In the post-COVID world, VCs say it’s not as easy to get excited about investing in digital health. Deal activity in healthcare IT was relatively flat in Q1 2024 at 74 total deals, valued at about $1 billion total, up only 3% from the year-ago quarter, according to PitchBook data.
Still, promising startups have grabbed investors’ attention this year. TechCrunch spoke with about a dozen healthcare VCs about the companies they think have the most promising future. While recently formed AI-driven startups that are solving staggering administrative challenges in the U.S. healthcare system dominated their recommendations, they also mentioned several slightly older, non-AI-focused businesses.
We narrowed their suggestions to the list of names that more than one VC mentioned, which came in at an even 10 companies. VCs discussed with us the companies that were both in their portfolios and not.
Abridge
What it does: Uses AI 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-taking space and one that has secured integration with the all-powerful Epic Systems health records software.
Why it’s promising: The Pittsburgh-based startup generates excitement among investors and hospital systems eager to free up physicians’ time spent on note-taking. Abridge is the health tech startup that among investors we talked to was mentioned the most.
Some investors said that Abridge is leading its category. Other companies competing to dominate the AI-powered medical note-taking market include Ambience, Nabla, Microsoft-owned Nuance and Suki.
Funding: In February, Abridge raised a $150 million Series C led by Lightspeed Ventures at a valuation of $850 million, a mere four months after the virtual medical scribe startup grabbed a $30 million Series B from Spark Capital, Bessemer Venture Partners, CVS Health Ventures and others.
CodaMetrix
What it does: 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 burdens.
Why it’s promising: Medical coding is tedious and error-prone. Entering an incorrect code for a condition or treatment can lead to insurance rejection of claims and other administrative problems. Moreover, the burden of entering codes falls on already busy physicians and nurses, leading to increased stress and burnout.
The company has competitors, including Fathom Health, but investors say that CodaMetrix has one of the largest annotated coding datasets.
Funding and valuation: In March, CodaMetrix grabbed a $40 million Series B from Transformation Capital with participation of returning investors SignalFire and Cressey Ventures. The deal valued the Boston-based company at $220 million, according to PitchBook.
Cohere Health
What it does: Cohere Health expedites health insurance approval process, known as prior authorization, for medical conditions with the help of AI.
Why it’s promising: Prior authorization management could take medical and administrative staff hours as it requires gathering appropriate documentation for submission to health insurers 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 that Cohere is for now the leader in the space, but other startups that expedite health insurance approval 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.
Grow Therapy
What it does: Grow Therapy connects therapists who want to start independent practices with patients and insurers. Founded in 2020, the startup employs the so-called business-in-box model because it gives mental health professionals tools for filing claims, receiving payments and being matched with patients.
Why it’s promising: The company claims that its business model offers therapists more flexibility than if they were to provide their services through marketplaces like Headway or Lyra. While it’s not clear whether that’s indeed the case, Grow, true to its name, is growing fast, investors say.
Funding and valaution: In April, Grow closed an $88 million Series C led by Sequoia at a $1.4 billion valuation, according to PitchBook data.
Equip
What it does: Four-year-old Equip provides online treatment for kids, teens and adults in all 50 states and accepts most health insurances. Equip providers are also trained to address co-occurring conditions like anxiety, depression and obsessive-compulsive disorder (OCD).
Why it’s promising: About 10% of the U.S. population develops an eating disorder during their lives, but only a fraction of these people receive help, according to the National Eating Disorders Association. The company’s offering brings care to those who don’t live near an eating disorder facility or prefer to be treated 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 it does: The New York-based health clinic and benefits platform offers services for fertility, adoption, parenting, pediatrics and menopause through employers, including Microsoft and AT&T. Maven also serves Medicaid patients.
Why it’s promising: Investors say that 10-year-old Maven continues to grow, given that its area of focus — digital health services for women and families — has been historically underserved. While VC interest in women’s health has grown in recent years, the U.S. Supreme Court’s decision to overturn Roe v. Wade in 2022 has shined an even brighter spotlight 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 the participation of VCs, including Lux Capital, Oak HC/FT and Sequoia.
Memora Health
What it does: Memora Health offers virtual AI-based care coordination, reducing administrative burdens for medical staff. The company’s technology uses text messages to communicate with patients, automating tasks like appointment reminders, answering patients’ common questions and collecting data about 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 on their health journey.
Funding: The company spun out of Harvard Innovation Lab and went through Y Combinator in 2018. Since then, it has raised nearly $80 million and was valued in April 2023 at $430 million, according to PitchBook data. Memora’s investors include General Catalyst and Andreessen Horowitz.
SmarterDx
What it does: Founded in 2020, SmarterDx uses AI to help hospitals not miss out on revenues by analyzing patients’ lab results, medications and doctors’ notes to find minor errors and omissions in patients’ 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 realize more revenues, the value of the company’s technology is easy to measure.
Funding: In May, SmarterDx raised a $50 million Series B round led by Transformation Capital, with participation from Bessemer Venture Partners, Flare Capital Partners and Floodgate Fund. The latest capital infusion brought the company’s total funding to $71 million.
Summer Health
What it does: The two-year-old Summer Health connects parents to pediatricians who, within minutes, respond to urgent care and behavioral concerns. The company provides its text messaging service directly to consumers and through employers who offer access to Summer Health as a benefit.
Why it’s promising: Busy and worried parents want answers to their children’s health issues right away and around the clock. Summer Health reduces parents’ concerns because they can get fast responses to their questions via an app.
Funding: In April, Summer Health raised its $12 million Series A led by 7wireVentures and existing investors including Sequoia, Lux Capital and Chelsea Clinton’s Metrodora Ventures.
Transcarent
What it does: Four-year-old Transcarent helps large companies save money on providing health insurance to employees. The startup gives employees access to discounted medications, telehealth services and personalized AI-generated answers about their health coverage.
Why it’s promising: Part of the company’s fast rise could be attributed to its founder, Glen Tullman, who previously started Livongo, a chronic condition management company Teledoc acquired for $18.5 billion in 2020.
The company also recently introduced an AI platform that answers members’ questions about coverage, offers clinical information 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.