Investing in digital health: Reading the tea leaves by studying startups

1. Invent Health
Innovations driving healthy returns

2. A new world
...unprecedented lockdown
(>700k businesses shut)
...new protocols to follow
...new technologies to connect
(web conferencing up 500%)
...new challenges to address
(Mental health doubles to 40% of Americans)

3. Still not close to the old normal

4. Migration away from coastal states

5. Virtual platforms not going away

6. Accelerated adoption priced into stock prices

7. School, work… increasingly healthcare
Telemedicine up 631%

8. HealthcareInvent
Healthcare
Courtesy: Jenny_hill

9. Healthcare
20% of GDP
$3 trillion
Take people away from the $3.7 trillion
traditional sick-care industry and lead them
toward health fitness and well-being
Photo: courtesy Marion_michele

10. Who am I?
Vator - Founder/CEO
Vator Health Fund - Managing
partner (Defender Capital)
Dow Jones MarketWatch, CNBC, Fox
Tech Columnist/Correspondent
CBS (KPIX) -
Tech and Business Anchor
CNN -
Tech and Business Producer
AIG -
$1B money market fund
Random facts:
Mother of 4 boys
Author: “Unequally Yoked” (Oct 2020)
I’m a PSIA certified ski instructor/coach
Trekked to Everest Base Camp
Rode the Tour de France (Pyrenees); Ran
the Camino de Santiago; Rode the Death
Ride (California Alps)
Worked for Donald Trump

11. Investment philosophy - look 10 years out
Culture - How do demographics (Baby
Boomers (55-75) biggest spenders),
technology change customs, habits,
expectations, values?
Consumer Demand - How does culture change
what we demand?

12. Investment philosophy
History - How did the internet change media and commerce?
Amazon wasn’t just a bookseller, it changed culture and consumer demand by transforming how we
receive recommendations and access goods. Facebook was not just a digital photo album, it mastered
the way to organize relationships, stay connected and influence our emotions and well-being.
Importantly, those new habits created new demand which created new revenue streams.

13. The internet - 80’s-90’s invention
One of the biggest technological
advancements in history.
Trillion dollar companies delivered
transformational technologies.
Media -- 15-20 yrs for newcomers to cultivate
new habits, create new demands, new
business categories, new revenue streams as
they redefined old industries

14. Youngest of top media is 15 yrs old
Sony
Apple (Rev: $260 billion) - Founded
1976
News Corp ($10 billion)
Charter Comm
Tencent Holdings - Founded 1998
Facebook (Rev: $70 billion) - Founded
2004
The Walt Disney Company (Rev: $65 billion)
Comcast
Alphabet (Rev: $160 billion) - Founded
1998
AT&T

15. Source: PWC
/ US
Create new revenue stream - online advertising

16. Expand new rev stream - social media ads
Source: Statista / US

17. Create a new business category - smartphones
Apple iPhone launch June 2007
Revenue $6.7billion 2008
iPhone rev: $168 billion 2021

18. Youngest of top healthcare is 50 yrs old
CVS Health
UnitedHealth Group
McKesson Corp
AmerisourceBergen
Cigna
Cardinal health (Rev: $153 billion) - Founded 1971
Walgreens Boots Alliance
Anthem

19. The internet
One of the biggest technological advancements in
history.
Trillion dollar companies have been formed on top
of it, making the internet less of a greenfield
opportunity.
Yet it has yet to fully transform other industries…
namely healthcare

20. Investment philosophy - look 10 years out
Culture - How do demographics, technology
change customs, habits, expectations, values?
Consumer Demand - How does culture change
what we demand?
History - The internet changed the way
consumers received recommendations,
accessed goods, organized relationships, stayed
connected and it influenced our emotions and
well-being. Game-changing companies created
new business categories and revenue streams.

21. What are the tea leaves telling me?
Recommendations (curating data: diagnostics
(a-fib alerts), personalized treatments; precision
medicine)
Access (on-demand, at home: doctors, care
teams, specialists, tests)
Organizing relationships (care coordination:
family, doctors, caregivers)
Influenced our emotions and well-being
(treatments: software to change behavior)
Create new category/ revenue streams
*Market timing

22. Create new business, rev - behavioral/mental health
The internet influences our emotions and well-being (software to change behavior, replace pills)
$29 billion

23. Behavioral / mental health replaces pills
The internet influences our emotions and well-being (software to change behavior, replace pills)
$21 billion

24. Behavioral / mental health replaces brick-and-mortar
The internet influences our emotions and well-being (new access points to care)
$18 billion

25. Behavioral health and mental health still nascent
The internet influences our emotions and well-being (software to change behavior, replace pills)
$2.3 billion

26. Mental illness treatments and investments surging
The global cost of the treatment of mental illnesses was $2.5 trillion (of which two-thirds are indirect
costs) in 2010; this is slated to reach $6 trillion by 2030 (Source: WHO)
Mental health startups have raised a record-breaking $1.37 billion in the first three quarters of 2020,
already outpacing the total $1.06 billion invested in 2019 (Source: PitchBook)
[Note: $7 billion invested in digital health in 2019 (Source: Rock Health) -- 20% of investments going into
mental health startups]

27. Clinical
conditions
Wellness
Digital therapies;
wearables, VR, AR
Licensed therapists/Experts
Chronic
diseaseEmotional well being
Coaches,counselorsCommunity
Self-help:Games,
activities,tests
Major Depressive
Disorder
Created by:
New Mental, Behavioral Health companies
Depression, anxiety, stress Addictions Rehabilitation

28. Create new business, rev - virtual care/telehealth
The internet changes access (software providing treatment like doctors/devices/clinics that expand
access to doctors, care teams, specialists, tests)
$22 billion

29. Create new business, rev - wellness/prevention
The internet changes recommendations (curating data: diagnostics)
The American medical system,
primarily focuses on prescriptions
and procedures, not preventative
care. About 90% of diseases are
related to social determinants–your
environment and your behavior.

30. Social determinants of health

31. Create a new business, new revenue - wearables
Apple Watch launch April 2015
Revenue $2.7 billion 2015
$14.7 billion 2021
(48% of wearable market)

32. Companies to watch in the private sector
Carbon Health - multi-access (video, pop-up clinics) healthcare provider
(Raised $172M - recently $100M in Nov 2020)
Lyra Health - mental health coaching (Rev: $100M in 2020)
(Raised $288 million)
Calm - digital meditation apps
(Seeking to raise $150M at $2.2 billion valuation)
Omada Health - provides coaching and digital platform for pre-diabetics/diabetics/chronic conditions
(Raised $256 million)
Parsley Health - clinic for advanced preventative care

33. New tech-driven, service-driven insurance companies
Raised $925 million Raised $1.3 billion
Raised $440 millionRaised $220 million

34. On-site health clinics
Electronic health records
Apple Watch
Siri voice assistant
Alexa voice asst
Amazon Comprehend
Medical = AWS

35. Companies to watch in the public sector
Google - data curation predictive analytics (FitBit, Verily, Calico)
Amwell - Sep IPO $18 - telehealth (Rev: $149M in 2019)
Teladoc - telehealth platform (bought Livongo $18.5B) (Rev: $553M in 2019; $1B in 2020)
Peloton - internet connected exercise machine (Rev: $1.8B in 2019)
Zoom - horizontal video platform for healthcare (Rev: $622 million in 2019)
Palantir - Sep IPO $10 - data curation predictive analytics (Rev: $742M in 2019)
One Medical - reinventing primary care brick-and-mortar clinics (Rev: $276M in 2019)

36. January 2019 - Apple shares slashed by 35%
to $150 (post-split $40)
”Investors fear that iPhone sales have slowed
down and will continue to do so this year,
particularly in China -- reportedly a much
larger market than the US. iPhones accounted
for 59 percent of Apple's total revenue in Q4
2018. But when looking at other growth areas
for Apple - it's in the pole position for
wearables. My bet is that Apple's real future
will be in its watch and wearables.”

37. Questions?
Follow and ask questions to Bambi on Twitter: @bambi100
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