COVID-19 Health, Wellness & Biotech Startups Venture

Beyond COVID: Biotech And Health Care Trends To Watch In 2022

Health care and biotech has always been a hot industry in the startup and technology worlds, even before a deadly virus pushed investment into the sector to even taller heights. But it’s not just COVID-19 driving industry interest, investors and startup tech companies say.

A series of recent technological advances and consumer shifts have attracted the bulk of investment, from artificial intelligence breakthroughs to new candor about mental health issues and even greater consumer interest in at-home testing and preventative care.

Among the big drivers of growth in the industry are regulatory changes, said Sundeep Peechu, general partner at Felicis Ventures,1 which invests in early-stage startups.

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“When you relax, from a regulatory standpoint, the ability to see patients in video calls for instance, all of a sudden you change the modality,” he said. “Even though those technologies were available 10 years ago, if the regulation didn’t change and there was no need for it because people were willing to walk into clinics, none of those businesses boomed. … COVID finally gave that push.”

It’s unlikely the advances made in the past two years will ever reverse in full. Though no one knows how the pandemic will play out in the coming year, industry insiders say that’s why they remain bullish on the strength of biotech and healthtech—even beyond COVID-19.

Artificial intelligence

As with much of the tech world, artificial intelligence is fueling many of biotech’s advances. In particular, AI can analyze enormous troves of data with accuracy and speed that humans just can’t compete with.

And while AI’s applications in biotech are nearly boundless, scientists, founders and investors have honed in on a couple of key use cases: cancer breakthroughs and treatments.

Already, companies using AI to target cancers have grabbed the attention of investors. Biotechnology startup HotSpot Therapeutics, for instance, drummed up $100 million in its oversubscribed Series C funding round this year, money that will allow the startup to advance its AI-driven technology that identifies and targets previously overlooked disease-causing proteins in the body so the company can figure out how best to treat the illness.

“What’s also super exciting for us is the mixture of health care venture attention as well as the technology sector,” Geraldine Harriman, HotSpot co-founder and CSO, told Crunchbase News in an interview this year. “It’s having investors that are typically technology-focused investors and really seeing the value of that interface between technology and medicine.”

Gene editing and cell therapy

But once technology has allowed scientists to pinpoint illnesses like cancers or other chronic illnesses, the question of treatment inevitably comes next. That is what Northpond Ventures director Adam Wieschhaus is most excited about in the new year.

“From a public market standpoint, some of the largest IPOs (in 2021) were in the field of gene editing and cell therapy,” he said in an interview. “These companies are making significant progress in advancing these novel therapies in cancer, cardiovascular disease and other key areas of unmet need, and we believe these solutions will have durable, long-term benefits to improving patient outcomes.”

He and Northpond Ventures, which focuses on breakthrough science and technology startups, will be watching and investing in those types of technologies. That includes therapies aimed at “restoring a patient’s genome,” which can have implications in things like aging. The hurdles, Wieschhaus said, are in scale and distribution.

“One of the biggest challenges for any company doing this will be the ability to scale their technologies,” he said. “We will need to focus increasingly on how we can industrialize these processes to ensure they can yield products that are available to anyone who needs them.”

Mental health

Mental health has made its way to the forefront of public consciousness after people around the world have spent nearly two years isolated from loved ones, worried about jobs, money and illness. Suddenly, people are talking more openly about their depression, anxiety, trauma and other mental health issues once considered taboo.

That shift, paired with relatively new advances in technology, like wearables, brain imaging and targeted therapeutics and even chatbots that can help triage patients in crisis, make the industry ripe for growth as it races to meet new demand.

Employers are increasingly seeing the value of proactively helping workers through mental health issues, said Ryan Todd, CEO at Headversity, which offers mental health, safety and resiliency training for companies.

That realization began to dawn on many company leaders pre-COVID, when a growing trove of data started emerging that showed mental health issues contributed to more disability claims and workplace strife or lost productivity that equated to fewer dollars for businesses. But the ripple effects became more undeniable in the past year and a half, Todd said.

“We all felt isolation, we all felt increased anxiety, and those who had diagnosable mental health issues that got worse, is what we saw on the frontline,” Todd, a licensed psychiatrist, told Crunchbase News. “So that whole issue of mental health got pushed from the forefront onto people’s desks.”

Fintech

When COVID-19 descended on the United States in early 2020, people flocked to hospitals en masse. Some went because they were sick with the coronavirus and needed help, others because they wanted assurance their cold wasn’t the new virus, and some because they had other emergencies.

The cracks in the country’s health care system appeared quickly, but few were as deep as the often manual and paper-based filing systems that slowed everything down, including billing.

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Before 2020, it was hard for hospitals to collect money, bouncing between insurance companies and individual patients, who often could pay back medical debt. After the pandemic, it became increasingly difficult to get through the paperwork and collect money from a population that was sick and often out of work.

A growing number of hospitals started looking to tech to solve filing and billing process woes, and startups began delivering.

“Health care is (nearly) 20 percent of the GDP and relatively untouched by technology—it’s still very old-school in a lot of ways,” Peechu said. “Financial services was the same way, and a lot of the money and the attention went to that.”

One example of that is medical fintech startup PayZen, which raised $15 million in a Series A round this year to expand its “care now, pay later” model in the United States. The company makes a platform that helps calculate a person’s health care cost and ability to pay those fees after insurance. Then it sets up a payment plan for the patient and an automated system to help streamline the billing process for hospitals.

Meanwhile, Nomi Health wants to skip the insurance companies altogether. The Utah-based direct health care startup offers employers a payment platform that connects directly to health care providers, which it says can save everyone money. The company launched in 2019, and closed a $110 million Series A funding round in December.

While both PayZen and Nomi founders say their companies are fairly unique in the market today and have seen enormous growth in adoption, employee count and funding, they both expect more competition in the future as the industry grows. Peechu is bullish on that, too.

“The overall health care market is very rich and diverse,” he said. “Money is going into both the traditional life sciences investments and all of these subsectors.”

Diagnostics

The idea of spitting in a tube, pricking one’s finger or packaging a sample of stool for analysis isn’t a foreign concept in health care. But doing all of that at home and paying a private company to analyze it is still a relatively novel, yet growing, part of the industry that investors like Peechu say they’re watching closely.

Bellevue, Washington-based Viome, for instance, raised $54 million last year year to research aggressive cancers and chronic diseases and, ideally, come up with early-stage diagnostics and therapeutics for those ailments. But most people know the company for its at-home diagnostic kits that exchanges a sample of blood or stool for diet recommendations and supplements—a service that boomed during the pandemic.

“More and more people are becoming more aware of their own health, and COVID, to some extent, taught us that we actually have a say in what happens to our health,” Viome founder and CEO Naveen Jain told Crunchbase News in 2021. “It used to be ‘I do what I do and when I get sick, I go to the hospital.’ COVID taught us the last thing you want to do is to get sick and go to the hospital.”

Illustration: Dom Guzman


  1. Felicis Ventures is an investor in Crunchbase. It has no say in our editorial process. For more, head here.

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