Are Healthcare IPOs Back?

In February, we predicted a coming revolution in essential industries – “Software’s Third Act” – that deeply informs our investment thesis at The Council Fund. Healthcare is one of the top five areas we believe will experience the biggest step change via vertical software improvements. The pandemic exposed vulnerabilities in our healthcare system, and a new wave of innovators is emerging to address them. These founders are dissatisfied with the status quo and possess deep industry knowledge alongside a tech-savvy mindset. 

This month, we delve deeper into this exciting world, exploring industry news, recent healthcare exits (read: IPOs and acquisitions!), and success stories from our portfolio companies.

Stay tuned! Throughout the year, our newsletters will showcase how software is transforming other essential industries – manufacturing, logistics, construction, and more. We'll highlight the innovative companies leading this “Third Act” and their impact on our daily lives. The Council Fund remains your trusted guide on this journey, unpacking the future of software and its transformative power.

Industry News

• Healthcare IPOs are back! Both Waystar and Tempus AI went public this month. These are the first digital healthcare IPOs since 2022, and the industry will be watching closely to see who might be next. 

  • Waystar IPO Debut: Waystar began trading on June 6 on the Nasdaq with an initial public offering of 45 M shares at $21.50 per share. Waystar simplifies healthcare payments so providers can prioritize patient care and optimize their financial performance.

  • Tempus IPO Debut: Tempus AI began trading on June 14 on the Nasdaq, with an initial public offering of 11.1 million shares priced at $37 each, raising $410.7M. Tempus has one of the world’s largest libraries of multimodal data and provide AI-enabled precision medicine solutions to physicians to deliver personalized patient care. In parallel, Tempus facilitates discovery, development and delivery of optimal therapeutics.

• DTx Making Waves: A May 2024 report by American business consulting firm Frost & Sullivan reports that the global Digital Therapeutics market is predicted to reach an astonishing $4.54 billion in 2025 and $32 billion in 2027 (from $1.23 billion in 2020), consequential of the increase of healthcare costs and increasing patient demand for remote and efficient healthcare solutions

  • DTx stands for Digital Therapeutics, which are software applications that use evidence-based methods to treat, manage, or prevent diseases and disorders.

  • Musculoskeletal (MSK) DTx are found to be efficacious and provide cost savings to patients: The PHTI recently reported that MSK digital health solutions show more efficacy and cost savings for patients than the standard of care.

  • Yet, is DTx the best solution for diabetes?: In March, the PHTI released a report on how digital health solutions for diabetes were likely not worth the cost given the poor outcomes. 

• FDA advisers vote against first MDMA therapy to treat PTSD: On June 4, CNN reported that FDA constituencies voted against the first ecstasy-based treatment for PTSD, questioning the integrity of the trials to support the proposal of this groundbreaking new treatment for PTSD. 

• AI Altering the Scientific Discovery Landscape: Google’s DeepMind last month published a revolutionary report powered with AI about Protein Folding and Structures, discussing 214,000 findings within their DeepMind Database as of 2024, which signals that AI could be a groundbreaking mechanism to helping scientists understand more about protein structures. This could eventually allow scientists to understand proteins and their functions more clearly, leading to new drug discovery and cures.

• Health and Biotech Startups Now Get the Majority of U.S. Series A Funding: As of Q2 2024, according to Crunchbase data, so far in 2024, biotech and health startups have captured around $5.6 billion across 110 Series A rounds, accounting for 53% of all funding within the Series A stage this year.

Groundbreaking New Healthcare Innovations Hitting the Market:

• UK Pharmaceutical and Beauty Retailer Giant Boots Launches First-ever Saliva Pregnancy Test: Collaborating with Abingdon Health, Salignostics, and Crest Medical, Boots has launched the first saliva-based pregnancy test under its own line, now available in Boots locations across the UK

• Israeli Healthcare Company and Medical Center Launch First-ever Saliva Test For Early Detection of Oral Cancer: Jerusalem-based Healthcare Company Salignostics has partnered with Sheba Medical Center in Tel Aviv in a groundbreaking effort to produce and release at-home saliva tests for early detection of oral cancer. 

• LabCorp Launches New and First of its kind Pre-eclampsia Screening Option: In May 2024, LabCorp became the first and only service in the United States to begin offering Pre-eclampsia screening for women throughout pregnancy in order to mitigate cases earlier on.

Deals, Deals, Deals! What Major Local Deals Are Going On In The Space This Q2?

• Adonis: $31 Million in Series B Funding: Adonis is a revenue intelligence and automation platform that gives healthcare providers the ability to better collect revenue they are owed. Investors include Point72 Private Investments, Kin Ventures, General Catalyst, Bling Capital, and Max Ventures.

• Valar Labs: $22 Million in Series A Funding: Valar Labs, which is creating an AI-powered tumor analysis and oncology diagnostic platform, has just secured $22 million in Series A funding via DCVC and Andreessen Horowitz, with Pear VC participating.

• Plenful: $17 Million in Series A Funding: Plenful, a no-code admin automation tool for providers and pharmacies, has just secured $17 million in Series A funding via TQ Ventures. Participation came from Bessemer Venture Partners, Mitchell Rales (Co-founder of Danaher), Susa Ventures, and existing Plenful investors. 

• Clarity Pediatrics: $10 Million in Seed Funding: Clarity Pediatrics, a chronic care startup based in San Francisco, was founded in 2021 at the height of the pandemic to take ADHD diagnoses and training online to reduce typical yearlong wait times and astronomical co-pays within the psychology space. Clarity has provided care to thousands of California families, and it plans to use the $10 million seed funding from Rethink Capital Partners, Homebrew Ventures, and Maverick Ventures to expand its services nationwide in 2024.

• Weave Bio: $10 Million in Seed Funding: Weave bio, out of New Haven, Connecticut, a platform using AI attempting to automate the Investigational New Drug application process, has just secured $10 Million in Seed funding co-led by Innovation Endeavors and Magnetic Ventures. 

• Float Health: $10 Million in Series A Funding: Float Health, a platform easing providing at-home infusion nurses, has just secured $10 million in Series A funding via investments by leader Canvas Ventures, along with participation from Wave Capital, Burst Capital, Also Capital, and Y Combinator. 

• Foundation Health: $6 Million in Seed Funding: Foundation Health, a San Francisco-based digital healthcare startup focused on empowering direct pharmaceutical to customer relations, has announced that it has received $6 Million in its seed funding round to propel its evolution and growth as a pioneer in the space. Investors include Garry Tan (CEO of Y Combinator), Transpose Platform, Tuesday VC, Alt Capital, Box Group, Liquid Ventures, Exceptional Capital, Calm/Storm Ventures, PageOne Ventures, as well as angels Paul Johnson from Lemonaid and Meghan Fitzgerald from Grey Ghost Advisors.

Portfolio Powerhouses In The News

• Daybreak Health: Daybreak Health, the leading provider of school-based mental health services, announced its partnership with Medi-Cal on May 10, California’s Medicaid program. Medi-Cal covers 15.5 million Californians, including 5.5 million youths (between 0-20). This is a groundbreaking step forward for the company in its mission to “ensure that every child in need in California has equitable access to evidence-based mental healthcare.” Our General Partner Amber Illig angel invested in Daybreak Health’s Pre-seed round.

Other Council Updates 

• Today (June 27th) is the last day to apply to The Council Angels: If you’ve been watching The Council for a while, you may know that we are not only bullish on operators-turned-founders, but also on operators-turned-angel investors. Our fund is super-powered by a community of 160 angel investors who have worked at high growth companies like OpenAI, Cruise, Procore, Slack, Block, Uber, Flexport, Airbnb, Lyft, Affirm, and many more. Historically we’ve marketed to women, given we don’t see enough of them on cap tables and they exist at every top company. If a friend, family member, or coworker of yours comes to mind that wants to start or scale their angel investing efforts, we would love to meet them. Here's the application link you can share with them.

• Our GP Amber Illig spoke on industrial innovation alongside Lux Capital, General Catalyst, and Industry Bloc peers (AlleyCorp, House of VC, Steel Atlas, and Iron Prairie) as part of New York Tech Week. Stay subscribed to hear about more events like this in San Francisco and New York!

Want to invest alongside The Council Angels and The Council Fund?

Join our syndicate – a no strings attached way to see some of the top deals we’re investing in and participate when there’s space!

Know an awesome founder we should chat with?

At The Council, we firmly believe that groundbreaking solutions in healthcare are crucial to improving patient outcomes while lowering costs for all parties involved. This is part of our larger thesis around proven operators building venture-scale software in essential industries. We love unsexy spaces and are actively looking to get to know the best founders building in them at Pre-seed & Seed stage.

If you or a friend/connection are an entrepreneur who aligns with our thesis around Software’s Third Act or more specifically healthcare, please get in touch! Pro tip – a warm intro through our network really speeds up the process 😉 

We welcome your feedback on this newsletter. Please don't hesitate to contact us at [email protected]!

Sincerely,

The Council Team