A new report found that more New York City healthtech startups have already raised a greater amount of funding this year than at any time since at least 2016. NYC digital health startups have already raised 25 percent more venture capital in 2020 than all of 2019.
By the end of July, investors dropped a combined $1.5 billion into 70 locally based healthtech startups, according to an analysis by “The State of Digital Health NYC,” a report compiled by NYC Health Business Leaders and venture company Alleycorp.
Released on Wednesday, report authors surveyed more than 100 local doctors, entrepreneurs and academics to identify the top trends driving growth in the city’s digital health scene. By the end of the year, the group estimated investors will drop a combined $2.2 billion in 105 healthtech startups — proving that New York City has not only become the digital health hub in the country, but the world, said Bunny Ellerin, president of the NYC Health Business Leaders and director of the healthcare and pharmaceutical management program at Columbia Business School.
“The big takeaway is just that the funding hasn’t stopped at all, it’s only grown in the digital health space,” Ellerin told Built In. “In New York City, it was a good time before [COVID-19 to launch a digital health startup], but it’s really a good time now if you’ve got a solid idea and a good team.”
Digital pharmaceutical startups nabbed the greatest portion of the funds, while startups focusing on patient engagement and insurtech also grabbed sizable portions.
Oscar Health, a direct-to-consumer health insurance provider, raised the greatest amount so far this year at $225 million. Ro, a digital pharmaceutical startup, followed closely behind at $200 million, while Cedar Health trailed in third with its $102 million Series C round. The majority of startups funded had already raised at least a Series B round, according to the report.
Authors also found that other areas of significant investment this year included healthcare analytics, provider tools, health equity and women’s health. Ellerin said she expected industry fields to blur in the coming years, as tech startups continue to compartmentalize hospital services and bring healthcare home to consumers.
“You’ll see more of these types of organizations get funded, and my guess is it’s not going to be discrete,” Ellerin said. “You can have a behavioral health company that’s focused on health inequity that is virtual.”
Over the next year, Ellerin said she expected investment in digital behavioral health startups to “explode,” especially since the COVID-19 pandemic has exacerbated existing issues around depression and stress, alcohol and opioid addiction and homelessness. Venture capital company Optum’s $470 million acquisition of virtual therapy provider AbleTo proves this point, authors said.
The report found that 40 percent of respondents worried that mental-health issues would be the greatest long-term issue the city would face after the pandemic. Companies also said they have struggled most with supporting employees’ well-being during this time.
In addition to increasing investment in mental-health tech, the report further speculated that investment in equity-focused digital health startups like Cityblock Health — which raised $54 million in July — would continue to grow.
“You’re just gonna see a lot more money go into that sector, and that’s good,” Ellerin said.