4Q 2013: Digital Health Insights Report for the 50+ Market:

Published: January 14, 2014

startuphealth.com/insights

Digital HealthInsights for the 50+ Market2013 Annual Report

A REPORT PREPARED FOR

1

A StartUp Health Insights Report. Get comprehensive funding data at startuphealth.com/insightsPublished: January 14, 2014

Digital health and wellness investments have rapidly expanded from $999M in 2010 to $2.82B

Deal count more than quadrupled from 139 to 575

$958M $1.57B $2B $2.32B

512

0

125

250

375

500

2010 2011 2012 2013$0M

$750M

$1,500M

$2,250M

$3,000M

Deal Count Total Funding

139

234

440

575


$999M $1.55B $2.03B $2.82B

2


Early stage innovation is the primary growth driver because of the following conditions:

Change: Healthcare Reform

Technology: Mobile & Digital Health

Acceleration: Chronic Disease, Aging & Cost

Opportunity: Golden Age of Entrepreneurship

$283M

$590M

2011 2012

$967M

100

0

200

300

400

2010 2013

Early-Stage Deal Count

Mid-Stage Deal Count Venture-Round Deal Count

73

145

291

410

41 43

86 99

1223

Late-Stage Deal Count Total Funding

$641M

$0M

$200M

$400M

$600M

$800M

Deal CountTotal

Funding

1731

71% of deals were in Seed & Series A rounds

3


SocialEngagement

PhysicalFitness

MedicationManagement

Aging withVitality

NavigatingThe Healthcare

System

Vtial SignMonintoring

Behavioral andEmotional Health

Diet andNutrition

Emergency Detectionand Response

Traditional 50+ Market50+ referred only to

the aging market

Preventative medicine is a growing focus among the 50+ market leading to increased opportunity across the nine areas of digital health and wellness innovation

Opportunities in the 50+ Market

4


Funding in the 50+ market rose 33%from $722M last year to $1.15B in 2013

0

75

150

225

300

2010 2011 2012 2013$0M

$250M

$500M

$750M

$1,000M


49

95

186

248


$425M $626M $722M $1.15BM

5


Early-stage deal count in 50+ market grew more than seven-fold from 25 in 2010 to 183 in 2013

$187M

$0M

$75M

$150M

$225M

$300M

$375M

TotalFundingDeal Count



Late-Stage Deal Count Total Funding

50

0

100

150

200

250

2010 2011 2012 2013

183

25

60

132

16 1929 38

5 8 10 16

$221M

$406M

$89M

6


$425M

$999M

2010

2010 2011 2012 2013

2011

$626M

$1.55B

2012

$722M

$2.03B

2013

$1.15B

$2.82B

Digital Health & Wellness 50+

50%

40%

30%

Deal Count Funding

Tota

l Fun

ding

50+ health investment sector as percent of total digital health & wellness

35%

42%41%

40%

42%

36%

43%

41%

The 50+ market continues to grow at the pace of the digital health and wellness market

7


Stage distribution of 50+ market deals and funding mirrors industry-wide activity

0%

25%

50%

75%

100%

Deal Count Funding0%

25%

50%

75%

100%

Deal Count Funding



Late-Stage Deal Count

2013 Digital Health & Wellness 2013 50+ Market

8


2013 Notable VCs by stage in 50+ market

SEED SERIES A SERIES B SERIES C SERIES ESERIES D

denotes 3+ investments

9


Social Engagement

NOTABLE DEALS IN 2013

Third highest year-over-year growth in median size deal value at 120%

NOTABLE INVESTORS

MARKET INSIGHT*: Estimates suggest 40-80% of the 50-64 population and 30-70% of the 65+ population would be interested in a social engagement solution

$8MSeries C

$900KSeed

$7MSeries C

$4.3MSeries A

*Health Innovation Frontiers Report downloadable at www.aarp.org/50plusinsights

0

8

15

23

30

$43M $26M $105M $149M$0M

$38M

$75M

$113M

$150M


4

9

27

31

2010 2011 2012 2013Deal Count Total Funding

2013 Activity


Early-Stage Mid-Stage Venture-Stage

10


Medication ManagementNewest market opportunity in 50+ Market

MARKET INSIGHT*: 70% of people ages 50-64 take at least two medications and 87% of people 65 and older take at least two medications


NOTABLE INVESTORS

$3MSeed

$1MSeed

$1.16MSeed

$1.35MSeed


3

10

13

$13.39M $6.72M $8.46M0

3

6

8

11

Deal Count

$0M

$3M

$7M

$10M

$13M

Total Funding

Deal Count Total Funding2011 2012 2013

2013 Activity



11


Emergency Detection and ResponseSecond highest proportion of early-stage funding at 85%

MARKET INSIGHT*: 40-70% of the 75+ population and 10-30% of the 50-74 population would be interested in emergency detection or response services


NOTABLE INVESTORS

$4MSeries A

$2.5MSeed

$3.19M Series A

$7.3MSeries B


Deal Count Total Funding2010 2011 2012 2013

$21M $28M $40M $30M$0M

$10M

$20M

$30M

$40M

45

9

12

Total Funding

0

3

6

8

11

Deal Count

2013 Activity


Early-Stage Mid-Stage Late-Stage

HotDot

12


Behavioral and Emotional HealthHighest proportion of early-stage deals at 86%

MARKET INSIGHT*: Estimates predict 10-30% of the 50+ population would be interested in a behavioral or emotional health solution


NOTABLE INVESTORS

$9.7MSeries A

$3MSeries A

$5MSeries A

$2MSeries A


0

5

10

15

20

2010 2011 2012 2013

$13M $55M $75M $41M$0M

$20M

$40M

$60M

$80M

6

11

1721



2013 Activity



13


Physical FitnessSecond highest proportion of early-stage deals at 79%

MARKET INSIGHT*: Five-year total revenues as high as $1.7 billion or as low as $1.1 billion


NOTABLE INVESTORS

$43MSeries D

$14.5MSeries B

$18MSeries A

$23MSeries B


0

10

20

30

40

2010 2011 2012 2013

$23M $70M $137M $166M$0M

$38M

$75M

$113M

$150M

6

13

34 38



2013 Activity


Early-Stage Mid-Stage Late-Stage Venture-Stage

14


Diet and NutritionLargest year-over-year growth in funding at 208%

MARKET INSIGHT*: Fee-based diet and nutrition management services and technology/software licensing fees will be the two dominant revenue models for the diet and nutrition market


NOTABLE INVESTORS

$30MSeries A

$850KSeed

$1.52MSeed


0

4

8

11

15

2010 2011 2012 2013

$17M $27M $23M $70M$0M

$18M

$35M

$53M

$70M

7

10

15

12



2013 Activity



15


Navigating the Healthcare SystemMost actively funded opportunity at 100 deals and $492M in funding

MARKET INSIGHT*: Fee-based case assistance service and advertising sales will be the two dominant revenue models for the care navigation market


NOTABLE INVESTORS

$68M Venture Round

$6MSeries A

$40MSeries A

$2.1MSeries A


0

20

40

60

80

100

2010 2011 2012 2013

$130M $280M $271M $492M$0M

$100M

$200M

$300M

$400M

14

40

63

100Deal Count Total Funding


$500M

2013 Activity



16


Aging with VitalityHighest proportion of mid-stage funding at 46%

MARKET INSIGHT*: The Affected Population of this market hit 101 million at the end of 2012 and will reach 113 million by 2018


NOTABLE INVESTORS

$31MSeries A

$8.4MSeries C

$30MSeries B

$10MSeries A


0

10

20

30

40

$50M $136M $143M $177M$0M

$50M

$100M

$150M

$200M

12

19

4037

2011 20132011 2012



2013 Activity



17


Vital Sign MonitoringLargest median deal size at $3.69M

MARKET INSIGHT: An estimated 78 million consumers 50+ have at least one chronic condition


NOTABLE INVESTORS

$62MSeries F

$20MSeries D

$32MSeries C

$15MSeries B


0

10

20

30

40

50

2010 2011 2012 2013

$228M $136M $126M $366M$0M

$75M

$150M

$225M

$300M

$375M

14

20

34

46



2013 Activity



18


The nine areas present vast emerging market opportunities

SOCIAL ENGAGEMENTThird highest year-over-

year growth in median

size deal value at 120%

MEDICATION MANAGEMENTNewest market opportunity in 50+

EMERGENCY DETECTION AND RESPONSESecond highest

proportion of early

funding at 85%

BEHAVIORAL ANDEMOTIONAL HEALTHHighest proportion of early-stage deals at 86%

PHYSICAL FITNESSSecond highest proportion

of early-stage deals at 79%

DIET AND NUTRITIONLargest year-over- year growth in funding at 208%

NAVIGATING THEHEALTHCARE SYSTEMMost actively funded opportunity at 100 deals and $492M

AGING WITH VITALITYHighest proportion of mid-

stage funding at 46%

VITAL SIGN MONITORINGLargest median deal size at $3.69M

AGING WITHVITALITY

VTIAL SIGNMONINTORING

PHYSICALFITNESS

DIET ANDNUTRITION

SOCIALENGAGEMENT

BEHAVIORAL ANDEMOTIONAL HEALTH

MEDICATIONMANAGEMENT

CARENAVIGATION

EMERGENCY DETECTIONAND RESPONSE

AGING WITHVITALITY


PHYSICALFITNESS

DIET ANDNUTRITION

SOCIALENGAGEMENT



CARENAVIGATION


AGING WITHVITALITY


PHYSICALFITNESS

DIET ANDNUTRITION

SOCIALENGAGEMENT



CARENAVIGATION


AGING WITHVITALITY


PHYSICALFITNESS

DIET ANDNUTRITION

SOCIALENGAGEMENT



CARENAVIGATION


AGING WITHVITALITY


PHYSICALFITNESS

DIET ANDNUTRITION

SOCIALENGAGEMENT



CARENAVIGATION


AGING WITHVITALITY


PHYSICALFITNESS

DIET ANDNUTRITION

SOCIALENGAGEMENT



CARENAVIGATION


AGING WITHVITALITY


PHYSICALFITNESS

DIET ANDNUTRITION

SOCIALENGAGEMENT



CARENAVIGATION


AGING WITHVITALITY


PHYSICALFITNESS

DIET ANDNUTRITION

SOCIALENGAGEMENT



CARENAVIGATION


AGING WITHVITALITY


PHYSICALFITNESS

DIET ANDNUTRITION

SOCIALENGAGEMENT



CARENAVIGATION


19


AGING WITHVITALITY


PHYSICALFITNESS

DIET ANDNUTRITION

SOCIALENGAGEMENT



CARENAVIGATION


Vast 50+ Market Opportunities

The nine health innovation frontiers represent a vast and under-addressed market opportunity.

Breakthrough technologies, innovative services, and disruptive business models will benefit more than 100 million people 50+ and represent $20 billion in revenue by 2018.

Source: Health Innovation Frontiers Report downloadable at www.aarp.org/50plusinsights

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Digital Health& Wellness

50+

Digital Health and 50+ Market Snapshot

50+ OPPORTUNITY

Social Engagement

Medication Management

Emergency Detection & Response

Behavioral and Emotional Health

Physical Fitness

Diet and Nutrition

Navigating the Healthcare System

Aging with Vitality

Vital Sign Monitoring

DEAL COUNT

27 31

10 13

9 12

17 21

34 38

15 12

63 100

40 37

34 46

FUNDING

$105M $149M

$6.72M $8.46M

$40M $30M

$75M $41M

$136M $166M

$23M $70M

$271M $492M

$143M $177M

$126M $366M

MEDIAN DEAL SIZE

$560K $1.23M

$190K $432K

$2.75M $2.40M

$1.09M $845K

$2.58M $1.58M

$1.10M $845K

$1.70M $1.35M

$915K $1.90M

$1.27M $3.69M

Key: 2012 | 2013

2013 Median Round Size

$0M

$4M

$8M

$11M

$15M

Seed Series A Series B Series C Series D Series E

Digital Health and Wellness 50+

DEAL COUNTMARKET FUNDING MEDIAN DEAL

440 575

186 248

$2.03B $2.82B

$722M $1.15B

$1.29M $1.40M

$1.24M $1.30M

21


MethodologiesThe data presented herein is from StartUp Health Insights, which was gathered from public non-grant funding information from SEC filings, company press releases, CrunchBase, AngelList, and other news sources as of January 3, 2013. The data spans from January 1, 2010 through December 31, 2013.

The 50+ health investment sector, as defined by AARP, is comprised of the following market opportunities and some of their respective needs that are addressed:

MARKET OPPORTUNITY

Social Engagement

Medication Management

Emergency Detection & Response

Behavioral and Emotional Health

Physical Fitness

Diet and Nutrition

Navigating the Healthcare System

Aging with Vitality

Vital Sign Monitoring

EXAMPLES OF NEEDS ADDRESSED

Staying connected socially

Managing multiple medications

Detecting falls

Stress reduction

Improving muscle strength

Eating healthy and portion control

Managing healthcare costs

Aiding in memory and cognition

Keeping blood pressure in range

Keeping mobilized

Preventing in-home accidents

Sending alerts when lost

Receiving divorce/grief support

Age-appropriate exercise

Maintaining a healthy weight

Evaluating quality of care

Improving or aiding vision

Detecting skin problems

Stimulating intellect

Sharpening memory

Preventing in-home accidents

Managing life phase transitions

Maintaining healthy weight

Reducing bad cholesterol

Plan for end of life care

Improving or aiding hearing

Improving sleep quality

Some deals (slides 9-17) may represent more than one sector, and as such, may be included in multiple categories. However, neither the aggregate data on the “digital health and wellness” industry (slides 1-2) nor the “50+” industry (slides 4-7) include double counting.

The funding stages are categorized as follows: Early-Stage: Incubator, Seed, & Series A Mid-Stage: Series B & CLate-Stage: Series D, E & FVenture-Round: Stage not disclosed publicly

22


About

AARP’s vision is to stimulate innovation and entrepreneurship in the market place around breakthrough products, experiences, and business models for health technologies benefiting the 50+ market.

Startup Health, a global startup platform to accelerate health and wellness innovation, represents a new model for helping entrepreneurs succeed in the health sector. StartUp Health is on a mission to inspire, educate, and provide access for 1,000 digital health startups to reimagine and transform healthcare by 2020.

Published: January 14, 2014

startuphealth.com/insights

Digital HealthInsights Report forthe 50+ Market

A REPORT PREPARED FOR

4Q 2013: Digital Health Insights Report for the 50+ Market:

Technology

vital sign

emergency

comprehensive

dominant revenue

behavioral

round deal

deal count

emergency