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This week's Startup Index Newsletter digs into healthcare in collaboration with Mark Goldstein, Chairman of the UCSF Health Hub, UCSF’s digital health innovation hub. Mark covers his overview of how this year has been a boom for digital health, telehealth, and other health tech-related startups, along with DocSend data on healthcare startup fundraising.

Mark Goldstein is the Chairman and Founder of the UCSF Health Hub. The UCSF Health Hub is a non-profit that is helping healthcare companies scale and grow, by connecting them to advisors, mentors, investors, researchers or doctors, based on their specific requirement.

Mark is also a venture capitalist as a Partner at Builder's VC in San Francisco. Below is an excerpt from Mark's webinar event "UCSF Health Hub+ DocSend: Digital Health VC Funding - Raising your next round faster with DocSend" with Russ Heddleston, CEO of DocSend.

Digital Healthcare Sector in 2020

MG: If you were a company and you were raising money this year, before March, we were all really nervous. COVID changed absolutely everything and companies quickly found out whether they were either on the right side of COVID or on the wrong side of COVID. But 2020 in the digital health sector has been the most amazing year that this sector has ever seen.

MG: The fundraising volume in terms of the number of transactions increased by 35%. The IPO activity, not just in the Telehealth area, but in other healthcare areas, in digital health, remote care, and health IT, drove the entire industry and raised the upside. And as a result, it has attracted so much new money into our sector. There have been fifty new venture funds formed this year focusing on digital health. That increased, based on data we collected at UCSF Health Hub, by at least 40% of available new funding this year for digital health companies. So it is a great year to start, fund, and grow digital health companies.

MG: The largest wealth manager, UBS, called out our sub-sector and said, there are four things that are changing the world, and there are four things you need to invest in if you're going to basically think about it being an investor. The 5G wave, changing how we pay, streamlining healthcare, what they're calling “governments going green”. The fact that streamlining healthcare is one of their four big things shows that we're in the eye of the storm. So, looking at the data that we've collected, the biggest sub-sector winners have been in remote diagnostics and testing solutions, machine learning and AI in Electronic Health Records and patient data, mental health-related apps, along with new technologies that power clinics. We’re seeing the announcement of Amazon’s pharmacy and other new providers entering the healthcare sector. They're looking for new technology to drive their businesses to compete with the UCSFs and the traditional hospitals and providers out there. Digital health and Telehealth are having an e-commerce moment. This is just like it was in the days when Amazon came in, I got to play. That was my background. I was playing e-commerce in the day. We're having that experience right now.

In total, healthtech drew around $10 billion of US and European VC investment in the first three quarters of 2020, compared to $8.8 billion in the same period last year, according to data from SVB. "Healthtech broadly has just been catapulted forward by a number of years," said Katherine Andersen, head of life science and healthcare relationship banking at Silicon Valley Bank." For data on the healthtech funding market, read Pitchbook's recap of Q3 fundraising in the sector on their blog.

If you're a digital health or health-related startup, you can apply for UCSF's Health Hub Connect, their program to be connected with advisors, businesses, and investors. Learn more at https://www.healthhubsf.org/.

DocSend Data on Healthcare Startup Fundraising

According to the DocSend Startup Index, healthcare startups, on average, need to contact 121 investors and land 50 meetings to get to a successful capital raise. This results, on average, in a $1.7 million raise and about 20 weeks to close. The COVID impact may have affected these stats, but healthcare startups usually need to contact more investors and take more meetings to get to a capital raise than other tech startups.

What does a typical healthcare startup’s founding team look like? We’ve found that it’s an average of two founders with an overall average age of 36, and 55% included a minority and 44% included a woman. Which is more diverse, based on our data, than the average non-healthcare startup. Below, you can see the numbers we’ve collected by surveying healthcare startups. Reply to request Russ's webinar slides.

Average Seed raise process in healthcare

What a typical healthcare founding team looks like

Pitch Deck Interest Metrics Update

The average time spent per pitch deck by potential investors dropped last week by nearly 6% to 2 minutes and 47 seconds, signaling that investors had to spend less time reading the large number of decks they received during election week. (tweet this) In contrast to the spike in pitch decks sent during election week, links created fell last week by 12%. Read our full analysis of last week's data.

Recommended Reads

An Ode to Cold Outreach

Fundraising is not easy, so in the spirit of founders helping founders, particularly those who are underrepresented and undernetworked, Yuliya Bel, founder of Notus, put together a list of investors who are open to strategic cold outreach from founders who are in the process of raising and other fundraising resources.

Here's the list of investors and resources.

What belongs on your due diligence checklist?

You made your pitch. You hooked an investor and you signed a term sheet agreeing to their intended investment. It’s almost a done deal. The only thing standing between you and the investor’s money is the due diligence process. What is due diligence, and how can your business successfully navigate it to close your funding round? Here’s a due diligence checklist to help.

Read the full post on DocSend's blog.

Participate in DocSend Fundraising Research

If you've enjoyed all of our research this year, you can be part of the next round by participating in this year's fundraising survey. Founders and investors from anywhere can submit their responses. All data is aggregated and anonymized.

And, if you fill out the survey, we'll enter you into a drawing to win a $500 Amazon gift card to be sent to one winner when the survey ends.