HealthSoftwareAppsTotalFunding0913-300x196.png 300w\" sizes=\"auto, (max-width: 690px) 100vw, 690px\" \/><\/a><br \/>\nThis flood of capital has pushed some investors like\u00a0<a href=\"http:\/\/www.crunchbase.com\/financial-organization\/founders-fund\" target=\"_blank\">Founders Fund<\/a>\u00a0to re-think their strategy, and de-emphasize healthcare software in search of other, larger opportunities.<\/p>\n<p>\u201c\u201cThe reason we have somewhat shifted focus away from healthcare IT is because there is so much investment going into that space. \u00a0So we think the problems there are being sufficiently addressed by the full market.\u201d said Brian Singerman, a partner at Founders Fund.<\/p>\n<p>The firm\u2019s most recent investment was in Oscar, a new, New York-based insurance company. Yes\u2026 an insurance company.<\/p>\n<p>\u201cIn healthcare there is a tech stack around genomics, digitization, biometrics, analytics, and actual cures; one of the things that ties that all together is insurance,\u201d said Singerman.<\/p>\n<div>\u201cLaunching a new insurance company is not something that happens very often. While you could launch a new insurance company without the Affordable Care Act, the catalyst it gives you by being on the same page as the big incumbents is unprecedented.\u201d<\/div>\n<div><\/div>\n<div>At Google Ventures, Dr. Yeshwant thinks there will be more opportunities for tech-enabled companies like Oscar and One Medical to compete in these broad industrial categories rather than offering point solutions. \u201cInstead of being a piece of the system, it\u2019s being the entire entity,\u201d he said.<\/div>\n<div><\/div>\n<div>\u201cThe thing to keep in mind\u2026 with the healthcare industry is that it is far bigger than tech. As an entity it is where we\u2019re spending 17% to 18% of GDP, so any one segment is tens of billions of dollars,\u201d Dr. Yeshwant said. \u201cIncreasingly you\u2019re seeing IT investors who have a fine sense of disruptive opportunities enter the market.\u201d<\/div>\n<div><\/div>\n<div><em>Photo via Flickr user BrickDisplayCase<\/em><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>US investment in health care was triggered by the affordable care act health is a bigger sector than tech investing in a health insurance start-up presents an interesting strategic level http:\/\/techcrunch.com\/2014\/01\/15\/vcs-investing-to-heal-u-s-healthcare\/ VCs Investing To Heal U.S. Healthcare Posted\u00a0Jan 15, 2014\u00a0by\u00a0Jonathan Shieber\u00a0(@jshieber) The U.S. healthcare system\u00a0is sick, but increasingly early stage investors are spending money on &hellip; <a href=\"https:\/\/blog.panicola.com\/?p=1161\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">VCs investing in US Healthcare<\/span> <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,8,9,3,30,7],"tags":[],"class_list":["post-1161","post","type-post","status-publish","format-standard","hentry","category-data-saving-lives","category-entrepreneurship","category-healthcare","category-rapid-learning-health-systems","category-startup","category-technology"],"_links":{"self":[{"href":"https:\/\/blog.panicola.com\/index.php?rest_route=\/wp\/v2\/posts\/1161","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.panicola.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.panicola.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.panicola.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.panicola.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1161"}],"version-history":[{"count":1,"href":"https:\/\/blog.panicola.com\/index.php?rest_route=\/wp\/v2\/posts\/1161\/revisions"}],"predecessor-version":[{"id":1164,"href":"https:\/\/blog.panicola.com\/index.php?rest_route=\/wp\/v2\/posts\/1161\/revisions\/1164"}],"wp:attachment":[{"href":"https:\/\/blog.panicola.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1161"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.panicola.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1161"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.panicola.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1161"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}