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Edition 12 — September 8, 2021
Good morning. 

In the last edition, we covered the flood of health data from wearable devices and the challenges this creates for physicians. Well, last week’s news does not suggest the tide will drop in the future: The Wall Street Journal reported that temperature and blood glucose tracking will come to the Apple Watch next year. And the startup Whoop raised a whopping $200 million funding round to further spread their health and fitness tracking band.


But enough about the last edition of our newsletter. Let's move on to the questions we’re addressing this time:
  • What healthcare trends is the most successful early-stage investor betting on?
  • Which European country is leading in terms of digital health record adoption?
  • What are the downsides of the Silicon Valley myth of the from-zero-to-hero founder?
Have fun reading the answers in our biweekly MedTech roundup.

Unicorn factory Y Combinator bets on MedTech

Illustration by Mary Delaney

Last week, startup incubator Y Combinator unveiled the companies from its summer 2021 batch. How is this relevant to MedTech? Here’s the answer: 

Y Combinator has incubated more unicorns (private companies valued at more than $1 billion) than any other early-stage investor. The semi-annual presentation of the program's new startups is therefore considered an important indicator of tech trends.

On the Y Combinator website, you can find a database of all startups. 59 of the 374 startups from the last batch tackle healthcare across all areas, from biotech to preventive health to drug discovery. This is 15% of the total batch, a clear upward trend compared to previous years. In our analysis, we found five trends particularly interesting: 

→ The batch included seven medical device companies—more than ever before—although the funding volume for medical device startups has recently stagnated. The startups do not build simple consumer devices but are clearly positioned in critical medical fields like surgical robots (Revolve Surgical), respiration monitoring (Makani Science), and pelvic vein therapy (V-Flow Medical).

→ The mental health boom is also reflected in the Y Combinator batch, with startups in psychedelic therapeutics (Mindstate Design Labs), ADHD self-help (Inflow), online group therapies (Shimmer), and freelance marketplaces (Legion).

→ At MedTech Pulse, we have often written about the trend toward vertical telehealth offerings for specific target groups or indication areas. This is a trend that Y Combinator is also focusing on with Ruth (pregnancy), Verano (diabetes), and Comet (pelvic care).

→ Latin America has come into the focus of venture capital investors in recent years. LatAm startups have raised $9.3 billion in the first half of 2021 alone, almost double the amount of all of 2020. Y Combinator healthcare startups are also betting on the region, including Fitia (weight loss), FastPharma (digital pharmacy), Okani (primary healthcare), and Examedi (healthcare at home).

→ Clinics are coming home. This is how we described the trend of more and more “jobs-to-be-done” in the medical industry separating from the physical location of a clinic. Y Combinator is also paying attention to this trend, with startups such as Safebeat (at-home ECG), Akute (EHR for telehealth), and Zeit (at-home stroke detection).

Talent crunch hits healthcare

Image: Unsplash

Many countries are facing a physician shortage. According to data from the AAMC, the United States could see an estimated shortage of 124,000 physicians by 2034. A study conducted by the Robert Bosch Stiftung anticipates that by 2035, some 11,000 primary care physician positions will be unfilled in Germany, and that nearly 40% of counties will be underserved or at risk of undersupply. 

Corona has further exacerbated the problem. A Wall Street Journal article points out that the cost of salaried nurses has risen massively in recent months, and that some hospitals are unable to find staff despite their high starting salaries. As a result, travel-nurse pay has skyrocketed. In December 2019, average gross weekly wages for a travel nurse were around $1,600. One year later, average pay was more than $3,500 a week.

→ Labor shortages are one of the most important economic problems, especially in the highly specialized healthcare sector. New political regulations and incentive structures are intended to bring the profession back into the mainstream, with a particular focus on underserved areas.

→ On the other hand, this development naturally promotes innovations in the healthcare market. There is no doubt that the COVID-19 pandemic will be the tipping point that changes the way healthcare providers and patients use Digital Health and MedTech offerings. However, market imperatives ensure we will not be able to offer more patients improved digital access to healthcare services—at least not immediately. Anyone can become an Uber driver within a couple of weeks. But a physician-in-training spends more than 10 years in school and residency before he or she can fully join the market. That's why the past few months have also shown that innovations aimed at reducing healthcare staffing levels and decreasing dependence on skilled workers certainly offer potential. Examples include improved training offerings, job portals, automation efforts, and the ongoing consumerization of healthcare services.

Stroke detection for anyone and anywhere

Image: FOS S.P.A./UNIVERSITY OF GENOA

The earlier a stroke patient is treated, the greater his or her chances of recovery. Diagnosis and treatment within the first hour is therefore paramount. Given this narrow window of action, researchers are developing wearable smart helmets that can detect, diagnose, and monitor stroke patients while they are being transported to the hospital. Researchers at the University of Genoa have now unveiled a prototype that can detect strokes using electromagnetic waves, rather than relying on ultrasound like previous models.

→ Although the prototype is not yet fully developed, the technology holds great potential. EM-based systems can be built to be more compact, portable, and less expensive than current ultrasound devices. This could make them suitable for use in ambulances or at home with high-risk patients. In addition, ultrasound typically requires trained personnel to interpret the images correctly. This appears to be less of a problem with EM-based units. 

→ Innovation has always been about industrializing breakthroughs, however minor they may be, to make them available to the masses. Gradual and incremental technological improvements will hopefully ensure EM-based devices can be used by many in the future. The past shows us how this could play out. Consider the first portable defibrillator, developed by Frank Pantridge. His first unit from 1965 weighed 70 kg. By 1968, however, he had already developed an instrument weighing only 3 kg. Today's automated external defibrillators require minimal training to use, saving thousands of lives each year. We hope to write similarly about mobile stroke detection devices in the near future.

We dug up some interesting yet sobering data on the usage of digital health records across Europe, which can be found on Eurostat

Germany, one of the leading economies in the world, ranks as one of the least digitally-enabled countries in Europe when it comes to the usage of online health records. Only 3% of Germans are able to use the internet to access and manage their health data. Practically speaking, people’s health history only exists in analog paper folders spread across various practitioners and clinics.

For comparison, Finland’s penetration of digital health-record usage scores at 61%, followed by its Scandinavian peers Norway, Iceland, and Denmark at 42%, 35%, and 34%, respectively.

This is a devastating sign for a country like Germany, whose ability to innovate in the health sector is massively impaired by this nonexistent interoperability of its citizens’ health information.

Uwe is a veteran of the pharmaceutical and healthcare industry. He has been in the industry for more than 30 years. Before co-founding Rox Health in 2020—a Berlin-based Roche subsidiary focused on digital health applications and their commercialization—he spent a quarter-century at Roche in various roles, gaining extensive experience developing and testing new business models and supporting existing healthcare IT solutions.

Developing new business models in digital healthcare needs visionary thinking, courage, resilience, energy, and a deep understanding of how our healthcare system works.

Uwe Günzel (Co-founder RoX Health)

Series C
Diabetes
Ovivaa provider of tailored nutritional advice and personalized coaching intended to stop the progression of Type 2 diabetes and obesity-related conditions, raised $80 million of Series C venture funding in a deal led by Sofina and Temasek Holdings.
SIFTED (2021-09-01) ↗
Series F
Wearables
Whoop, a Boston, Massachusetts-based human performance company and fitness tracker developer, raised $200 million in Series F funding. Led by SoftBank's Vision Fund 2, the round brings the company to a staggering $3.6 billion valuation.
WHOOP (2021-08-30) ↗
Series B
Dental
Quip, a provider of CPG oral care products and online dental services, raised $128.13 million through a combination of debt, Series B1, and Series B2 venture funding from Cowen Sustainable Investments. 
RETAILDIVE (2021-09-02) ↗
Series C
Genomics
Genome Medical, the operator of a cloud-based genomic care delivery platform intended to bridge the gap between advancing genome technology and current medical practice, raised $60 million of Series C venture funding in a deal led by Casdin Capital. Simultaneously, Genome Medical acquired GeneMatters, a U.S.-based genomic care delivery company.
PRNEWSWIRE (2021-08-30) ↗
Series A
Dental
Overjet, a Boston-based digital dental health startup, raised $27 million of Series A venture funding in a deal led by Insight Partners and General Catalyst. The company uses AI for the real-time analysis of dental X-rays.
FIERCEBIOTECH (2021-08-26) ↗
Series A
Robotic surgery
FlexDex Surgical, a developer of minimally-invasive surgical devices designed for use in urology, gynecology, colorectal, head, and neck surgeries, raised $13 million of Series A venture funding in a deal led by Johnson & Johnson Innovation.
GUIDEDSOLUTIONS (2021-08-24) ↗

Last week, the trial against Theranos founder Elizabeth Holmes began. Many of you may know her story, which has been chronicled in books and documentaries. For everyone else, here's the short version:

Holmes dropped out of Stanford in 2003 at the age of 19 to found Theranos. The startup promised to revolutionize blood testing with a new technology that would require only a few drops of sample. As it later turned out, it was all a big scam. The technology never worked, the once $10 billion company became worthless, and Elizabeth Holmes was indicted. 

Reading the news made me think not about Elizabeth Holmes, but about her reception by the public. The media was just as enthusiastic about her as many investors. We all love the Silicon Valley myth of the founder who achieves incredible success and a billion-dollar valuation from nothing. It is therefore hardly surprising that the Theranos press stories at the peak of the hype were not about the innovation behind Theranos, but about Elizabeth Holmes being a self-made billionaire and successor to Steve Jobs, whom she emulated.

The glittering Silicon Valley myth has driven many great founders and brought fantastic innovation to the world. At the same time, we have to be careful that the glamorous surface of fame and fortune does not overshadow the core of progress and innovation. I would love to see more of this core on the magazine covers of the world instead of Steve Jobs wannabes.