Health IT

Amazon Alexa Fund, Amgen Ventures among 1K first time digital health investors in 2016

Amgen's venture arm also invested an undisclosed amount in Israeli digital health incubator eHealth Ventures last year.

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Mercom Capital Group came out with an overview of the 2016 health IT investment landscape. Its report tallied up health IT deals valued at a total of $5 million, a new milestone for this category.

“For three years in a row, we have seen funding settle in the $4.7 to $5 billion range. It looks like the years of exponential funding growth are behind us,” said Raj Prabhu, Mercom Capital Group CEO and cofounder said in emailed responses to questions. “Early stage deals have decreased gradually from about 60 percent of the total funding in 2013 to about 45 percent in 2016.

The report noted that there were more than 1,000 first time investors in digital health companies last year. One frequently hears how so many investors are beginning to move into digital health — so much so that it just becomes another talking point. But when you hear a figure like this one, it gives that trend some definition.

Two of the most interesting newbie digital health investors, according to Prabhu, were Amazon, through its Alexa Fund, and biotech giant Amgen’s investment arm Amgen Ventures.

“Both are companies with huge resources that may become more active if it fits their strategic investment strategies,” Prabhu said in an emailed response to questions.

Amazon Alexa Fund provides up to $100 million in venture capital funding to fuel voice technology innovation, according to its website. The fund invested in Owlet Baby Care, which developed an infant activity tracker embedded in a smart sock. It passively monitors skin temperature, oxygen levels, heart rate, and sleep data. The smart sock transmits that data to a caregiver’s smartphone. In addition to Amazon Alexa Fund, other investors that took part in a $15 million financing round for the company included Eniac Ventures, Trilogy Equity Partners, RTP-HC, Capital Integral, and Broadway Angels.

The investment by the Alexa Fund clearly demonstrates that the group sees potential to expand the capabilities of Owlet beyond the sock sensor and it will be interesting to see how that vision plays out.

Amgen Ventures invested in Akili Interactive Labs, alongside Merck Ventures, in the digital therapeutics’ Series B round last year. Merck Ventures is the investment arm of Merck KGaA, in Darmstadt, Germany.

Akili developed video game interventions — one geared for people with ADHD and another that’s designed to detect cognitive decline in the early stages, when medications could potentially slow down the progression of Alzheimer’s disease. The company raised $11.9 million from Amgen Ventures and Merck Ventures. Other pharma investors in this business include Pfizer and Shire.

Interestingly, Amgen Ventures also invested an undisclosed amount in eHealth Ventures last year. This is a digital health incubator that’s one of several in the Israeli government’s incubator program. Cleveland Clinic, a subsidiary of one of Israel’s largest HMOs, Maccabi Healthcare, Chinese Venture Capital Fund SCI and Medison Pharma also support the incubator, according to eHealth Ventures website.

Incubators in the program have budgets ranging from $500,000 to $800,000 and 85 percent of that comes from the Israeli government through a grant — the rest is financed by the incubators. Each early stage company in the program pays the government 3 percent to 5 percent of royalties from the revenue they generate until the full amount of the grant, including interest, is repaid. The goal is to make Israeli startups competitive in the U.S. market.

Photo: Bigstock

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