In a post-COVID world, venture capitalists say it’s not so easy to get excited about investing in digital health. Healthcare IT deal activity remained relatively flat in the first quarter of 2024 at 74 deals totaling about $1 billion, up just 3% from the same period a year ago, according to PitchBook data.
Still, promising startups have captured investors’ attention this year. TechCrunch spoke to 12 healthcare venture capitalists about which companies they see as most promising. Newly founded, AI-driven startups that are solving enormous administrative challenges in the U.S. healthcare system dominated the recommendations, but there were also some older companies that aren’t specifically AI-focused.
We narrowed their proposals down to a list of 10 names mentioned by multiple VCs. The VCs discussed with us both companies that were in their portfolios and those that weren’t.
summary
function: Leverage AI to automate medical records based on doctor-patient conversations.
Founded in 2018 by Shiv Rao, a practicing cardiologist, Abridge was an early entrant in the medical record-keeping space and is the company that has secured integration with the all-around Epic Systems medical records software.
Why it’s promising: The Pittsburgh-based startup has been gaining traction among investors and hospital systems looking to save doctors time taking notes. Abridge is the health tech startup that generated the most buzz among investors we spoke to.
Some investors say Abridge is leading the field. Other companies vying for dominance in the AI-powered medical note-taking market include Ambience, Nabla, Microsoft’s Nuance and Suki.
Funding: In February, Abridge raised $150 million in Series C funding led by Lightspeed Ventures at a valuation of $850 million, just four months after the virtual medical scribe startup raised a $30 million Series B from Spark Capital, Bessemer Venture Partners, CVS Health Ventures and others.
Codametrics
function: Founded in 2019, CodaMetrix uses AI to automate medical coding. The company’s technology translates medical notes stored in electronic medical records into diagnosis codes, helping to reduce errors and administrative burdens.
Why it’s promising: Medical coding is a tedious and error-prone task. Entering the wrong code for a medical condition or treatment can lead to claims denials and other administrative issues. Additionally, the burden of coding can be a big burden on already busy doctors and nurses, leading to increased stress and fatigue.
The company has competitors such as Fathom Health, but investors say CodaMetrix has the largest annotated coding dataset.
Funding and evaluation: In March, CodaMetrix raised a $40 million Series B from Transformation Capital, with participation from returning investors SignalFire and Cressey Ventures. The deal valued the Boston-based company at $220 million, according to PitchBook.
Cohere Health
function: Cohere Health uses the help of AI to speed up the health insurance approval process, known as pre-authorization, for medical conditions.
Why it’s promising: Prior authorization management can take hours of medical and administrative staff to gather the proper documentation to submit to health insurers and Medicaid. Cohere Health’s AI reduces this task to minutes, saving medical and administrative staff hours of work.
Cohere is currently the leader in the field, investors say, but other startups that speed up health insurance approvals for medical conditions include Anterior and Alaffia Health.
Funding: Cohere Health raised a $50 million Series B earlier this year from Deerfield Management, with participation from Define Ventures, Polaris Partners, Longitude Capital and Flare Capital Partners.
Glow Therapy
function: Grow Therapy connects therapists looking to set up their own practice with patients and insurance companies. Founded in 2020, the startup operates a business-in-a-box model that gives mental health professionals the tools to submit claims, receive payments, and match them with patients.
Why it’s promising: The company claims its business model offers therapists more flexibility than offering their services through marketplaces like Headway or Lyra. It’s not clear if that’s the case, but investors say Glow is living up to its name and growing fast.
Funding and evaluation: Grow closed an $88 million Series C funding round led by Sequoia in April at a valuation of $1.4 billion, according to PitchBook data.
Equipment
function: Equip, a four-year-old company, offers online therapy to children, teens and adults in all 50 states and is covered by most health insurance plans. Equip’s practitioners are trained to treat co-occurring conditions such as anxiety, depression and obsessive-compulsive disorder (OCD).
Why it’s promising: According to the National Eating Disorder Association, about 10 percent of the U.S. population will develop an eating disorder in their lifetime, but only a small percentage of them will receive help. The company’s service provides care to those who don’t live near an eating disorder treatment facility or who prefer treatment online.
Funding and evaluation: Equip’s last valuation was $505 million, according to PitchBook data, and it has raised $135 million in total funding from investors including Optum Ventures and General Catalyst.
Maven
function: The New York-based health clinic and benefits platform offers fertility, adoption, parenting, pediatrics and menopause services through employers such as Microsoft and AT&T. Maven also serves Medicaid patients.
Why it’s promising: Investors say the 10-year-old company is growing given that its focus area of digital health services for women and families has been historically underserved. Women’s health has seen increased venture capital interest in recent years, but the U.S. Supreme Court’s decision to overturn Roe v. Wade in 2022 has further highlighted the need for technology to serve this female demographic.
Funding and evaluation: Maven has raised nearly $300 million in funding since its inception, and was last valued at $1.35 billion in late 2022 in a Series E round led by General Catalyst and with participation from VCs including Lux Capital, Oak HC/FT and Sequoia.
Memora Health
function: Memora Health provides AI-based virtual care coordination to reduce the administrative burden on medical staff. The company’s technology communicates with patients using text messages, automating tasks like appointment reminders, answering frequently asked patient questions, and collecting data on symptoms and post-procedure recovery.
Why it’s promising: Like many other AI-based healthcare startups, Memora saves medical staff time. The company also helps patients feel more supported in their health journey.
Funding: The company was spun out of Harvard Innovation Labs and went through Y Combinator in 2018. Since then, it has raised nearly $80 million and was valued at $430 million in April 2023, according to Pitchbook data. Memora’s investors include General Catalyst and Andreessen Horowitz.
Smarter Dx
function: Founded in 2020, SmarterDx uses AI to analyze patient test results, medications, and doctor’s notes to spot small errors and omissions in patient diagnoses and associated medical codes, helping hospitals avoid missing out on revenue. The company’s technology reviews patient medical records for accuracy before claims are sent to health insurance and Medicare.
Why it’s promising: Investors say the value of Smarter Dx’s technology is easy to measure because it helps health systems increase their revenue.
Funding: In May, SmarterDx raised $50 million in a Series B round led by Transformation Capital, with participation from Bessemer Venture Partners, Flare Capital Partners and Floodgate Fund. The latest capital infusion brings the company’s total funding to $71 million.
Summer Health
function: Two-year-old Summer Health connects parents with pediatricians who can address emergency care or behavioral concerns within minutes. The company offers its text messaging service directly to consumers and through employers who offer access to Summer Health as an employee benefit.
Why it’s promising: Busy, concerned parents want quick answers to their children’s health concerns around the clock, and Summer Health helps ease parental anxiety by providing quick answers to questions through the app.
Funding: 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.
Transcurrent
function: Transcarent, a four-year-old startup, helps large companies save on the costs of providing health insurance to their employees. The startup offers employees access to discounted medications, telehealth services, and AI-generated personalized answers about health insurance.
Why it’s promising: The company’s rapid growth can be attributed in part to founder Glenn Talman, who previously launched Livongo, a chronic disease management company that Teledoc acquired for $18.5 billion in 2020.
The company also recently introduced an AI platform to answer members’ questions about insurance coverage, provide clinical information and connect them with medical staff when needed.
Funding and evaluation: In May, the company raised $450 million in Series D funding led by General Catalyst and 7wire Ventures at a valuation of $2.2 billion.
