In the post-COVID-19 world, VCs say it’s not so easy to get excited about investing in digital health. Healthcare IT deal activity was relatively flat in Q1 2024 at 74 total deals, valued at approximately $1 billion in total, up only 3% from the year-ago quarter; according to PitchBook data.
However, promising startups have caught the attention of investors this year. TechCrunch spoke with about a dozen healthcare VCs about the companies they believe have the most promising future. While AI-driven startups solving mind-boggling administrative challenges in the US health care system dominated their recommendations, they also mentioned several slightly older, non-AI-focused companies.
We narrowed down their suggestions to the list of names mentioned by more than one VC, which even made it to 10 companies. VCs discussed with us the companies that were both in their portfolios and not.
Shorten
What is he doing: It uses artificial intelligence to automate medical records based on conversations between doctors and patients.
Founded in 2018 by Shiv Rao, a practicing cardiologist, Abridge is an early entrant into the medical note capture space and has secured integration with powerful health record software Epic Systems.
Why it’s promising: The Pittsburgh-based startup is generating excitement among investors and hospital systems looking to free up the time doctors spend taking notes. Abridge is the most mentioned health tech startup among the investors we spoke to.
Some investors said Abridge is leading its class. Other companies competing to dominate the AI-powered medical note taking market include Ambience, Nabla, Microsoft-owned Nuance and Suki.
Financing: In February, Abridge raised a $150 million series round led by Lightspeed Ventures at a valuation of $850 million, just four months after the virtual medicine startup secured a $30 million round from Spark Capital, Bessemer Venture Partners, CVS Health Ventures and others.
CodaMetrix
What is he doing: Founded in 2019, CodaMetrix uses AI to automate medical coding. The company’s technology translates medical notes stored in electronic health records into diagnostic codes, helping to reduce errors and administrative burden.
Why it’s promising: Medical coding is tedious and error-prone. Entering the wrong code for a condition or treatment can lead to denied insurance claims and other administrative problems. Additionally, the burden of entering codes falls on already busy doctors and nurses, leading to increased stress and burnout.
The company has competitors, including Fathom Health, but investors say CodaMetrix has one of the largest annotated coding datasets.
Funding and Valuation: In March, CodaMetrix secured a $40 million series round 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
What is he doing: Cohere Health accelerates the health insurance approval process, known as prior authorization, for AI-assisted medical conditions.
Why it’s promising: Administering the prior authorization could take hours of medical and administrative staff, as it requires gathering appropriate documentation to submit to health insurance companies or Medicaid. Cohere Health’s AI can reduce the time it takes to do this to minutes, saving medical and administrative staff hours on these tasks.
Investors say Cohere is currently the leader in the space, but other startups accelerating health insurance approval for medical conditions include Anterior and Alaffia Health.
Financing: 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.
Grow Therapy
What is he doing: Grow Therapy connects therapists looking to start independent practices with patients and insurers. Founded in 2020, the startup uses a so-called business-in-box model because it provides mental health professionals with tools to file claims, receive payments and match patients.
Why it’s promising: The company claims its business model gives therapists more flexibility than if they were to provide their services through marketplaces like Headway or Lyra. While it’s not clear if that’s actually the case, Grow, true to its name, is growing fast, investors say.
Funding and funding: In April, Grow closed an $88 million Series C led by Sequoia at a $1.4 billion valuation, according to PitchBook data.
Equip
What is he doing: four year old Equip provides online therapy for children, teens and adults in all 50 states and accepts most health insurances. Equipment providers are also trained to treat co-occurring conditions such as anxiety, depression and obsessive-compulsive disorder (OCD).
Why it’s promising: About 10% of the US population develops an eating disorder in their lifetime, but only a fraction of those people get help, according to the National Eating Disorders Association. The company’s offering brings care to those who don’t live near eating disorder facilities or prefer to receive treatment online.
Funding and Valuation: Equip was last valued at $505 million and has secured a total of $135 million in funding from investors including Optum Ventures and General Catalyst, according to PitchBook data.
Maven
What is he doing: The New York-based health clinic and benefits platform offers fertility, adoption, parenting, pediatrics and menopause services through employers including Microsoft and AT&T. Maven also serves Medicaid patients.
Why it’s promising: Investors say 10-year-old Maven continues to grow, given that its focus area — digital health services for women and families — has historically been underserved. While VC interest in women’s health has increased In recent years, the US Supreme Court’s decision to overturn Roe v. Wade in 2022 has shone an even brighter light on the need for technologies that serve the female population.
Funding and Valuation: Since its founding, Maven has raised nearly $300 million in funding and was last valued in late 2022 at $1.35 billion in a Series E round led by General Catalyst with participation from VCs including Lux Capital, Oak HC/FT and Sequoia.
Memora Health
What is he doing: Memora Health offers virtual AI-based care coordination, reducing the administrative burden for medical staff. The company’s technology uses text messages to communicate with patients, automating tasks such as appointment reminders, answering common 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.
Financing: The company was spun out of the Harvard Innovation Lab and passed through Y Combinator in 2018. Since then, it has raised nearly $80 million and was valued in April 2023 at $430 million, according to data from PitchBook. Memora’s investors include General Catalyst and Andreessen Horowitz.
SmarterDx
What is he doing: Founded in 2020, SmarterDx uses artificial intelligence to help hospitals avoid losing revenue by analyzing patient lab results, medications and doctors’ notes to spot minor errors and omissions in patient diagnoses and associated medical codes. The company’s technology reviews patient charts for accuracy before a claim is sent to health insurance or Medicare.
Why it’s promising: Investors say that since Smarter Dx helps health systems generate more revenue, the value of the company’s technology is easy to measure.
Financing: In May, SmarterDx raised $50 million Series B; round led by Transformation Capital, with participation from Bessemer Venture Partners, Flare Capital Partners and Floodgate Fund. The latest capital raising brought the company’s total funding to $71 million.
Summer Health
What is he doing: The two year old Summer Health connects parents with pediatricians who, within minutes, respond to urgent care and behavioral concerns. The company provides its texting service directly to consumers and through employers who offer access to Summer Health as a benefit.
Why it’s promising: Busy and anxious parents want answers to their children’s health issues immediately and around the clock. Summer Health eases parents’ worries because they can get quick answers to their questions through an app.
Financing: In April, Summer Health raised a $12 million Series A round led by 7wireVentures and existing investors including Sequoia, Lux Capital and Chelsea Clinton’s Metrodora Ventures.
Transparent
What is he doing: four year old Transparent helps large companies save money on providing health insurance to employees. The startup gives workers access to discounted drugs, telehealth services and personalized AI-generated answers about their health coverage.
Why it’s promising: Part of the company’s rapid rise could be attributed to its founder, Glen Tullman, who previously started Livongo, a chronic disease management company that Teledoc acquired for $18.5 billion in 2020.
The company also recently introduced an artificial intelligence platform that answers members’ questions about coverage, offers clinical insights and connects them with medical staff as needed.
Funding and Valuation: In May, the company raised a $450 million Series D at a $2.2 billion valuation led by General Catalyst and 7wireVentures.
