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Can startups that tackle the U.S.’s broken healthcare system scale across the world?

August 6, 2020, 2:24 PM UTC

Hello, this is Jonathan Vanian filling in for Lucinda, who is on her much-deserved vacation.

The shiny new thing for investors: startups using artificial intelligence to fix healthcare woes.

Healthcare-related A.I. funding jumped 14% to $1.1 billion in the second quarter of 2020 from $986 million during the previous quarter, according to market intelligence firm CB Insights.

One of the biggest deals in recent months was Cedar’s $77 million round, which it landed in June. That startup uses machine learning and related automation tech to make it easier for patients to pay their healthcare bills.

He Wang, a healthcare analyst for CB Insights, told Fortune that “the biggest theme” he sees is the idea that machine learning is “automating” time-consuming tasks, like those related to billing and payments. 

Healthcare firms are especially interested (and under pressure) to use automation tech “to cut costs” as the economy continues to decline, Wang said. Those firms spend a lot of money on “human capital in this space,” or the agents who act as bill collectors or the middlemen who call insurance companies regarding behind-the-scenes financial minutiae. Especially in these trying times, they want to save money by employing less people than they used to.

“Every CFO is looking to cut 10% of their cost structure in the next 10-18 months,” Wang said.

But would an investment in a startup that specializes in automating mundane tasks for healthcare firms “scale” in countries outside the U.S., where healthcare systems may be less complicated?

In Shanghai, where Wang is based, he says people can get a routine physical exam at a hospital and simply pay for the visit using their smartphone and the Alipay service app. Compare that scenario to going to the doctor in the U.S., which can entail multiple phone calls with insurance providers, tons of bills, and a general sense that even after you pay for a visit, something isn’t quite finished—there could be some sort of calculation error resulting in another bill down the road.

You could argue that the healthcare system in the U.S. is so broken, with so much wasted spending, that a startup could become a massive business simply by helping domestic healthcare firms manage their IT better. Who needs the rest of the world when the majority of the healthcare-related IT problems are here in the U.S. anyway?

But we all know that venture capitalists aren’t merely looking to fund your run-of-the-mill software business. They want to put money into a startup that will generate exponential returns—and oftentimes that means these companies need to go global.

Jonathan Vanian 

@JonathanVanian

jonathan.vanian@fortune.com

Anne Sraders curated today’s Term Sheet.

VENTURE DEALS

-ChargePoint, a Campbell, Calif.-based electric vehicle charging station network, raised $127 million in Series H funding from investors including American Electric Power, Chevron Technology Ventures, Clearvision and Quantum Energy Partners. Read more.

-Taysha Gene Therapies, a Dallas-based gene therapy developer focused on curing monogenic central nervous system disease, raised $95 million in Series B funding. Fidelity Management & Research Company led the round, and was joined by investors including BlackRock, GV (formerly Google Ventures), Invus, Casdin Capital, Franklin Templeton, Octagon Capital, Perceptive Advisors LLC, Sands Capital, ArrowMark Partners, Venrock Healthcare Capital Partners, PBM Capital and Nolan Capital

-Rigetti Computing, a Berkeley, Calif.-based quantum computing systems software developer, raised $79 million in Series C funding. Bessemer Venture Partners led the round, and was joined by investors including Franklin Templeton, Alumni Ventures Group, DCVC, EDBI, Morpheus Ventures, and Northgate Capital.

-Ginger, a San Francisco-based on-demand mental healthcare platform, raised $50 million in Series D funding. Advance Venture Partners and Bessemer Venture Partners led the round, and were joined by investors including Cigna Ventures, Jeff Weiner, the executive chairman of LinkedIn, and Kaiser Permanente Ventures.

-CloudPay, a U.K.-based cloud-based payroll services provider, raised $35 million in funding from investors including Runway Growth Capital, Rho Ventures and Pinnacle Investment Partners.

-Syntiant, an Irvine, Calif.-based AI voice command and sensor chipmaker, raised $35 million in Series C funding. M12 and Applied Ventures led the round, and were joined by investors including Atlantic Bridge Capital, Alpha Edison and Miramar Digital Ventures

-Thriver (formerly Platterz), a Toronto-based provider of office catering, culture and wellness programs for employees, raised $33 million in Series B funding. Viola Growth led the round, and was joined by investors including Vertex Ventures Israel, Union Tech Ventures, Journey Ventures, and FJ Labs, Aleph, and Altair Capital.

-PandaDoc, a San Francisco-based document signing and contracts software company, raised $30 million in funding. One Peak led the round, and was joined by investors including M12, Savano Capital Partners, Rembrandt Venture Partners, EBRD Venture Capital Investment Programme and individual investor David Sipes.

-Crossbeam, a Philadelphia-based collaboration platform for networking with partners, raised $25 million in Series B funding. Redpoint led the round, and was joined by investors including FirstMark Capital, Salesforce Ventures, Slack Fund, Uncork Capital, Okta Ventures and executives from Partnership Leaders

-StreetLight Data, a San Francisco-based data provider focused on tracking street activity for transportation planning, raised $15 million in Series D funding from investors including Macquarie Capital, Activate Capital, Osage University Partners and Ajax Investment Strategies.

-Dapper Labs, a Vancouver-based blockchain gaming platform, raised $12 million in funding from investors including Samsung NEXT, Andreessen Horowitz, Union Square Ventures, Coinbase Ventures and several NBA players. 

-Infermedica, a Poland-based AI-based platform for doctors to triage and pre-diagnose patients, raised $10.3 million in Series A funding. European Bank for Reconstruction and Development (EBRD) and Heal Capital led the round, and were joined by investors including Karma Ventures, Inovo Venture Partners, and Dreamit Ventures.

-Smalls, a New York City-based cat food company, raised $9 million in Series A funding. Left Lane Capital led the round, and was joined by investors including Founder Collective and Companion Fund

-REDD Intelligence, a New York City-based online market intelligence platform focused on fixed income and emerging markets news, raised $5.8 million in funding. Nassau Point Investors led the round, and was joined by investors including Neil Osborn, the chairman of REDD Intelligence, and Thomas Barry.

-Orum, a New York-based platform to help financial institutions move money and predict funds availability, raised $5.2 million in seed funding from investors including Inspired Capital, Homebrew, Acrew, Bain Capital Ventures, Clocktower, and Box Group.

-clean.io, a Baltimore, Md.-based malicious ads and untrusted JavaScript blocker, raised $5 million in Series A funding. Tribeca Venture Partners led the round, and was joined by investors including Real Ventures, Inner Loop Capital, and Grit Capital Partners.

-Approve.com, an Israel-based procurement and vendor management platform, raised $5 million in seed funding led by Aleph.

-PICadvanced (PICa), a Portugal-based telecom optics and photonics solutions provider, raised €4 million ($4.5 million) in Series A funding. Verizon Ventures led the round, and was joined by investors including 200M Fund.

-Food-X Technologies, a Vancouver-based online grocery fulfillment software provider, raised $2.6 million in a follow-on grant from the Digital Technology Supercluster

-Minnow, a Seattle-based platform for contactless food delivery and pickup, raised $2.2 million in seed funding. Elevate Capital led the round, and was joined by investors including Portland Seed Fund and LPC Ventures.

-Ceresa, an Austin-based coaching and leadership development platform, raised $1 million in seed funding from investors including LiveOak Venture Partners and Next Coast Venture Partners.

PRIVATE EQUITY

-Mercer Global Advisors, backed by Oak Hill Capital and Genstar Capital, acquired Summit Wealth Advisors, a Frisco, Colo.-based wealth management firm. Financial terms were not disclosed. 

-ASG, owned by Alpine Investors, acquired extendedReach, a Littleton, Colo.-based management software provider for foster care, child and family social services. Financial terms were not disclosed. 

-Tritium Partners and Terminus Capital invested in Katabat, a Wilmington, Del.-based debt collection software provider. Financial terms were not disclosed. 

-Spire Capital Partners acquired DBI Group, a Lenexa, Kan.-based testing and inspection services provider for oil and gas pipelines and infrastructure, and will merge the company with its existing portfolio company ERI Solutions. Financial terms were not disclosed. 

-Power Digital, backed by Periscope Equity, acquired Covet Public Relations, a San Diego-based public relations firm. Financial terms were not disclosed. 

-NordStar Capital completed its acquisition of TorStar Corp. (TSX: TS.B), a news publisher, for C$0.74 per share or about C$60 million ($80 million). 

-Genstar Capital invested in Sonny’s Enterprises, a Tamarac, Fla.-based conveyorized car wash systems maker. Financial terms were not disclosed. 

OTHERS

-Sampo and Rand Merchant Investment (RMI) agreed to acquire Hastings Group Holdings, a U.K.-based general insurer, valuing it at £1.7 billion ($2.2 billion) in all cash for the recommended deal. Read more

-Nolato agreed to acquire GW Plastics, a Bethel, Vt.-based plastics and silicone maker, for approximately SEK 2 billion ($229.6 million). 

-Harness acquired Drone.io, a San Francisco-based open-source continuous integration platform. Financial terms were not disclosed. Read more.  

-Uber agreed to acquire Autocab, a U.K.-based taxi and private hire vehicle booking and dispatch software provider. Financial terms were not disclosed. 

-Tencent is leading discussions to merge Huya and DouYu, China’s two largest game streaming platforms, which would have a combined market cap of $10 billion, outlets including Bloomberg report citing sources. Tencent owns stakes in both companies. Read more

 

 

IPOS

-Rocket Companies, a Detroit-based parent company of mortgage titans Quicken Loans and Rocket Mortgage, raised $1.8 billion in an IPO, down from $3.3 billion anticipated, offering 100 million shares priced at $18. It plans to list on the NYSE as “RKT”. Read more

-Gores Holdings V, a Beverly Hills, Calif.-based blank check company formed by The Gores Group, raised $475 million in an offering of 47.5 million shares priced at $10. It plans to list on the Nasdaq as “GRSVU.” Read more.

-Oak Street Health, a Chicago-based provider of primary care for Medicare patients in the Midwest, raised $328 million in an offering of 15.6 million shares priced at $21, above its previous range of $19 to $20. It posted revenue of $540 million in 2019 and a loss of $137.2 million. General Atlantic, Newlight, and Humana back the firm. It plans to list on the NYSE as “OSH.” Read more.

-Holicity, a Kirkland, Wash.-based blank check company led by McCaw Cellular Communications (now part of AT&T Wireless) founder Craig McCaw, raised $275 million in an IPO in an offering of 27.5 million shares priced at $10. It is targeting investments in technology, media, and telecommunications. It plans to list on the Nasdaq as “HOLUU”. Read more.

-PainReform, an Israel-based biotech focused on pain relief therapies used for post-operative pain, plans to raise $23 million in an IPO in an offering of 2.6 million shares priced between $8 to $10. It plans to list on the Nasdaq as “PRFX.” Read more

EXITS

-Clearwater Analytics, a Boise, Idaho-based investment accounting software provider owned by Welsh, Carson, Anderson & Stowe, is considering a sale for $2 billion including debt, Reuters reports citing sources. Read more

 

F+FS

-Data Collective (DCVC), a San Francisco-based venture capital firm, raised $350 million for its early stage fund Bio II. 

PEOPLE

-Bain Capital Ventures added Aaref Hilaly as a partner. Hilaly was previously at Sequoia. 

-BTIG added J. Rory Rohan as a managing director. Rohan was previously at RHK Capital.