Investors just bet $3.2 billion that tech will transform healthcare. Here are the top 10 firms making the most digital health investments.

Chris Gibson CEO Recursion Pharmaceuticals
Chris Gibson is CEO of Recursion Pharmaceuticals, which has been backed by three of the VCs on the list.
Recursion

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  • In the third quarter, digital health companies brought in $3.2 billion in venture funding, according to a report from CB Insights.
  • Overall, digital health startups have accounted for about a third of venture funding since 2016, according to the report.
  • The venture capital firm Data Collective (DCVC) was the most active in the space in the third quarter, according to the report. 
  • But it's a crowded space, with four other VC firms tied for second place and five venture firms tied for third. 
  • These firms have invested in startups like Freenome, which focuses on early detection and prevention of cancer, and the drug discovery company Recursion Pharmaceuticals
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So far this year, startups in digital health have raised more than $10 billion from investors placing bets on the future of healthcare.

And while digital health remains a lucrative area for investment, a report from CB Insights shows that digital health deals have been on the decline. There were 328 deals in the third quarter, down from the same period in 2018.

Since 2016, digital health has represented an average of 31% of healthcare deals, according to the report

Read more: Companies like Google and Microsoft are making big investments in startups looking to disrupt healthcare. Here's where 5 top tech giants are placing their bets.

Amid the decline, some venture investors are still finding opportunities.

There are 10 venture capital firms that have been especially active in the space, CB Insights reports. CB Insights ranked the VCs based on the number of unique digital health company investments they had made, but the report doesn't disclose those figures. 

These firms have invested in startups like the cancer blood test startup Freenome, which focuses on early detection and prevention of cancer, amd the drug discovery company Recursion Pharmaceuticals

As more investors delve into the space, five VCs ranked as the third most active in the space, with four VCs ranked as the second most active digital health firms in the space, with Data Collective taking the top spot. 

Here's who they are, and what they've been betting on: 

#3 - Felicis Ventures

Aydin Senkut
Aydin Senkut
Felicis Ventures

Felicis Ventures is an early-stage venture firm based in San Francisco founded by Aydin Senkut, who used to work at Google. 

The firm closed its sixth funding round in 2018 with $270 million

The firm has an extensive portfolio across many sectors like commerce, education, and health and biotech startups. 

Investments: Ginkgo Bioworks, the biotech company focused on synthetic biology and drug discovery company Recursion Pharmaceuticals.

#3 - Khosla Ventures

Vinod Khosla
Vinod Khosla, founder of Khosla Ventures.
Steve Jennings/Getty Images for TechCrunch

Menlo Park, California-based Khosla Ventures invests across a variety of industries. Healthcare is one of 17 fields the venture firm lists as places it has investments, alongside education, financial services and space. 

The early-stage VC has raised a total of $2.9 billion across 9 funds, according to Crunchbase. 

Investments: Behavioral telehealth startup Ginger and heart monitoring startup Hello Heart

#3 - Kaiser Permanente Ventures

Kaiser Permanente CEO Bernard J. Tyson
Kaiser Permanente CEO Bernard J. Tyson.
Reuters

Kaiser Permanente which is one of the biggest healthcare providers and health plans in the US, has a venture arm, focused primarily on healthcare companies.

It has an extensive healthcare portfolio in digital health, drug discovery and diagnostics. 

Investments: Early cancer detection testing startup Freenome and the behavioral telehealth startup Ginger.

#3 - Lightspeed

Calm
Calm

The Menlo Park, California-based early-stage venture capital firm Lightspeed Ventures focuses mainly on technology and the consumer space. To date, the firm has backed more than 350 companies, which include Snapchat and DoubleClick, which was acquired by Google.

According to itsa website, since the firm's founding, over a third of the companies have gone public. 

Investments: Healthcare data analytics company MDClone and meditation and sleep app Calm, which reached unicorn status this year. 

#3 - Menlo Ventures

Menlo Ventures partner Matt Murphy
Menlo Ventures partner Matt Murphy.
Menlo Ventures

The San Francisco-based venture capital firm Menlo Ventures is one of the earliest VC firms, founded in 1976. Menlo invests in companies from industries like technology, communications, and security.

The company's list of past investments includes more than 70 public companies, and it now has $5 billion under management. Some of its past bets include Uber, Gilead Sciences and Warby Parker. 

Investments: Drug discovery company Recursion Pharmaceuticals and cloud computing life science research platform Benchling

#2 - Baidu Ventures

Baidu's co-founder and CEO Robin Li delivers a keynote speech at the opening session of Baidu's annual AI developers conference Baidu Create 2019 in Beijing, China, July 3, 2019. REUTERS/Yilei Sun
Baidu's co-founder and CEO Robin Li delivers a keynote speech at the opening session of Baidu's annual AI developers conference Baidu Create 2019 in Beijing
Reuters

Baidu Ventures works with companies to invest in artificial intelligence across various industries. The firm was founded in 2016 and is headquarted in China. 

Investments: Biotech drug discovery startup Insilico Medicine, India-based pharmaceutical company Neuracle Lifesciences, and genome-sequencing tech company Qitan Technology

#2 - Optum Ventures

Kaia Health app.
Someone using the Kaia Health app.
Courtesy of Kaia Health.

Optum Ventures, founded in 2017, is an early-stage venture capital firm that's part of UnitedHealth Group, the biggest US health insurer.

While Optum Ventures isn't the biggest firm on the list, with investments in just 14 companies, its focus is solely on digital health startups. 

Investments: Vim, a healthtech company managing the provider-patient experience;  virtual care and diagnostics platform Buoy; and virtual physical therapy app Kaia Health

#2 - F-Prime Capital

carl byers, f-prime capital
Carl Byers, partner at F-Prime Capital whose portfolio includes Buoy Health and Firefly Health.
F-Prime Capital

Cambridge, Massachusetts-based F-Prime Capital is a big investor in healthcare. 

Healthcare is "the largest sector of our economy and arguably the least efficient in many ways," Carl Byers, a partner at F-Prime, previously told Business Insider.

"That leads to huge opportunities to improve care while reducing cost. And people who create the technology and services in the middle can earn and should earn in terms of making that happen," he said at the time. "So it's just a great opportunity for that reason."  

Investments: Biotech drug discovery startup Insilico Medicine, virtual care and diagnostics platform Buoy, and primary care startup Firefly Health

#2 - Qiming Venture Partners

Screen Shot 2019 11 06 at 2.50.42 PM
Founding managing partner, Duane Kuang.
Screenshot via CNBC

Qiming Venture Partners is a China-based venture capital firm founded in 2006. According to the company's website it has $4 billion in assets under management.

In 2017, the company launched Qiming USA, focused on early-stage healthcare opportunities in the US and Europe.

Investments: Biotech drug discovery startup Insilico Medicine, virtual care and diagnostics platform Buoy, and virtual care platform myHealthTeams, which creates social networks for people living with chronic conditions. 

#1 - Data Collective (DCVC)

Gabe Otte, CEO and Co Founder, Freenome
CEO and co-founder of Freenome, Gabe Otte
Freenome

Data Collective (DCVC) is a San Francisco-based venture capital firm established in 2011. It recently raised $725 million to invest in "deep tech." The firm takes the number one spot on the list for most active investors in digital health. 

The firm invests in companies across multiple sectors like life sciences, agriculture, security,  and computational healthcare. 

Investments: Early cancer detection startup Freenome, drug discovery company Recursion Pharmaceuticals, synthetic biology company Ginkgo Bioworks, diagnostics company Lucira Health, and Canadian-based biotech company Sequence Bio

 

 

 

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