One-third of startups receiving first fundings since 2015 are in imaging and diagnostics, which has seen investment from VCs including Data Collective, Khosla Ventures, and Google Ventures.
From health insurance selection to drug discovery, there’s a huge potential for artificial intelligence algorithms to solve problems in the healthcare industry. Startups, big corporations, and investors alike are tapping into these opportunities.
We tracked first fundings to AI-focused healthcare startups to gauge the volume of emerging investor-backed entrants in this space, and how the pace of these fundings varied over time.
According to CB Insights data, around 20 new AI-centered healthcare startups raised their first equity rounds in 2016 alone and 50 have raised first equity rounds since the start of 2015.
Our analysis includes the first equity round with a disclosed amount raised by a startup, including seed/angel, Series A, convertible note, and unclassified equity rounds raised by stealth companies like Imagen Technologies. We excluded incubator/accelerator rounds that do not involve equity participation.
Here are some of the highlights from the deals above:
- Imaging & diagnostics: This is an especially bustling sector of AI-based healthcare activity. Around 16 startups in imaging and diagnostics have received their first round of equity funding since January 2015 across countries including the United States, Canada, Israel, and India. Among them, Bloomberg Beta backed Canada-based Deep Genomics; Accel Partners India backed SigTuple; Khosla Ventures- and Marc Benioff-backed Zebra Medical Vision; Data Collective backed Enlitic. More recent startups in the space include Advenio TecnoSys, cloud platform Proscia, and stealth startup Imagen Technologies.
- VCs backing first equity rounds: Khosla Ventures backed 3 unique companies: imaging and diagnostics startups Zebra Medical Vision and Bay Labs, and predictive analytics startup Lumiata. Google Ventures, along with Frost Data Capital, seed-funded remote patient intelligence startup Sentrian, and diagnostics startup Mindshare Medical. Founders Fund, which participated in IBM Watson-backed Pathway Genomics‘ Series A round back in 2009, recently seed-funded natural language processing startup Medal, which derives insights from patients’ medical history. China-based ZhenFund, which also seed-funded Medal, backed wearable tech startup BioBeats in 2013.
- Slowdown in Q2’16: The graph above and timeline below shows how the activity slowed in Q2’16 to 7 deals after two previous record-setting quarters of 10+ deals each.
While healthcare-focused AI startups have seen significant investment over the past year and a half, they also face stiff competition from general-purpose AI companies like Ayasdi and Digital Reasoning Systems that tailor their solutions to multiple industries and have made healthcare one focus. For example, DigitalReasoning recently received funding from Hospital Corporation of America to bring its cognitive computing technology to the medical industry.