DR.

BERTALAN MESKÓ

THE MEDICAL
FUTURIST’S
GUIDE TO

INVEST IN
DIGITAL
HEALTH

THE MEDICAL FUTURIST

Table
of Contents

Welcome Message 4.
CHAPTER 1: Digital Health By The Numbers 5.
CHAPTER 2: Why To Invest In Digital Health 8.
CHAPTER 3: Where To Invest? The Trends And Technologies To Look Out For 12.
01 Virtual reality 13.
02 Augmented reality 14.
03 Remote care 14.
04 Mental health services 15.
05
Managing chronic conditions 16.
06 Employee health programmes 17.
07 Artificial Intelligence 18.
08
Fitness trackers and smartwatches 19.
09 Portable diagnostics devices 19.
10 Smart utensils 20.
11 Food scanners 21.
12 Nutrigenomics 22.
13 Robot services, companions, robot nurses 22.
14 Direct-to-consumer genetic tests 23.
15 Microbiome tests 24.
16 Health sensors and wearables 25.
17 3D printing 25.
18 At-home lab tests 26.
19 Digital pills 27.
20 Smart patches and tattoos 27.
21 3D printed drugs 28.
22 Digital health insurance 29.
23 Ride-hailing services 29.
24 The digital health centaurs 30.
Top 24 Digital Health Technologies Infographic 31.
CHAPTER 4: Good Investments, Bad Investments: Tales From The Industry 32.
The Good Ones MySugr 33.
AliveCor 34.
Oscar Health 35.
DeepMind 35.
The Notorious Ones Theranos 36.
Proteus 37.
Organovo 37.
Clinicloud 38.
CHAPTER 5: The The Medical Futurist method 40.
Top 100 Digital Health Companies Infographic 43.
Conclusions 45.
Glossary of Terms 46.

3
Welcome message
from The Medical
Futurist
Dear Reader,
At The Medical Futurist, and especially at The Med-
ical Futurist Institute, we don’t usually deal with
investment-related news and announcements. We
never share investment rounds or press releases
coming from incubators and venture capital firms.
However, it doesn’t mean that we don’t keep a close
eye on all these developments.

Moreover, the mission we stand by indicates that we

actively support the digital health and artificial intel-
ligence start-up community; we are in close contact
with many founders and we do share news and con-
texts that those incubators use.

The pandemic has just made this involvement even

more prominent in our work. Good digital health
investments these days cannot only provide a more
optimistic vision for healthcare, but can shape how
we deal with COVID-19 too.

So, it was time to share how we assess the quality

and promise of digital health and A.I. start-ups and
technologies; how we make a decision whether to
feature a report or announcement on our channels;
and how in general we try to make sense of all the
changes around healthcare when it comes to
investments.

We shared those 24 technological trends we find the most promising by also highlighting some
specific areas that are worth following. And we included good and bad examples of the past
couple of years about investment stories.

I hope you will find our publication a useful addition to the toolset of investors to find the next big
thing in digital health and A.I. that can make the lives of patients and the job of medical profes-
sionals better.

Kind regards,

Dr. Bertalan Meskó

The Medical Futurist
Director of The Medical Futurist Institute

4
CHAPTER 1:
Digital Health
By The Numbers
During the decade that lapsed, billions of dollars were funneled into the digital health sec-
tor. In investment terms, such amounts are commonplace in virtually any industry. But to
put it in perspective, this particular sector saw a 400% increase in investment deals during
the same timeframe.

This has been a steady trend in funding for digital health startups in the last couple of
years, according to data from Rock Health, the full-service seed and early-stage venture
fund supporting digital health startups. The record-setting year of 2017 totalled $5.7 bil-
lion in capital investment in digital health but was surpassed by a staggering 42% the
subsequent year when investors channeled some $8.1 billion. 2019 saw a slight downslope
with $7.4 billion in funding in the sector.

5
As for the surreal year that is 2020, one might be excused to assume that this downward
trend would follow suit, or even plummet, considering the pandemic’s physical and eco-
nomic lockdown. But contrary to this ideation, investments did not falter.

Before the year’s end, by Q3 2020, the amount of investment totalled $9.4 billion, exceed-
ing the largest annual sum of $8.1 billion in 2018, being even higher than in the record-set-
ting year before then. Driving these numbers in 2020 were also larger deals than before.
Rock Health reports an average deal size of $30.2 million in 2020, which is 1.5 times greater
than the $19.7 million average in 2019.

If there’s one thing that speaks to investors,

it’s the numbers; and here, the numbers speak
for themselves, and they’ve baffled even experts.
“We looked at all of these headwinds and we kind
of made the prediction that we were coming off
a record-setting first quarter of funding, and we
said, this is unlikely to last,” Rock Health Research
Analyst Sean Day said in an interview. “We were
surprised. The deals kept coming in.”

However, as is often the case, investors are put

to blame for funding without proper appraisal of
businesses. Venture capitalists are seen to back
innovators left and right that come up with either
elaborate technologies or untested products, in
the hopes of getting a hold on the next unicorn.

As such, these numbers might only be indicating

hype. But in healthcare, this might not hold true.
Investors interviewed in a Deloitte report
emphasised their backing of innovative
businesses “that align their value propositions
to the present and future of health, with
technology being the bedrock.” They further
highlighted the need for these companies’
products to improve quality of care, diminish
costs and improve access to care.

For instance, in 2020, Rock Health saw a spike in investments towards companies offering
on-demand healthcare services and remote care. These include the likes of telemedicine
services, prescription delivery and at-home urgent care; services for which there’s a real
need amidst the pandemic with the need to limit physical contact while continuing medical
consultations.

As the Deloitte report points out, “venture funding to innovative companies is often con-
sidered an important barometer of their value propositions and long-term success. More-
over, it can indicate future market performance and emerging trends.” In addition to this
scaling “standard”, investment moves from major players are also indicative of the upcom-
ing trends, as capital not only funds startups but is also redirected to established corpo-
rations through mergers and acquisitions (M&A).

6
Google, Amazon and Apple all made digital health startup acquisitions in 2019, with one of
the most prominent and unexpected being Google’s acquisition of Fitbit for a whopping
$2.1 billion. Despite its economic downturns, 2020 was also a rather active year in M&A
deals.

Even with the steady flow of capital for funding startups and for M&As, caution should
still be exercised. Recent years have been filled with cautionary tales from digital health
startups that over-promised but grossly under-delivered; even from major players and
coveted unicorn startups.

But despite these failed ventures, reasons do abound to bring in funds in the sector.

Chapter 1 key points:

Digital health investments

are steadily on the rise

2020 has been the year

of digital investment;
precipitated by the COVID-19
pandemic

Big Tech companies are also

taking interest in digital health

7
CHAPTER 2:
Why To Invest
In Digital Health
Despite all the money talks, newly interested parties might - and rightly should - ask why
they should invest in digital health in the first place. For one, deals in this sector are re-
latively scarce, especially outside of the United States. McKinsey reports that during the
period from 2015 to 2018, healthcare tech deals amounted to only 7% of both European
and U.S. healthcare deal volume; and that during this window, 83% of global healthcare
tech deals occurred in the U.S. alone.

But as we saw in the previous chapter, investors are not backing down but steadily fuelling
capital in this field. According to a forecast from Statista, the global digital health market
size is expected to increase almost six-fold by 2026 to nearly $640 billion, with an expec-
ted compound annual growth rate (CAGR) of 28.5% from 2020 to 2026. Market players will
want a piece of this growing cake, and so might you, before those pieces get limited.