1 StartUp Health Insights 1 ®2019 Q1StartUp Health InsightsA quarterly report on health innovation and the health moonshots transforming the world.ACCESS TO CARECOST TO ZEROCURE DISEASECANCERWOMENS HEALTHCHILDRENS HEALTHNUTRITION & FITNESSBRAIN HEALTHMENTAL HEALTH & HAPPINESSADDICTION LONGEVITY2 StartUp Health Insights 3 STARTUP HEALTH INSIGHTSOverviewHealth Innovation HighlightsABOUT STARTUP HEALTHAt StartUp Health we believe that with the right mindset, a moonshot vision, and the spirit of an entrepreneur, anything is possible. We also know that something magical happens when you bring together people who are passionate about impact-ing peoples lives for the better around common goals. Thats why since 2011, weve been invest-ing in a global army of Health Transform-ers to solve the worlds biggest health challenges. ABOUT STARTUP HEALTH INSIGHTS StartUp Health collects and shares market insights because these data points tell a critical part of the health innovation story. More than simply chronicling the flow of money, this report provides a glimpse into the overall health of our Health Moonshots. The story beneath the top-line figures opens up new challenges as well as op-portunities.Health Moonshots require radical collabo-ration, so we encourage you to dig into this report and then bring your own insights to the table at hq.startuphealth.Report Authors Liz TucciLogan PlasterPolina HaninContributors Tara SalamoneJennifer HankinNicole Kinsey-© 2019 StartUp Health Holdings, Inc. StartUp Health and Health Transformer and associated logos are registered trade-marks of StartUp Health LLC. Sign up to receive weekly funding insights at startuphealth/insiderSource: StartUp Health Insights | startuphealth/insights. Note: Report based on publicly available data through 3/31/19 on seed (incl. accelerator), venture, corporate venture, and private equity funding only. Companies tracked in StartUp Health Insights may fall under multiple Moonshots and therefore will be represented throughout the report.If youve been reading StartUp Health Insights for any length of time (weve been tracking data since in 2010) youll notice that this report is different. Were still tracking all the same funding and investor numbers, but were now highlighting insights by key Health Moonshots. Were drilling down on the prog-ress being made in critical areas that have the potential to impact billions of peoples lives globally. We believe, as weve written before, that what was once defined as “digital health” is con-verging across all health sectors health IT, biotech, med-tech, pharma, health services, consumer and so on. What matters most in our opinion is “health innovation” which, in addition to digital solutions, connectivity and data, needs to include new business models, design thinking, and other essential ingredi-ents helping transform health. With that lens we can focus on the progress being made toward solving the worlds biggest health challenges, like effectively delivering quality care to billions of people, or ending cancer as we know it, or radically reducing cost. Ironically, we see health innovation moving faster than we dreamed possible and slower than we need at the same time. Its now one massive dynamic global market and the true innovation may be yet to come. Here are some key insights weve pulled from this quarters data.DEAL COUNT DIPS, MARKET MATURES With a grand total of $2.8 billion in invest-ment, Q1 2019 dipped in total funding by only 3.7%, however, total number of deals dropped by 37% over this same time last year. This dis-parity is in large part due to the massive $500 million deal by Clover Health. While 2019 may have had a slower start than previous years, there are signs that the market is continu-ing to mature, as median deal size overall climbed to $9.2M, outpacing every other quarter before it. In fact, six of the 11 health moonshots we track saw more than 40% of their deals reach above $10 million.NEW OPPORTUNITIES IN INSURETECH Clover Healths massive raise follows quickly after Devoted Healths $300M raise in Q4 2018, suggesting a strong interest in InsureTech startups entering the Medicare Advantage space. The opportunity for any company in health innovation is to figure out how to best collaborate with these organiza-tions.COST + ACCESS TOP THE LIST The Cost to Zero and Access to Care Moon-shots were the most funded impact areas at $1.1 billion and $983 million respectively they were also the health moonshots that overlap the most in terms of company focus. WOMENS HEALTH SEES BUMP Were pleased to report that Womens Health Moonshot funding is starting off strong com-pared to Q1 2018, with $91.6 million raised across 8 deals, as compared to a mere $7.8 million this time last year. With 20 deals in all of 2018, were optimistic the trend will continue. NEW GLOBAL HUBS EMERGE New global entrants like Lausanne, Switzer-land and Athens, Greece remind us of the ro-bustness of the global health innovation com-munity. They still pale in comparison to the San Francisco Bay Area, which had five of the 10 top U.S. deals, and whose funding is more than the rest of the U.S. deals combined.There is still a lot more work to be done around the world. In fact, the Childrens Health and Brain Health Moonshots among others are extremely underfunded. We encourage entrepreneurs to discover how their technologies may apply to areas where innovation is still needed. And we also en-courage investors (and welcome new ones) to continue to fund companies that are making a long-term impact.2 StartUp Health Insights 3 INVESTMENT SPECTRUMEvery company in the StartUp Health Insights database is sorted into one of 10 functions its main value drivers. This top line break-down offers a look into the breadth of investment, which speaks to the overall health of the market (shown here), and each health moonshot, which well share in coming pages. FUNCTIONPatient EmpowermentWellnessResearch Personalized Health Administrative Workflow Clinical Workflow Biometric Data AcquisitionPopulation Health Education + Content Insurance StartUp Health Insights, a quarterly report that tracks trends in the health innovation industry, has analyzed over 5,000 funding deals dating back to 2010. Over that period, the market has exploded to $58.3 billion in funding, with new companies emerging every year from every corner of the world.Along with that rapid growth has come an increase in complexity within the market. To address this new paradigm, StartUp Health has re-imagined how we categorize and track companies.Increasingly, companies and industry theses are relegated to a single-variable descriptor, such as “population health company,” “AI company,” or “oncology platform.” This tactic can give an audience a frame of reference, but that framing is often too narrow to be useful.The StartUp Health Insights classification structure: Creates a nuanced way in which market trends are analyzedUncovers new opportunities for entrepreneurs, investors and key stakeholdersEncourages investors, customers, and other stakeholders to more clearly state their thesis for the industry to improve existing partnerships and build new partnerships with startupsSix Key Attributes It starts by breaking down each company into six attributes, which creates different lenses to see where the money is (or isnt) flowing. Companies may have more than one health moonshot, specialty, end user, technology or application, but they can only have one function. As such, youll see throughout our report that the same company can fall into multiple categories. 1. Health Moonshot The long-term impact the company will have on the world ex: access to care, cost to zero 2. Function The companys main activity or value driver ex: wellness, research 3. Specialty The branch of medicine or disease the company addresses ex: oncology, cardiology 4. End User The organization or individual who benefits from the companys value ex: patient, provider 5. Technology The delivery mechanism of the companys value ex: machine learning, robotics 6. Application The use cases for the companys technology ex: diagnostics, billing Q1 2019$405.2M$420.6M$326.5M$114.6M$239.3M$314.1M$242.1M$153.0M$10.3M$656.5MQ1 2019How We Think About the Health Innovation MarketIn 2018 StartUp Health introduced a new way to organize the health innovation marketplace. Heres the rundown. pTHE STORYPatient empowerment typically tops the list as the most funded function, but insurance led this quarter, with a 93% increase in capital raised compared to Q1 of 2018 due to Clover Healths financing. Just two education and content deals were closed, representing less than one percent of total funding this quarter. Wellness, led by Hims $100M raise in January, was the second most funded function, making up 15% of total capital raised in Q1 2019.Source: StartUp Health Insights | startuphealth/insights. Note: Report based on publicly available through 3/31/19 on seed (incl. accelerator), venture, corporate venture, and private equity funding only. Companies tracked in StartUp Health Insights may fall under multiple Moonshots and therefore will be represented throughout the report.4 StartUp Health Insights 5 $1.2B$2.0BQ1 Q2 Q3 Q4 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019YTDThe first quarter of 2019 saw fewer deals than last year (a 35% drop over Q1 2018 and flat over Q4 2018), while funding dollars only trailed Q1 2018 by 3.7%, leading median deal size to grow by 79%. We might look at this as quality over quantity fewer, larger deals could suggest a more mature market yet it is notable that this is the first Q1 on record that hasnt beaten the preceding Q4 in funding amount. Clover Health represented 17% of total cap-ital raised in Q1 2019, a percentage share that hasnt been seen since Outcome Healths Q2 2017 $600M round. In fact, it took three com-panies to reach that percentage in Q1 2018. Clover Healths deal also catapulted the insur-ance function to make up 23% of total capital raised, while only 4% of deal volume.Though total funding for the quarter took a small dip, the deals recorded represent a broad diversity of investments, covering eight out of the ten tracked functions.Largest U.S. DealsCompany Amount Function01 Clover Health $500M Insurance02 Beam Therapeutics $135M Research03 Health Catalyst $100M Admin Workflow04 Hims $100M Wellness05 Calm $88M Wellness06 DNAnexus $68M Population Health07 Pear Therapeutics $64M Patient Empowerment08 The Pill Club $51M Patient Empowerment09 eHealth Technologies $41M Clinical Workflow10 Quip $40M Wellness10 TriNetX $40M WellnessLargest Non-U.S. DealsSTARTUP HEALTH INSIGHTS / THE MARKETFundingDEAL COUNT154283473645606570860137Total Funding$2.3B$2.8B$7.1B$6.2B$8.3B$14.6BCompany Amount Function01 Doctolib $170M Patient Empowerment02 Taimei Medical Technology$80M Research03 Sophia Genetics $77M Clinical Workflow04 Shuidichou $74M Insurance05 Miaoshou Doctor $73M Wellness06 Medbanks Network Technology$59M Clinical Workflow07 Dental Monitoring $51M Biometric Data Acquisition08 Vantage Health $50M Biometric Data Acquisition09 Alan $45M Insurance10 EarlySense $39M Biometric Data Acquisition$1.2BTHE STORY$0.4B$0.5B$0.6B$1.4B$2.9B$1.1B$2.2B$3.0 B$1.2B$0.2B$2.8B$11.7B688769Source: StartUp Health Insights | startuphealth/insights. Note: Report based on publicly available data through 3/31/19 on seed (incl. accelerator), venture, corporate venture, and private equity funding only. Companies tracked in StartUp Health Insights may fall under multiple Moonshots and therefore will be represented throughout the report.4 StartUp Health Insights 5 F-Prime Capital Partners4 Deals (11)Sands Capital Ventures3 Deals (1)GV4 Deals (6)Wells Fargo Strategic Capital3 Deals (1)Balderton Capital3 Deals (1)Most Active Investors Q1 2019 deal count(Total number of deals invested in 2018)Early Stage Mid Stage Late Stage STARTUP HEALTH INSIGHTS / THE MARKETInvestors1762913145076236531248 12382019 YTD201820172016201520142013201220112010350Total Investors year over yearNUMBER OF DEALS BY INVESTOR 2 3 4 5 6+ TOTAL UNIQUE INVESTORS100200THE STORY With 350 unique investors, the first quarter of 2019 was on track with 2018. GV and F-Prime Capital Part-ners topped the list of active investors with four investments each in Q1 2019. Balderton Capital, Sands Capi-tal Ventures and Wells Fargo Strategic Capital, who barely dipped their toes into the health innovation market in 2018 with one investment apiece, already have three investments under their belts this year. Eleven percent of investors have backed two or more companies this year, with 11 of the 37 being new to the health innovation space in 2019. This demonstrates a continued interest in the ecosystem, with cross-pollination of expertise from more traditional sectors, such as biotech, medical devices and healthcare IT.93150150Source: StartUp Health Insights | startuphealth/insights. Note: Report based on publicly available through 3/31/19 on seed (incl. accelerator), venture, corporate venture, and private equity funding only. Companies tracked in StartUp Health Insights may fall under multiple Moonshots and therefore will be represented throughout the report.STARTUP HEALTH INSIGHTS / THE MARKETHubs of InnovationMost Active Metro Areas in the United States5 4 7 9 6 2 31 8THE STORY In the United States, San Francisco, New York, and Boston almost always top the list of most-funded metro areas, and this quarter was no exception. Five of the largest U.S. deals this quarter call the San Francisco Bay Area home, which led the metro area to raise more money this quarter than every other metro area combined. While the New York City metro area was not home to as many mega deals in Q1 2019, they trailed by just four deals behind their coastal counterpart. Not to be outdone, Seattle saw five deals in Q1 2019 compared to just one in Q1 2018, and increased capi-tal raised from $1M to $44M. Dallas/Fort Worth made our list for the first time with four deals and $18M raised in Q1 2019. While large deals were concentrated on the coasts, diversity of deal flow continued to spread across the U.S., with numerous deals occurring across 29 metro areas this quarter overall.City/Region Funds Raised Deals YTD 2018 Deals01 San Francisco $991.8M 20 13802 Boston $278.5M 10 4503 New York City $186.5M 17 9204 Salt Lake City $125.0M 2 305 Seattle $44.1M 5 1306 Rochester $41.0M 1 107 Denver $25.0M 2 708 Washington, DC $20.5M 3 609 Chicago $19.6M 3 1310 Dallas/Fort Worth $18.0M 4 010 Tampa $18.0M 1 410Source: StartUp Health Insights | startuphealth/insights. Note: Report based on publicly available data through 3/31/19 on seed (incl. accelerator), venture, corporate venture, and private equity funding only. Companies tracked in StartUp Healt