The San Francisco-based company, co-founded by Foresite Labs, specializes in precision medicine—more specifically, a relatively new science that analyzes cells, their divisions over time, and mutations that can occur when those human cells divide. The startup’s work focuses on those mutations and cells known as “clonal hematopoiesis of indeterminate potential,” or CHIP, that are indicators of diseases like cancer. 

“For years, we have known this fundamental biology will change the way we treat age-related diseases, but not until TenSixteen has a company been positioned to operationalize that vision,” Vikram Bajaj, CEO of Foresite Labs and managing director of Foresite Capital said in a statement. 

The science behind CHIP has emerged in the past decade, but despite how new the field is, co-founder and CEO Dr. Mark Chao told Crunchbase News that it is sound.

Chao is a physician and former co-founder of Forty Seven, an immuno-oncology company that Gilead Sciences acquired for nearly $5 billion. He also previously served as the vice president of oncology at Gilead Sciences and as a clinical instructor at Stanford University. 

“As a hematologist, I’ve unfortunately had the privilege to see a lot of patients with aggressive blood cancers, and there have been several where … they’re being referred, they’ve already had a few treatments, and by then, their cancer is completely mutated, so our success of really changing their disease is quite low,” he said. “What if we could treat the disease when it’s a lot more simple? What if we could, even better, eliminate those cells that were going to cause the disease and prevent it from happening in the first place?” 

To that end, he expects that one day tests for CHIP cells could become standard practice in medicine because they would allow hospitals to catch markers for hard-to-treat diseases early and help doctors tailor treatment to patients. 

“One of the themes that you’re seeing across the health care field is the ability to treat earlier, right,” Chao said. “There’s very few times where you have biology this transformational that can really do that across many diseases. We look at CHIP as one of the broad biomarkers as a tool to be able to treat early.” 

The startup is named for the approximate number of times human cells divide in a lifetime—an enormous number that equates to roughly 10¹⁶ times—that each offer an opportunity for mutation. 

TenSixteen’s ultimate goal is to develop new therapeutics that could help treat the ailments that CHIP testing can identify. It’s still early days for the startup, as it continues to gather data and work on growing its team from about 10 full-time employees to more than 30 in the coming year with its new funding, Chao said. 

He hopes the company will have multiple treatments in clinical trials, or be approved for use in oncology and heart disease patients in the next five years.

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Tai Adaya launched skin care startup HABIT in mid-2020 and within a year the company was profitable and viral on social media platform TikTok, feats that would make any startup founder proud. But as it turns out, critical venture capital funding—the kind of money that allows startups to scale and market—was harder to nail down than consumer buy-in.

Adaya is one of a large and growing cohort of Latine startup founders in the U.S. But Crunchbase data shows that while funding to Latinx founders has increased in dollar terms—from $1.7 billion in 2017 to $6.8 billion in 2021—that growth only slightly outpaced the overall increase in U.S. venture capital investments, leaving Latine startup funding stuck stubbornly at around 2 percent of the overall startup investment pie.

Meanwhile, the data shows early-stage funding, arguably the most critical phase, has stagnated almost completely in recent years.

The disparity makes little sense considering that the number of Latinx-founded businesses—and their profitability—is growing. Latine-founded businesses made up about half of the net new small business growth between 2007 and 2017, data from management consulting firm Bain & Co. shows.

Such companies are also a good investment, according to the Stanford Latino Entrepreneurship Initiative, which notes Latinx-founded companies often have high credit scores and fast-growing annual revenue compared to companies with white, non-Latinx founders.

Meanwhile, Latine-founded businesses are struggling not only to secure VC funding, but other types of investment as well. Even after controlling for revenue growth, industry, credit scores and profitability, Latine business owners are about 60 percent less likely to be approved for a loan from a national bank, according to Marlene Orozco, associate director for the Stanford Latino Entrepreneurship Initiative.

“We’ve done analysis that shows in order for a company to scale and grow, you need to have external sources of capital,” she told Crunchbase News. “Most Latino-owned businesses, what that means is that they need to be very resourceful, and they’re bootstrapping their companies.”

For Adaya and many Latine startup founders, the disparity between funding and outcomes is felt far beyond the bottom line.

“If you’re someone who looks like me and going after that type of financing, you end up just wasting a ton of time, and that, to me, is where it gets super, super costly,” she said. “If I were a white guy, I would probably talk to 50 people, but you end up talking to 1,000 people if you’re not a white guy to get to the same end result.”

Adaya noted that only about 2 percent of venture capital funds go to women-only founded businesses and that those numbers are even bleaker for women of color like her who launch a startup.

“There are a lot of egos in VC and there are a lot of people that are not really willing to listen,” Adaya said.

Early-stage funding stalls

One particularly crucial area where Latine funding is diverging from overall investment trends is in early-stage startups.

The dollar amount received in angel, pre-seed and seed rounds for venture-backed Latine-owned startups in the U.S. has barely budged since 2018, when $185 million went to Latine-owned companies raising those earliest rounds, Crunchbase data shows. In 2021, $205 million went to Latine startups raising angel, pre-seed and seed rounds, a mere $20 million increase from three years earlier.

Other early-stage funding has grown slightly from about $800 million in 2018 to $1.3 billion in 2021. That means almost all of the growth in funding that Latine founders have seen in recent years went primarily to later-stage startups.

The ripple effects

The slow pace of change in early-stage funding among Latinx founders is a problem with real consequences, said Michael Clouser, co-founder of The Startup Race, a hackathon and accelerator that aims to help founders across the globe.

The first, and most obvious, consequence is that when a startup is summarily passed over for investment at its earliest stages, its founders are less likely to get a chance to prove themselves through some amount of scaling, hiring or marketing, even when their idea is good.

“The issue is that you’ve got to have a really big base of companies and then let the Darwinistic process takeover,” said Clouser, who is based in Colombia. “But when you have fewer companies available for that Darwinistic process, eventually that equates to fewer unicorns.”

Lack of funding can also affect recruitment, Clouser added, because top talent may follow the money to their next job to reduce the risk that they’ll be back on the job hunt in short order.

One bright spot for Latinx founders is that more money is flowing overseas to Latin American countries, Crunchbase data shows. Venture funding to startups based in Latin America last year reached nearly $20 billion—320 percent over what it was in 2020 and by far the highest annual amount yet—Crunchbase data shows. The region was the fastest-growing globally for venture funding last year.

Where once most founders thought they had to be in a U.S. economic hub to access venture capital dollars, some are now finding that money less encumbered by borders, Clouser said.

Still, there are challenges with getting meaningful investment to international locales, from the ability to monitor large investments to the differences between legal systems and fluctuating currency exchange rates. That’s why Clouser is skeptical VC funding from the United States to Latine-founded companies will ever reach parity through overseas investment.

“I think a lot of ([investors) just come back to ‘Hey, we’re managing this limited partner money and there’s so many good deals here in the U.S., we don’t really need to take that extra risk and go abroad,’” he said.

Follow the leader

Even the increase in funding some startup founders based in Latin America are seeing today isn’t overcoming the most daunting issue of all: In venture capital, investment follows investment.

What’s more, very few of the people writing checks come from diverse backgrounds, said Garnet Heraman, founding partner at Aperture Venture Capital, which focuses on investing in diverse founders, including people of color and women.

“Funds like us are as much about normalizing check-writing by people who are Black, Brown, and female, as they are about funding people who are Black, Brown and female,” Heraman said. “Once that becomes more normalized, that’s the only time you’re going to see those numbers for early-stage investing change.”

• Check out 2021’s top-funded companies founded by Black and Latine entrepreneurs

Latine investors make up only 2 percent of venture capitalists in general, and about 2 percent of partner-level venture capital investment professionals, according to a 2021 report by nonprofit LatinxVC, a consortium of investors trying to grow Latinx representation in the industry. About 86 percent of institutional venture capital firms don’t have any Latinx investment professionals, the nonprofit’s data shows.

While that diversity matters, Orozco says every venture capitalist can make a difference in the funding disparities for Latine business owners. 

“If you are a VC, and you come across a Latine entrepreneur or another kind of underrepresented entrepreneur and you feel like the fit isn’t there … offer to make them an introduction or a connection to somebody else who is in your network that you think would want to listen to their story,” she said. “Don’t close the door, open a window.”

Indeed, that is why Heraman and Adaya say the investment numbers are only a small part of the story.

Adaya nabbed her first small, early-stage investment from Palo Alto-based venture capital firm OVO Fund and its principal Ilse Calderon, a woman of color who Adaya says “just got it.” 

She hopes future funding will be easier to get now that she’s gotten buy-in from at least one investor. 

“What I’ve learned in VC is there’s a mentality of following, so I think very few people out there are willing to make true assessments of risk,” Adaya said. “A lot of the way VC works is X invested in Y company, and you just trust X, or X has some type of prestige as an investor and that’s how you can get more people to invest.” 

But more venture capitalists and institutional investors are acknowledging the problem, including some major names. Whether they are successful in their mission remains to be seen, but the issue is undoubtedly a part of the conversation in a way it has never been before. 

Silicon Valley investment firm Andreessen Horowitz in 2020 offered up $2.2 million to launch an accelerator program for diverse founders, or those who “have the talent, drive, and ideas to build great businesses but lack the typical background and resources.” The announcement came shortly after the murder of George Floyd, a Black man in Minneapolis, by a white police officer that set off national protests, although the firm said it had been working on the program for six months.

“If you do not have the education, the mobility, the network, the social proof, the mentors, the business knowledge, then the Venture Capital world cannot see you,” the company said in an announcement. 

SoftBank, meanwhile, set aside $100 million in its Opportunity Fund focused on Latine, Black and other founders who identify as racial minorities. 

“​Investors often look for patterns, referrals and pedigree to make the investment process efficient, safely fitting into established norms,” the company said on its website at the fund’s launch. “The unintended consequence is that brilliant founders are often passed over. This expresses itself in many ways, perhaps none more harmful than the fact that Black, Latine, and Native American founders are largely left out of the VC ecosystem.”

PayPal has invested $100 million to Black- and Latine-led early-stage venture capital funds. The first half of that money went to eight funds in October 2020 and the second half was divided among 11 funds seven months later. 

“Venture capital funds led by Black and Latine managers expand wealth creation opportunities for diverse founders,” Dan Schulman, president and CEO of PayPal, said in a statement about the investments. “Over the long-term, the $100 million we are investing in 19 exceptional venture capital firms will help to foster a next generation of diverse founders that are building products and services that empower a more inclusive economy.” 

Many of those 19 firms, including Aperture, are small, still relatively young and trying to not only increase funding to diverse founders, but tackle the just-as-daunting task of diversifying venture capital itself. 

“I think the most telling data point about that is that the earliest published reports about the percentage of VC going to diverse founders and female founders dates to 2011 or 2012-ish,” Heraman said. “If you think about the history of wealth creation through tech and venturing, that dates back to the mid-90s. That’s two generations of wealth creation that’s happened and folks of color, and women have been left out of most of it.” 

— Senior Data Journalist Gené Teare contributed.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of Jan. 18, 2022. 

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

The most recent quarter/year will increase over time relative to previous quarters. For funding counts, we notice a strong data lag, especially at the seed and early stages, by as much as 30 percent to 40 percent a year out.

Please note that all funding values are given in U.S. dollars unless otherwise noted. 

Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

For M&A transaction analysis, we include venture-backed companies and exclude companies that previously went public. 

Glossary of funding terms

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Illustration: Dom Guzman

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The round, the company’s second infusion of venture capital in its 11 years of existence, marks a major turning point for the New Zealand-based startup, Kat Cole, company president and COO told Crunchbase News last week. 

“This (last) year was the first time ever with outside capital … in the company’s history that there was a material spend and effort around brand,” she said. 

Athletic Greens, founded in 2010 by CEO Chris Ashenden, is known for its flagship product, AG1, a powder that can be made into a drink with 75 vitamins, minerals and nutrients meant to boost health and energy. 

While the product was sold on Amazon for a short time, today it is only available through the company’s website. But that doesn’t seem to have slowed Athletic Green’s consumer buy-in, company leaders say. 

“We have incredible momentum in our mission to help people around the world take ownership of their daily health by focusing on foundational nutrition,” Ashenden said in a statement. “Consumers are demanding more from the health products they use daily and we have emerged as a leader by helping people realize their functional health goals with an incredibly high-quality and convenient product, AG1.”

Alpha Wave Global led the funding round, with participation from SC.Holdings and David Blitzer’s family office Bolt Ventures. 

The round also attracted a long list of sports, business and media figures, including those that swear by the company’s AG1 powder. Among them: Dr. Peter Attia, Mark Vadon, Alex Honnold, Chiney Ogwumike, Anthony Pompliano, Shane Parrish, Jim Toth, Amy Griffin of G9 Ventures, Joe Holder, Packy McCormick’s Not Boring Capital, Jeremy Jauncey, Tanya Sam, Jaime Schmidt, Miki Agrawal, Radha Agrawal, Marcy Simon, Swan Sit, Dan Churchill, Dave Peacock and Harold Hughes. 

Rick Gerson, chairman and chief investment officer at Alpha Wave Global, and Mark Vadon, founder of zulily and Blue Nile, and former chairman of Chewy, will join the Athletic Greens board of directors.

“The story of how Chris (Ashenden) and the team built Athletic Greens from scratch to this point while being bootstrapped until very recently is remarkable, and we think the story is only starting,” Gerson said in a statement. “They’ve built an impressive business based on a best-in-class product, an innovative customer acquisition model, and most importantly, a relentless focus on the customer.” 

Cole, who has an extensive leadership background in food brands—including about 11 years at Focus Brands, parent company to Cinnabon, Auntie Anne’s, Moe’s, McAllister’s and Jamba Juice—joined Athletic Greens in December. 

The new influx of money will be used to scale at basically every level of the organization, Cole said, but she’ll be focusing a lot of that capital into hiring, innovating on the AG1 mixture, unveiling more products in the coming year, broadening the company’s geographic reach, and growing the company’s production capabilities. 

The money has allowed the company to market in earnest for the first time, Cole added. So far, the startup’s customer base has grown primarily from word-of-mouth. The company doesn’t disclose the exact number of subscribers that get a shipment of Athletic Greens each month, but the number is in the “hundreds of thousands,” she said. 

Her five-year goal is to see that number grow to 20 million global subscribers, half of them in the United States. The company plans to get there through its tried-and-true method of “quality over quantity, less is more, and making a habit easy, not one more thing,” Cole said. 

“The fact that (AG1) changes so many lives; there’s a real noble mission of what if just most of us had 50 percent of our family, become AG customers?” she added. “It’s not crazy to think about getting to those numbers of customers. … And there will be a day when Athletic Greens products are available outside of athleticgreens.com.” 

Illustration: Dom Guzman

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The raise comes as many investors say gene therapy is poised to make waves in the biotech industry. The technology has made enormous strides in recent years to become a new option to help treat or cure chronic or severe illnesses, injuries and possibly even change the way we age. 

But in many ways, its impact is still theoretical because the industry is facing a major roadblock to scaling: Manufacturing simply hasn’t kept up when it comes to viral vectors, the critical tools molecular biologists use to put genetic material into cells.

That’s where 64x Bio comes in, according to company CEO and founder Alexis Rovner.

“This is a really hard problem, because … human cells have evolved to avoid vector production or virus production,” Rovner told Crunchbase News in a recent interview. “So, any mutation to these cells that forces them to make more of this material is going to be rare and it’s very likely that we would need to test more possibilities than there are stars in the universe. … We’re inventing a new technology to solve that problem.” 

The money will help 64x Bio expand its VectorSelect platform, which the company says can help pick the best cell lines for their specific uses and build them out to be manufactured at scale. 

The Series A round was led by Lifeforce Capital, with significant participation from Northpond Ventures, Future Ventures, First Round Capital and Michael Chambers, co-founder and former CEO of Aldevron. Also participating in the oversubscribed round were Chris Gibson, co-founder and CEO of Recursion, Alix Ventures and existing investors Fifty Years, SV Angel1, BoxGroup and Refactor Capital.

What sets 64x Bio apart, company founders say, is that it is building the optimized cell lines and licensing them to its customers, and is collecting and analyzing information along the way to make its VectorSelect platform smarter and more efficient with each new datapoint. 

From an investor’s point of view, 64x Bio is not only interesting on its own, but also has the potential to help grow and increase the value of the entire gene therapy industry, Adam Wieschhaus, director at Northpond Ventures, told Crunchbase News. 

“It’s not just about addressing the current gene therapy needs, which is still a limited market,” he said. “It’s about unlocking and applying gene therapies to a broad patient base that … currently we can’t even consider for gene therapies because not only are they hard to put in the hands of patients, but hard even to manufacture at this type of scale. I think (64x Bio technology) would certainly expand the market significantly.”   

Today, 64x Bio has about 13 employees, including the two founders and eight full-time workers, but it plans to hire another 50 employees in the coming year, Rovner said. The company is also actively in talks with various commercial partners to expand its reach, but Rovner demurred on the details of who those partners are. 

“The interest from the market that we’ve received was really validating that there is this massive unsolved problem in the gene therapy field,” Rovner said. “We want to be the leading supplier of highly optimized cell lines for this industry.” 

Editor’s Note: This story has been updated to reflect that Crunchbase News interviewed Adam Wieschhaus, director at Northpond Ventures, for this article.

Illustration: Li-Anne Dias

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Leaders at Owl Ventures, the largest VC firm globally focused exclusively on edtech, say little is off-limits when it comes to the types of companies and technology they intend to invest in, from pre-kindergarten to higher education and the future of work. The firm is also looking closely at what it calls “EdTech+,” which is an industry that sits somewhere between traditional edtech and other types of technology, like fintech and health care.

“We’ve always been focused on investing in the very best education technology companies around the world, full stop, and we have a lot of flexibility in how we do that,” Ian Chiu, managing director at Owl Ventures, told Crunchbase News. “We can do seed stage all the way to traditional A, B and C rounds, and then also late stage, so the full gamut.”

Since its 2014 inception, Owl Ventures has invested in a varied list of fast-growing edtech companies around the world, including Apna, BYJU’S, Degreed, Greenlight, MasterClass, Newsela, Quizlet and Stash.

The $1 billion in new funds is split across three areas: A $640 million fund (the fifth of its kind), a $270 million Opportunity Fund (the second of its kind), and more than $100 million in special-purpose vehicles.

Although all of the special-purpose vehicles funding has already been deployed, it’s still early days for the two investment funds. The Opportunity Fund will go to Owl Ventures’ existing portfolio companies.

The announcement marks a milestone for Owl Ventures, which in 2019 was dubbed a “rising star” by Crunchbase News when it had made investments in about 24 companies after raising its third fund, of $316 million. Today the firm has invested in 65 companies and has about $2 billion in assets under management.

“I think the milestone for us is really just a continuation of being the largest fund in this space,” said Tom Costin, managing director at Owl Ventures. “As a result, we will be able to attract top team LPs, really access what we believe are the top deals, and really create a virtuous cycle that we believe will help best position us to really capture this multi-decade opportunity.”

One of the firm’s major investment success stories is BYJU’S, the largest edtech company in India and one of the busiest startups in the field last year.

BYJU’S acquired Singapore-based Great Learning for $600 million, then Redwood City, California-based Epic for $500 million, and finally India-based Aakash Educational Services for around $1 billion in 2021. The startup is rumored to be considering going public in the United States through a SPAC, according to The Economic Times.

“Owl Ventures has been an invaluable partner to BYJU’S as we have scaled over the years,” Byju Raveendran, founder and CEO of BYJU’S said in a statement. “As an edtech specialist, Owl is a differentiated investor that has provided unique value across many functions including acquisitions, partnerships, talent and international expansion.”

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San Francisco-based PsyMed Ventures, founded by Dina Burkitbayeva, Greg Kubin and Matias Serebrinsky in 2020, on Friday announced its new $25 million investment fund. The money will go to early-stage startups, primarily those working on psychedelics, to help treat mental ailments. The fund will also invest in startups working on neurotechnology, digital health and precision psychology, all early, but fast-growing fields of technology in mental health. 

PsyMed has already started making investments to startups, though the founders acknowledge that only about one-third of the $25 million has been officially secured. The trio expects that by the end of March, they’ll have met their fundraising goal and will ultimately help fund between 20 and 25 startups. 

Among PsyMed’s early investments are biotech companies Freedom Biosciences and Delix Therapeutics, both working on using psychedelics to make new medications. 

Freedom Biosciences was co-founded by Burkitbayeva and John Krystal, chair of psychiatry at Yale University. The biotech company is working on clinical-stage development of ketamine- and psychedelic-focused therapeutics. 

Delix Therapeutics is developing therapeutics with non-hallucinogenic drugs known as psychoplastogens. In layman’s terms, psychoplastogens are meant to help our brains compensate for injuries and diseases, and make new links between the neurons firing signals back and forth. 

The three PsyMed founders spoke to Crunchbase News this week about the fund’s inception, investment strategy and goals for the future of mental health treatments. 

This interview has been lightly edited for length and clarity.

Tell me about how you came together to work on this fund. 

Kubin: We decided to create a syndicate together on AngelList, which has been a really good platform for us because it has given us exposure to two different communities. One is a community of people who are therapists, medicine people, psychiatrists coming from life sciences. But then also we’ve connected with people who are more just interested in technology and startups that see the value of psychedelic medicine. We have invested in 14 companies through our syndicate with over $15.6 million. From that, I believe we have over 300 LPs that have invested with us. We really feel the syndicate has enabled us to create a community of LPs—not just capital, but people, individuals who can support the companies that we’ve been investing in.

How has fundraising gone? 

Kubin: One thing that’s been really neat is some of the people who are investing in our fund have already invested in us through our syndicate. It’s people we’ve been able to build trust and rapport and connection with, and that was a nice validation. … What’s interesting is we’re finding interest from a wide array of investors. Some of these people have benefited from psychedelic medicines themselves. Others see the promise of it, or are following the space and the research. For us, it’s really important to have values-aligned investors who are investing with us because … integrity is super important to us. We recognize this is a very early industry and it’s going to take long-term, committed partners in terms of the founders we back, as well as the people who are supporting us. 

Psychedelics are still federally illegal, though some states are loosening their laws on their use and the FDA can approve certain applications for them. How does that affect the industry and its investment opportunities?

Burkitbayeva: We’re very aware of the limitations that a scheduled drug such as psilocybin, or MDMA, or ketamine pose in terms of investment and coming to market. With that in mind, … we look at the medical model, not the recreational model. … We invest in companies that would be developing a drug that would go through the FDA approval process, and that’s similar to any other biotech company that’s developing a molecule in oncology or cardiology. If that process is successful, and it’s FDA approved, then that trumps any kind of DEA scheduling. … Otherwise, we believe there’s a possibility that it goes through the FDA process and there could be some descheduling. That would not affect the investment, really. 

What can you tell me about your investment strategy? Why are you focusing specifically on early-stage startups? 

Serebrinsky: That is where we can actually make a difference. That’s where we can help and support entrepreneurs based on our own experience building companies in the past, so that’s number one. Number two is that this is still a very nascent industry. Mental health therapies have been completely underfunded until now, so the companies are just starting as well. … We started with psychedelic medicine and we’ve developed a playbook about how to get involved in this phase, how to invest, how to think through those opportunities. We’re expanding that same playbook to other verticals as well, but based on how established we are in psychedelic medicine, more than 50 percent to 60 percent of our investments in the space will be in psychedelic medicine for the first fund we’re raising. 

What emerging technologies or research in this space do you have your eye on that might be surprising to some people? 

Serebrinsky: Some of the (psychedelic) therapies we are looking at start with depression and anxiety as the biggest markets, but as these medicines are researched more, they’re finding potentially interesting opportunities. Nothing is certain, but they’re looking at potential uses for substance use disorder and things more out there, like Alzheimer’s disease and Parkinson’s. There are companies working on these therapies for things like stroke and organ transplant failure … and eating disorders as well.

Burkitbayeva: I think the mental health treatments space … is going to grow, not just because COVID has had such a hard hit on mental health, … but I think because there was not enough attention, research and investment going into mental health, so we haven’t really diagnosed most of the indications (of mental illness) that are actually out there. We have depression, anxiety, PTSD, OCD, bipolar, but what we’re seeing over and over again in the most cutting-edge research is that there’s so much more granularity to each one of these. 

In the future, when someone goes to a psychiatrist, there will be so many more tools, like neuroimaging tools and other types of biomarkers that we can use to diagnose, but we will also have just a larger number of indications that we’re aware of. So the size of the market is not just going to grow by the number of patients that need help, … but also by how sophisticated the diagnostics space is going to become. … I think psychedelics are probably going to be one of the major treatments, alongside neuro and digital therapeutics. 

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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.

“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.

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

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The boom in successful edtech IPOs and other exit moves in the sector via SPACs or mergers and acquisitions were pushed forward primarily by the COVID-19 pandemic. But the changes seen in the sector have been more nuanced than simply pointing to a pandemic, industry experts say.

For one, the United States has been laying the groundwork for more accessible online education and work through broadband infrastructure over the past decade, which contributed significantly to the country’s ability to grow and adopt the technology, said Ian Chiu, managing director at Owl Ventures, which focuses on edtech investing.

Then the pandemic hit and the entire country rushed to solve the second part of the U.S.’ connectivity infrastructure hangup: Laptops or personal computers and hotspots that some people simply couldn’t afford or didn’t have for one reason or another. Suddenly, those devices became a must-have for students, and programs in cities, counties, school districts and even private industry helped fill in many of the blanks.

Edtech adoption “had been happening a bit more steadily at the beginning, and then COVID accelerated a lot of that,” Chiu said. “In many ways, it’s very similar to what SARS did for e-commerce a couple of decades ago. We think we’re right at the beginning of this digital transformation within education, that the spend will continue to grow and the global markets for this opportunity will continue to be very, very compelling.”

Another shift in edtech trends came from China’s regulatory crackdown on the edtech space this year.

The new government oversight seems to have cooled off sector investment in China, where edtech startups had been leading the industry for years. That offered companies in other countries, including the United States, a larger platform—though that doesn’t mean that Chinese edtech is out of the investing picture entirely.

Below are some of the biggest edtech industry moves, from IPOs to SPACs and M&A, that happened in 2021—and what they could mean for the sector in 2022.

March

Coursera: As a private company, Coursera raised more than $443 million in funding, according to Crunchbase data. In March, it was valued at $4.3 billion as it prepared to go public on the New York Stock Exchange, but the market was even more bullish on the company—at first. Shares closed at $45 apiece 36 percent higher than the company expected on its first day of trading, leaving it with a market cap of $5.9 billion. Since then, they’ve dipped to around $24 apiece as of mid-December.

June

Zhangmen: Chinese online tutoring platform Zhangmen completed an IPO on the New York Stock Exchange in June, closing its first day of trading up nearly 44 percent from its offer price and raising almost $42 million. But the company’s nearly $17 share price at the close of its first day on the stock market has since dropped to about $1.13 as of mid-December. The company raised at least $902.3 million over seven funding rounds before going public, according to Crunchbase data.

July

Instructure: Salt Lake City-based Instructure, which makes popular learning management system Canvas, raised $250 million in its July initial public offering. Unlike most other edtech companies on this list, Instructure’s shares have gained value since its IPO, when shares went for nearly $21 at the market’s close. As of mid-December, they were valued at almost $23 apiece.

Duolingo: In July, Duolingo arrived on the Nasdaq with a $6.5 billion valuation, raising $521 million through its IPO and closing out its first day of trading at about $140 a share, up nearly 40 percent. As of mid-December share prices had dipped to $104 apiece. The language learning platform had raised at least $183 million in funding as a private company.

PowerSchool: Folsom, California-based PowerSchool sold 39.5 million shares at almost $18 apiece in its IPO, raising $710.5 million. That meant the company, which develops cloud-based software for K-12 education, was valued at about $3.5 billion following the public offering. Since then, its stock price grew, before settling back in at about $17 a share in mid-December.

September

Nerdy: Nerdy, which owns the popular Varsity Tutors, went public via SPAC in a deal valued at about $1.7 billion in September. The deal gave the St. Louis-based company up to $750 million in proceeds when it started trading on the NYSE. Since that deal, on Sept. 20, share prices have more than halved, going from $11.20 apiece to about $5 in mid-December. 

October

Udemy: San Francisco-based Udemy, which offers online courses for professional skills in technology and business, went public Oct. 29. It started the day selling shares at $29 apiece, but closed the day at $27.50 per share, still valuing the company at around $3.8 billion. After an initial surge in stock prices in November, shares were trending downward and valued at about $17.50 in mid-December.

Anthology and Blackboard: Boca Raton, Florida-based Anthology and Reston, Virginia-based Blackboard announced in September their plans to merge in an effort to “create the most comprehensive and modern edtech ecosystem at a global scale for education.” In other words, they were to become an edtech software behemoth for higher education. By October, the merger was official.

Look ahead

BYJU’S: India-based BYJU’S had a busy year, acquiring Singapore-based Great Learning for $600 million, then Redwood City, California-based Epic for $500 million and finally India-based Aakash Educational Services for around $1 billion, tech marketplace G2 outlined in its recent report on the edtech boom. Now, BYJU’S is rumored to be considering going public in the United States through a SPAC, according to the Economic Times. 

Despite the dips in stock prices of many companies that did IPOs this year, investor interest in the industry seems to be as bullish as it was when the year started—if not even greater, Eurie Kim, a partner at Forerunner Ventures told Crunchbase news.

The infrastructure progress for digital learning also excites Kim as much as it does Chiu at Owl Ventures. With that in place, Kim said she sees a future where edtech is a centerpiece for education.

“The biggest shift is that before COVID, it was all supplemental, nice-to-have education that was digital,” she said. “Now, I think we’re really going to start to see real core education move forward on the digital track and ask ‘How do you supplement schools that don’t have resources for some of these classes?’ Can some of these platforms like Juni, Coursera or some of the other bigger platforms start to enable more access to quality education?”

Perhaps the answer to that question will become more clear in 2022.

Illustration: Li-Anne Dias

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But two of those investment firms have emerged as major leaders, not only in the number of biotech funding rounds led, but also in overall dollars invested into the industry. Boston-based RA Capital Management and New York-based OrbiMed ranked first and second, respectively, on the two lists compiled using Crunchbase data. 

Although the two firms emerged as leaders in the data, they still make up a small part of the more than $120 billion in venture capital funds globally that poured into health and biotech startups as of Dec. 1 this year, Crunchbase data shows. 

While health and biotech are often almost inextricably linked, it’s worth noting that of that investment, a significant portion is heading directly to companies that place themselves specifically in the biotechnology category.

Here is a breakdown of some of those leaders, based on Crunchbase data. 

Most investment rounds led in biotech 

Leading a funding round is a big undertaking. The lead investor often acts as the liaison between the startup’s founder(s) and the other participating investors, or is implicitly trusted by other investors to find the best terms for everyone. 

These VC firms led the most funding rounds for biotech startups this year between Jan. 1 and Dec. 1, according to Crunchbase data. This data also illustrates the total number of biotech industry investment rounds each lead investor participated in during that time, including those rounds the firm led and those it let others lead. 

Most money invested in biotech startups 

RA Capital Management and OrbiMed led the way in both total dollars invested and the number of venture capital funding rounds led in the biotech industry last year—the only two firms to make it onto both lists. 

Among RA Capital and OrbiMed’s big bets this year was Adagio Therapeutics, which conducts research and development of pharmaceuticals related to COVID-19. 

RA Capital led the company’s $336 million Series C ahead of the company’s August IPO, though the firm hadn’t participated in the company’s earlier funding rounds. OrbiMed and Fidelity Management and Research Co., however, participated in Adagio’s Series A, B and C rounds. 

To learn more about these VC firms and their 2021 investments take a look at their Crunchbase profiles: 

• RA Capital Management
• OrbiMed
• Northpond Ventures
• Temasek Holdings
• Lilly Asia Ventures
• Novo Holdings
• Sofinnova Partners
• GL Ventures
• Sequoia Capital China
• Flagship Pioneering
• Fidelity Management and Research Company
• Casdin Capital
• Surveyor Capital
• Logos Capital
• Janus Henderson Investors
• Alexandria Venture Investments
• Cormorant Asset Management

Illustration: Li-Anne Dias

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San Francisco-based Apella collects data from operating rooms in hospitals via sensors and puts artificial intelligence to the task of analyzing that information and spits it out in a way that that the startup says can be interpreted by hospitals to improve operations, surgical quality, training and even real-time decision-making. 

To start, Apella is focusing on all the things that happen between surgeries, including in the setup and takedown processes, David Schummers, CEO and co-founder of Apella, told Crunchbase News. 

“Obviously, there are a number of clinical inefficiencies and delays that also happen during surgery that are really valuable to capture and characterize, but the hospital administrators and the surgeons both really care about the efficiency of what happens between surgeries,” he said. 

The round, which adds to a $3 million seed round that closed in April of 2020, was led by Casdin Capital, with participation from Vensana Capital, PFM Health, Twine Ventures, Upside Partnership and Operator Partners, plus other unnamed but “notable individual investors.” 

“Apella is creating the operating system for the operating room,” Justin Klein, managing partner at Vensana Capital said in a statement. “The company’s technology can create a true system of record by capturing data that is unbiased, reliable, and increases in value over time.” 

Founded in 2019, Apella has deployed its systems to “a handful” of hospitals across the United States to help the company gather information and refine its technology. Now, it’s in talks with what Schummers calls “luminary hospitals” to put its technology to work. He expects the technology to be deployed in five to 10 hospitals in the first half of next year.  

The new injection of funding will help the company get its product into more hospitals and continue developing its platform, but the bulk will be spent on growing the team. Today Apella has around 15 employees, and Schummers expects that in the next six months, that number will double or triple—a tall order in a tight labor market, he acknowledged. 

What makes Apella’s technology stand out in the medical field, Schummers said, is that it’s meant to improve processes for every kind of surgery, rather than specializing in one type of care over another. 

“We are not using AI on one kind of imaging modality, like an endoscope or an X-ray,” he said. “We’re using it more to capture the processes that occur every day in every operating room because we think if you start there, you can scale relatively quickly and really have a much broader impact.” 

Illustration: Dom Guzman