The 26 billion-dollar startups to watch that are revolutionizing healthcare in 2021

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Summary List Placement

The financial calamities predicted at the beginning of the coronavirus pandemic didn’t materialize for most healthcare startups. 

The industry’s up-and-coming private companies largely benefited from the one-two punch of financial concerns in other parts of the market and an increased focus on healthcare with all eyes on America’s wavering pandemic response.

2020 will likely go down as one of the single most pivotal years for the US healthcare industry in history. Even outside large hospitals and pharmaceutical companies, private startups raised a whopping $17 billion in 2020, a 57% increase over 2019’s record, according to a new report from Silicon Valley Bank.

That led to a new herd of healthcare unicorns, private companies valued at or above $1 billion. Some former unicorns, like GoodRx and Amwell, made public market debuts while others continued raising venture capital and private financings while the market was favorable. Some startups raised two separate funding rounds in the last year alone.

Read more: The 8 digital health startups to watch that are changing healthcare in 2021

Business Insider rounded up the 26 healthcare companies currently valued at more than $1 billion, according to Pitchbook and additional reporting.

SEE ALSO: Investors think Amazon and Alphabet could set the pace for healthcare deals in 2021. Here’s what they are watching.

MDLive – $1 billion

MDLive is a long-standing telemedicine provider that has boomed during the pandemic. The 11-year-old company offers a suite of digital health and virtual care services to its patients in the United States and operates on a similar level to its competitor, telehealth giant Teladoc.

Teladoc in October completed its merger with Livongo, a company that helps patients manage chronic conditions like diabetes, spurring speculation that MDLive may pursue a similar blockbuster deal in 2021. 

MDLive indicated its plan to go public in 2021 instead when it announced $50 million in equity investment in September. According to Pitchbook data, the round valued MDLive at $1 billion and also included $25 million in debt financing as a separate transaction.

— Megan Hernbroth

Cityblock Health – $1 billion

Cityblock Health wants to improve healthcare outcomes for low-income patients through its social support services for what investors call social determinants of health in addition to its virtual care service.

These factors, which include access to public transportation, affordable and reliable housing, and nutritious food, operate outside the four walls of a clinic or doctor’s office but have massive implications on patients’ long-term health.

Cityblock Health raised $160 million in Series C funding on December 14, catapulting the three-year-old startup to the unicorn club.

Investors recently told Business Insider that startups like Cityblock could be poised to rise even further in 2021 as the pandemic continues and the inequities in care remain at the forefront of the nation’s response.

— Megan Hernbroth

Virta Health – $1.1 billion

Virta Health is a Silicon Valley startup that combines virtual care and the trendy ketogenic diet to help patients with diabetes. 

Virta encourages patients with type 2 diabetes to adopt a low-carb, high-fat diet and matches them with trained professionals to help track and manage their symptoms. In a peer-reviewed study Virta funded, researchers found that these changes to a patient’s diet could ultimately reduce or remove the need for medications like insulin.

Virta raised $93 million in Series C funding in January 2020 before raising another $65 million in Series D funding on December 2. The subsequent round valued the startup its $1.1 billion, Bloomberg reported.

— Megan Hernbroth

 

Lyra Health – $1.1 billion

Lyra is a mental health startup that works with companies to provide better benefits to employees. The startup has a network of therapists, coaches, and other care providers that provide virtual care visits to any employee with access to the software at little or no cost.

The service has been booming during the pandemic, according to investors, as remote employees struggle with work-life balance and employers seek to replace the enticing in-office perks with options that benefit more people.

Lyra raised $110 million in Series D funding on August 27, earning the five-year-old startup a $1.1 billion valuation, according to Pitchbook data.

Investors have been eager to back mental health startups in 2020, and many told Business Insider they foresee that trend only increasing in 2021

— Megan Hernbroth

 

Sema4 – $1.1 billion

Sema4 is a data analytics startup based in Stamford, Connecticut, that looks at data sets of large populations to gain insight into health outcomes. The company spun out of the Mount Sinai Health System in 2017, and was named for a system of sending messages using codes, which is the core function of its technology.

On July 29, the company said that it raised $121 million in Series C funding from BlackRock Innovation Capital Group, Mount Sinai Health System, The Blackstone Group, Moore Strategic Ventures, Deerfield Management, Oak HC/FT, Decheng Capital, Connecticut Innovations, and Section 32.

The round came about a year after a $120 million Series B funding round. In total the company has raised nearly $371 million, according to Pitchbook data.

— Megan Hernbroth

Freenome – $1.2 billion

Freenome is a liquid biopsy startup that seeks to detect cancer through a routine blood draw. 

“What we’re aiming to do is develop a test that healthy patients would take as part of their annual physical that tells you whether or not somebody’s going to have cancer,” cofounder and CEO Gabe Otte told Business Insider in 2016 following the company’s seed funding round.

Otte developed technology that can read the human genome for early markers of cancer by looking at a patient’s blood instead of more traditional biopsies that rely on sampling tumor cells. In the years since his first fundraising round, Otte and his team have also created software that creates a system for early disease detection and screenings.

The San Francisco-based company raised $270 million in Series C funding in July. Its investors include GV, Roche Venture Fund, Kaiser Permanente Ventures, Fidelity Investments, Novartis, American Cancer Society, Andreessen Horowitz, BrightEdge Ventures, Polaris Partners, Section 32, RA Capital Management, and Farallon Capital Management, among others. It has raised more than $508 million in total, according to Pitchbook data.

— Megan Hernbroth

 

 

Rakuten Medical – $1.2 billion

Headquartered in San Diego, Rakuten Medical develops precision-targeted cancer therapies designed to treat solid tumors. 

The biotech is led by the Japanese billionaire Hiroshi Mikitani, who is also founder and CEO of the large Japanese e-commerce firm Rakuten. Mikitani said he was inspired to fund the cancer research after his father was diagnosed with pancreatic cancer in 2012.

Rakuten Medical has raised about $471 million, according to PitchBook. Both Mikitani and Rakuten have invested in Rakuten Medical.

— Lydia Ramsey Pflanzer

Orca Bio – $1.2 billion

Biotech startup Orca Bio creates new cell therapies for procedures like bone marrow transplants that help strengthen patients’ immunity. The doses are personalized to each patient and are built cell-by-cell using another person’s blood.

According to the company, this treatment could help cure certain diseases and decrease side effects commonly experienced with current drugs. In November, the startup released a study of its therapy’s success on patients with graft-versus-host disease, a complication commonly associated with transplant recipients. 

The Silicon Valley company raised $192 million in Series D funding from Lightspeed Venture Partners and 8VC on June 17. According to Pitchbook data, it has raised $300 million since it was founded in 2016.

— Megan Hernbroth

Whoop – $1.2 billion

Whoop makes a health and fitness tracking strap that has won over everyone from Lebron James to Eli Manning to Kevin Durant.

The strap, which functions similar to existing watch fitness trackers, allegedly helped PGA Tour golfer Nick Watney detect early COVID-19 symptoms by picking up on his elevated respiratory rate, in addition to integrating with popular fitness app Strava. The strap itself costs nothing and is included with a membership for $30 a month or $288 for one year.

The 8-year-old startup was founded by 31-year-old founder and CEO Will Ahmed. On October 28, Whoop said it had raised $100 million in Series E funding at a $1.2 billion valuation. 

— Megan Hernbroth

Butterfly Network – $1.3 billion

Butterfly Network, a company that developed an iPhone-based ultrasound device, wants to make the technology more accessible to doctors and healthcare workers so they can make more precise diagnoses on the move. 

The device, called Butterfly iQ, plugs into the iPhone and isn’t much bigger than the phone itself. It’s been approved by the Food and Drug Administration for use in imaging the abdomen, bladder, and heart. 

In September 2018, Butterfly raised $250 million from investors such as Fidelity, Fosun Pharma, and the Bill and Melinda Gates Foundation. In total, the company raised $370 million. 

In November, the company said it plans to go public via a merger with the special purpose acquisition company Longview Acquisition Corp., a deal that would value the company at $1.5 billion. The deal, commonly referred to as a SPAC, was among a wave of similar reverse mergers that allowed startups to forgo the traditional IPO process while still taking advantage of public markets investors.

— Lydia Ramsey Pflanzer

Everlywell – $1.3 billion

Everlywell offers at-home testing kits for food sensitivity, fertility, hormones, STDs, and thyroid or metabolism issues, all compliant with federal standards. The startup sends samples to accredited labs, which perform the tests using patient-provided samples similar to what would occur at a routine doctor’s office visit. 

The tests are not currently covered by any insurance providers, but Everlywell says that it tries to keep its pricing simple and easy for consumers to understand. 

Everlywell patients receive results that have been reviewed by licensed physicians through a mobile app. They are then able to take those to a primary care or specialist provider without having to step foot in a traditional medical testing lab. The startup received national attention when founder Julia Cheek pitched the idea on Shark Tank.

In March, Everlywell announced it was also offering an at-home COVID-19 test as the coronavirus pandemic took hold in the United States. It partnered with independent labs to scale infrastructure to the point where it can handle up to 250,000 tests weekly, according to the company.

The company raised $25 million in Series C funding in February 2020. On December 3, the startup announced it raised $175 million in Series D funding from Goodwater Capital, Highland Capital Partners, and Next Coast Ventures in addition to several private equity firms. In total, the company has raised more than $250 million.

— Megan Hernbroth

Grand Rounds – $1.3 billion

Grand Rounds works with companies like Walmart and Home Depot to offer an on-demand healthcare virtual assistant to employees as an employer-provided benefit. The company previously focused on large self-insured companies like the aforementioned, but have recently started selling to medium-sized companies as the pandemic left many employers scrambling to offer relevant benefits while maintaining low costs.

In September, Grand Rounds raised $175 million from private equity firm Carlyle Group that launched its valuation to $1.3 billion, according to Pitchbook data.  

“As COVID hit and these employers, to take care of digital and work-from-home workforces across the country, they all had unique situations and needs pop up,” Carlyle Group investor and Grand Rounds board member Robert Schmidt told Business Insider in September.

— Megan Hernbroth

 

Ro – $1.5 billion

Ro is a direct-to-consumer provider that offers generic medications for conditions such as erectile dysfunction, hair loss, and weight management through the mail. Patients can consult a doctor through Ro’s telemedicine service throughout the course of treatment and are required to pay a cash fee for medication and the visit since Ro doesn’t accept insurance. 

The three-year-old company raised $200 million in venture funding on July 27, nabbing a $1.5 billion valuation as a result. It acquired Workpath, another startup that provides in-home care services, in December as it seeks to expand beyond digital health.

— Megan Hernbroth

Olive – $1.5 billion

Olive makes automation technology for healthcare workers. Its artificial intelligence software picks up on keystrokes to learn how a healthcare worker interacts with specific applications and provide suggestions for tasks like prior authorizations or patient verifications. It also has a tool to help automate processes in hospitals’ human resources, finance, and supply chain departments.

Olive raised $106 million in venture funding in September, just months after raising $51 million in March. It is currently valued at $1.5 billion, according to Pitchbook data. In December acquired Verata Health to further expand its services to insurance companies and hospitals.

— Megan Hernbroth

Hims – $1.6 billion

Be it depression, hair loss, or erectile dysfunction, Hims wants men to “take care of themselves” without fear of stigma via its suite of telemedicine and personal care offerings.

Besides online primary care visits and therapy, it sells hair, skin, and sex products directly to consumers. Its sister site, Hers, offers similar services for women. Hims says its total funding to date is $260 million.

On October 1, the company announced that it was going public through a reverse merger with blank-check company Oaktree, that valued Hims publicly at $1.6 billion.  

Its investors include Atomic, Maverick Ventures, Forerunner Ventures, Founders Fund, 8VC, and Redpoint Ventures.

— Lydia Ramsey Pflanzer & Megan Hernbroth

HeartFlow – $1.6 billion

HeartFlow is trying to make the process of finding blockages in the heart a lot less invasive. Using imaging from a CT scan, HeartFlow builds a 3D model that pinpoints the blockages associated with coronary-artery disease, a heart condition that affects millions of Americans and is the leading cause of death in the US

HeartFlow is based in Redwood City, California, and reached unicorn status in 2018 after raising $240 million. In total, the company has raised $532 million

— Lydia Ramsey Pflanzer

Zocdoc – $1.8 billion

Zocdoc helps patients book doctors’ appointments and check-in for them — everything from primary care to dental to optometry appointments.

Users can search based on procedures, conditions, and even a particular doctor they might want to book an appointment with.

In 2019, the company changed the way it pays its doctors in some states, moving from a subscription model to one that charges a per-booking fee. Some doctors weren’t been happy about the switch.

Zocdoc, which is based in New York, most recently raised $130 million in a Series D round in August 2015, bringing its total raised to $223 million. The company’s last reported valuation is from 2015, according to PitchBook.

During the pandemic, Zocdoc introduced video visits for the providers on its platform to use with patients. 

Zocdoc cofounder Cyrus Massoumi in September sued the company, claiming he was pushed out of his role as CEO in an illegal “coup.”

— Lydia Ramsey Pflanzer

Devoted Health – $1.8 billion

Devoted Health wants to reinvent how we care for aging Americans.

The company started selling Medicare Advantage plans in parts of Florida for 2019. In its second year, its enrollment jumped, in line with the company’s expectations

Read more: Oscar Health has confidentially filed to go public. Here’s a look at how the health insurer and rivals Clover and Bright have fared so far this year.

The company’s plans might look a bit different from traditional insurance in that Devoted plans to do more than pay for visits to doctors and hospitals. It also hires nurses and other employees directed at keeping seniors healthier and out of the hospital.

Devoted was founded in 2017 by brothers Ed and Todd Park. Before Devoted, Todd Park cofounded the health IT company Athenahealth and served as the chief technology officer of the US during the Obama administration. Ed Park, who serves as Devoted’s CEO, was formerly the chief technology officer and later chief operating officer at Athenahealth.

In October 2018, the Waltham, Massachusetts-based company raised $300 million in a Series B round led by Andreessen Horowitz, bringing its total funding to $369 million.

— Lydia Ramsey Pflanzer

Zymergen – $2.1 billion

Synthetic biology company Zymergen is a Silicon Valley company that turns living organisms into new materials. Synthetic biology involves harnessing the power of cells to make products like less-toxic sweeteners for food or drugs and biodegradable building materials and bags. It was a popular area of investment for cutting edge VC firms prior to the pandemic as the technology could help combat single-use plastic use.

On July 29, the eight-year-old startup raised $350 million in Series D funding led by private equity firm Baillie Gifford, according to Pitchbook data. Other investors include SoftBank Investment Advisers, SVF, Schiehallion Fund, SciFi VC, DCVC Bio, True Ventures, Perceptive Advisors, Baron Funds, Scottish Mortgage Investment Trust, and MicroVentures.

— Megan Hernbroth

Lyell – $2.5 billion

The San Francisco biotech company is focused on treating cancer with cell therapies. Lyell’s goal is to develop cell-based immunotherapies for cancer, with a focus on CAR-Ts and solid tumors.

In March 2020, the company raised a total $493 million in funding from undisclosed investors. The company has raised a total of $851 million, according to CB Insights, from investors including Foresite Capital Management, Arch Venture Partners, and Altitude Life Science Ventures.

— Lydia Ramsey Pflanzer

Sana Biotechnology – $2.8 billion

Sana Biotechnology is developing engineered cells that can be used as medication for patients. The goal, according to the company, is to engineer cells to repair and control genes or replace missing or damaged cells with an entirely new set of therapies for a range of conditions. It is currently focusing on immunology, stem cell biology, gene delivery, and gene modification.

The Seattle-based company said it has roughly 250 employees across three offices. In June, it raised $435 million in Series B funding from GV, Omega Fund, and Flagship Pioneering, according to Pitchbook data. The round was part of a larger initial financing, according to the company, which totaled $700 million after multiple separate rounds of fundraising.

Additional investors include ARCH Venture Partners, F-Prime Capital, Altitude Life Science Ventures, Canada Pension Plan Investment Board, City Hill Ventures, Baillie Gifford, Alaska Permanent Fund, Public Sector Pension Investment Board, and Bezos Expeditions.

— Megan Hernbroth

Radiology Partners – $4.3 billion

Southern California-based Radiology Partners owns and operates radiology clinics in 26 states across the US. According to the company, it employs roughly 1,500 radiologists and provides radiology services to more than 1200 hospitals on-site and virtually.

The eight-year-old company raised an undisclosed amount of private equity financing from Heritage Group in 2020, according to Pitchbook data, and subsequently raised two rounds of debt financing. Prior to 2020, it raised $750 million in growth financing from Starr Investment Holdings on July 19, 2019.

— Megan Hernbroth

Gingko Bioworks – $4.9 billion

Ginkgo Bioworks is a startup that designs microbes to produce substances like fragrances and medications. The Boston-based company sends the programmed bugs to partner companies that put them to use.

In September 2019, Ginkgo raised an additional $290 million. In total, the company has raised $719 million and a $350 million fund to invest in spinout companies that use its technology

In 2020 Ginkgo responded to the coronavirus pandemic by helping with testing, vaccines, and antibody therapeutics, according to its website

— Lydia Ramsey Pflanzer

Tempus Labs – $8.1 billion

Chicago-based Tempus got its start in 2015, and then rocketed into unicorn territory.

The startup, which was founded by Groupon founder Eric Lefkofsky, hopes to help doctors use data to find better cancer treatments for patients, using both clinical data — information about which medications patients have taken and how they responded to them — and data it sequences in its lab based on the tumors and hereditary genetics of cancer patients.

Tempus raised $100 million in March 2020 and another $200 million in December 2020, putting the company at an $8.1 billion valuation. So far, the company has raised about $1 billion. 

— Lydia Ramsey Pflanzer

Roivant Sciences – $9 billion

Roivant Sciences is a company known for developing drugs that other pharmaceutical companies have abandoned.

The company was founded by CEO Vivek Ramaswamy, who’s 35. Through its subsidiary companies, it identifies experimental drugs that other companies may have stopped developing for one reason or another that still have potential to get approved and go on the market.

So far, it has launched 17 subsidiary “-vant” companies, including a number that have gone public. Those include the neurodegenerative-disease-drug developer Axovant Sciences, the women’s health company Myovant Sciences, and the urology company Urovant Sciences.

In December 2019, the company entered a deal with Sumitomo Dainippon Pharma. The company raised $200 million from investors in 2018 a little more than a year after raising $1.1 billion in a monster round led by SoftBank’s Vision Fund. The $200 million round valued the company at $7 billion. 

— Lydia Ramsey Pflanzer

Samumed – $12.4 billion

Samumed is the highest-valued startup on this list.

The San Diego-based company has attracted a total of $764 million and a heady valuation thanks to a pipeline of what could be revolutionary treatments to regenerate hair, skin, bones, and joints.

The company’s science hinges on something called progenitor stem cells. Samumed hopes to manipulate the pathway that makes these progenitor stem cells spring into action so that they don’t cause conditions like hair loss or osteoarthritis. 

The company had previously raised funding from backers including high-net worth people and sovereign funds rather than venture capital. Samumed’s chief business officer, Erich Horsley, said in May 2018 that the company could go public in the next three to four years.

— Lydia Ramsey Pflanzer

Related Articles

We got an exclusive look at the pitch deck $3 billion valued healthtech startup Hinge Health used to raise $300 million

Summary List PlacementThe global digital health sector has unsurprisingly boomed amid the ravages of the coronavirus pandemic, with companies and consumers increasingly seeking out alternatives to in-person services.
Investors too are pouring more money into the space. One recent beneficiary is Hinge Health, which raised $300 million earlier in January to become the most highly valued private healthtech in the US, the company said. 
The Series D round was jointly led by private equity giants Coatue Management and Tiger Global and raised the valuation of startup to $3 billion, according to Hinge Health’s announcement.
The San Franc iso-based startup offers a digital clinic for musculoskeletal (MSK) pain and is available to more than 300 enterprise customers in the US. The company’s customer base tripled and revenue quadrupled in 2020, according to Hinge Health’s CEO Daniel Perez. 
“It was a very interesting year for us — in March every investor was concerned due to the pandemic, but we decided to stay the course,” Perez told Insider in an interview. “We knew there would be a counter revolution after a five or so week period where people weren’t answering the phone. We said, ‘If we can overcome this and execute we will win’  — and we were one of fastest growing companies in tech last year.”
The startup, founded in 2015, avoided layoffs or salary cuts and continued to hire last year. This new fundraising will help Hinge Health continue on its growth trajectory, with its current 550 headcount likely to double by the end of 2021, Perez said. The company was named as a healthtech company changing the industry recently.
Amid a crazy year for IPO listings in the US, and a likely continued surge into 2021, Hinge Health is primed for a debut on the public markets. 
“There was enormous investor interest when we opened the round — within 24 hours we had more than $400 million in commitments,” Perez added. “They [Coatue and Tiger Global] are the two best funds for a pre-IPO round, it’s very rare that they co-lead the same round.”
The two private equity firms’ involvement continues a trend of major hedge funds and private equity piling into late stage startups. 
Existing investors Atomico, Insight Partners, Quadrille, 11.2 Capital, Lead Edge Capital, Bessemer Venture Partners, and Heuristic Capital also participated in the funding round. Hinge Health has raised just over $426 million in total, according to Crunchbase.
Read more: Investors are pouring cash into mental health startups during a rough 2020. Here are 19 to watch, picked by top European VCs.
Despite the obvious incentives provided by public markets to buzzy startups, Perez claims that the company’s growth path is “laser focused” on growing its digital clinic for MSK.
“There is no pressure to IPO soon,” said Perez. “We’re hoping to be in a position to go public, or whatever, in 2022.”
To put Hinge Health’s rise into context, the company’s previous funding round (a $90 million fundraise in February 2020) valued the business at $428 million, one-sixth of the most recent valuation.
Perez said there’s still ample opportunity to grow further. “Healthcare is one-sixth of the US economy and around one-fifth of that is related to MSK,” he said. “That’s around 3% of [gross domestic product] so it’s a huge area of spend to disrupt.”
Check out Hinge Health’s pitch deck below: SEE ALSO: We asked 12 prominent European tech investors to pick out fintech startups they think will blow up in 2021. Here are the 20 they chose.

The founder of a healthcare venture fund that just raised $200 million shares why she wants to back founders that are building businesses for their communities

Summary List PlacementOne of digital health’s only early-stage venture firms just raised a fresh tranche of funding to help the youngest startups get off the ground during a pivotal year for the industry.
Define Ventures raised $200 million for its latest fund, the second since it was founded by ex-Kleiner Perkins investor Lynne Chou O’Keefe in 2018.
The early-stage firm will continue making new investments in companies in the incubation stage all the way up to Series B, Chou O’Keefe told Business Insider.
The new fund’s timing, coming after a record-setting year of private investment in healthcare startups, was purely coincidental and on track with the typical two-year fundraising cycle at most firms, she said.
“We’ve had well-timed investment cycles,” Chou O’Keefe said “But the activity has increased, overall, post-COVID.”
Read more: A former Kleiner Perkins investor is staking out the future of digital health. Here’s why she just made an early bet on an in-home care startup founded by a former Uber exec.
Define wants to back early startups rebuilding the healthcare system with patients at its center
Chou O’Keefe said she anticipated keeping up the pace in 2021, writing more checks to companies she believes are reimagining what it’s like to be a healthcare patient in the United States. In Define’s first $87 million fund, she backed a wide range of digital health startups, including LGBTQIA+ primary care startup Folx and in-home care provider MedArrive.
She said to expect more of the same coming from Fund II, with consumer-focused healthcare startups taking center stage over other companies that want to sell services to hospitals or insurance companies. The firm’s thesis formed around backing companies that use technology to reimagine the patient’s experience of healthcare was successful enough in Fund I to earn a vote of confidence in Fund II, Chou O’Keefe said.
“We haven’t seen our strategy shifted, it’s more that the time to market has really shortened,” Chou O’Keefe said. 
In practice, the consumerization of healthcare Chou O’Keefe wants to back varies widely. It can look like Dawnlight, a startup that makes remote monitoring products that track fall risks, among other specialties. It can also look like Lightship, a startup that runs decentralized clinical trials that are easy for participants and researchers to use. All these startups, however, share the unique challenge of marketing to regular patients instead of working directly with hospitals, doctors, or insurance companies.
“The make-or-break of digital health is the commercial side of the business,” Chou O’Keefe said. “That’s something that is so critical, and when I started Define the lack of sector-focused early-stage players was a window of opportunity for us because these entrepreneurs need help to build. It takes a village to change healthcare for all of us.”
Chou O’Keefe is betting that founders want to build for their own communities
Chou O’Keefe will write checks from $1 million all the way up to $15 million, depending on the company’s needs. As a former Livongo board member and current Hims board member, she said Define can lead funding rounds that require the active board support, but ultimately leaves that decision to the entrepreneur. 
“Entrepreneurs recognize the oil from water here,” Chou O’Keefe said. “There are people that can partner with you and build these companies with you, but the lessons learned from tech don’t apply in the healthcare space.”
Her investment strategy is in part a bet on authentic founders, she said.
She is particularly interested in supporting the entrepreneurs that are building solutions for their own communities because that perspective can be a differentiating factor that contributes to a company’s success.
Of Define’s 12 portfolio companies, four are founded and led by women, one of the many communities Chou O’Keefe feels has been left out of high-level healthcare business decisions in the past.
“It’s important we have women founders and CEOs in this space because we make the decisions, and it’s really the right business decision as well,” Chou O’Keefe said.SEE ALSO: The 26 billion-dollar startups to watch that are revolutionizing healthcare in 2021
Join the conversation about this story » NOW WATCH: Here’s what it’s like to travel during the coronavirus outbreak

A healthcare startup serving LGBTQIA+ patients just raised $25 million, and its growth reveals a key area of opportunity for other primary care startups

Summary List PlacementPrimary care, and healthcare more broadly, is largely one-size-fits-all in the US. 
A growing group of entrepreneurs and investors are trying to dismantle it and rebuild a more equitable healthcare system in its wake.
One such startup is Folx, a consumer healthcare startup for LGBTQIA+ patients, although there are tens more startups hoping to build trust among other long-neglected and underserved communities of patients. 
On Tuesday, Folx announced it raised $25 million in Series A funding from Bessemer Venture Partners, Polaris Partners, Define Ventures, and Red Antler. 
Although Folx is launching with direct-mail hormone replacement therapy treatments for transgender patients, founder and CEO A.G. Breitenstein told Business Insider of her long-term goals to unseat traditional care avenues for the LGBTQIA+ community, which is often discriminated against in traditional primary care settings. In the coming years, Breitenstein sees Folx drastically expanding the conditions it is able to treat through telemedicine in addition to expanding into owned-and-operated in-person clinics across the country.
“Discrimination is newly legal,” Breitenstein said of the Trump administration’s retraction of protections for transgender patients. “It allowed providers to discriminate against our community. Care has always been unstable for them, but we can be there for them and that’s what we’re here for.” 
Read more: This startup’s pricing model based on health insurer data was wrong almost half the time, and it reveals a huge challenge to reshaping healthcare
Startups like Folx want to reimagine the US healthcare system based on overcoming patients’ negative experiences, and that means building new models that don’t rely on the current network of doctors and clinics. 
“Our big takeaway is that other groups have underestimated the immense market size for advances in healthcare for distinct populations,” Bessemer Ventures Partners investor Morgan Cheatham told Business Insider. “We’re more bullish than ever that these niches aren’t so niche.”
That could contribute to a boon of highly specialized care startups, Cheatham said, in addition to those like his latest investment, Folx, that are already seeing growth among target populations. In fact, he said niche care could become the default for all primary care in the United States after the massive inequities were unearthed during the coronavirus pandemic.
Underserved patients need new healthcare solutions
Since 2014, highly targeted healthcare companies like Folx have collectively raised more than $1 billion, according to Pitchbook data.
The future of primary care could look like Cityblock Health, a $1 billion startup serving primarily low-income communities by addressing external factors like access to reliable transportation and clean drinking water as part of its holistic healthcare model. Its goal is to offset medical costs by addressing those factors, leading to better long-term health in the community. 
Until recently, investors didn’t consider these external factors, now commonly referred to as the “social determinants of health,” as a key area of cost reduction and innovation, one investor told Business Insider. It took a pandemic, and the cracks in the system it illuminated, to prove the environmental aspects of many Americans’ health. Now, it is an area of top investment for VCs going into 2021.
The future could also look like Oak Street Health, a more traditional primary care clinic model for elderly patients on Medicare, or ChenMed, for seniors with complex chronic conditions that need to be actively monitored by doctors. Oak Street went public in August, giving an air of legitimacy to the growing eldercare space.
Startups like One Medical have a broad-strokes approach to primary care but tend to focus primarily on city-dwelling young professionals with a subscription-based payment model and perks like cucumber water in waiting rooms. Village MD is another primary care startup with a broad appeal that works with physicians to provide care and has in-person clinics in select Walgreens locations. Those companies’ successes, however, have helped paved the way for tech-enabled challengers to grow while serving other groups that aren’t able to afford or access care through their networks.
Read more: Meet the 8 primary-care companies building a new future for medicine during the pandemic
Of more interest to Cheatham and other VCs are the communities that don’t yet have tailormade healthcare solutions. He pointed to communities like recent immigrants, undocumented individuals, low-income communities, and even racial or ethnic-specific groups as developments he is hoping for in primary care. 
“The One Medicals of the world focus on the upper end of that income spectrum, but there’s a lot of work to do on the other end,” Cheatham said, referring to the membership-based primary care model primarily targeted at healthy, working-age upper-middle-class patients.
Healthcare equity will have to come from outside
Getting patients to trust upstarts, a monumental task in healthcare broadly, still remains a challenge for the community-based care companies. Winning them over requires an entirely new perspective on medical care and clinic experience, Breitenstein said, even if that perspective comes from someone largely outside the existing system.
That approach involves lots of educational materials, Breitenstein said, so that patients know of and are able to adjust to complications from medications and make informed decisions about their own courses of treatment. 
That “informed consent” model differs from traditional symptom-based care in that it is more proactive and takes more stock of a patient’s lifestyle and goals, Breitenstein said, all in an effort to win patients’ trust.
“The paradigm shift around informed consent model of care, where you come to us and tell us what your goals are so we can help educate and guide you through the healthcare system, it’s informative and empowering,” Cheatham said, adding that he sees the model moving into other aspects of healthcare in the future.
Breitenstein has big ambitions for Folx and believes the market opportunity is large enough to support its growth. Beyond adding new capabilities like STI testing and mental health visits, she sees Folx expanding into in-person clinics across the country that could eventually include surgery centers for gender confirmation surgeries. She also has an eye on family planning and fertility, an already booming market with several startups serving heterosexual couples.SEE ALSO: SIGN UP HERE: Hear from healthcare’s biggest VCs on the future of digital health, biotech, and startups
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