First half healthcare investment and deal flow reach record highs in 2019

By CB Insights‘ count, the growth in investment and valuation means there are currently 38 VC-backed digital health unicorns worth a combined $90.7 …

The amount of deals and dollars invested in healthcare is hitting near record highs for the first half of 2019 with $26.9 billion poured into healthcare companies over 2,258 deals around the world, according to CB Insights’ Global Healthcare Report.

That represents a slight uptick from the first half of 2018 where $26.5 billion was invested over 2,223 deals.

Digital health specifically has been a major driver of that growth with $3.5 billion invested in Q2 of 2019, a 23 percent jump from the first quarter. When it comes to centers of that deal flow domestically, California ranked in first place for Q2 followed by Massachusetts and New York, respectively.

Outside of the U.S. the leading countries in digital health according to deal flow have been China, U.K., France, South Korea and India.

A few areas recently targeted by investors have been companies utilizing AI in healthcare, as well as mental health and wellness startups. Healthcare AI companies raised $864 million from VC firms in the second quarter of 2019 and mental health startups raised $321 million across 26 deals.

The report highlights Quartet Health’s $60 million Series D and Talkspace’s $50 million Series D as two illustrative examples of the latter category.

One potential concern in the report has been the drop in investment into Asian companies in the second quarter of 2019, potentially driven by the intensifying trade conflict between the U.S. and China.

When it comes to the most active healthcare investors for Q2, CB Insights listed First Round Capital and Jumpstart Foundry in the top spot. The investors joined together in a number of financing deals like the $16 million Series C round of Indian diagnostic startup SigTuple and the $75 million invested in gym and clinic operator CureFit

By CB Insights’ count, the growth in investment and valuation means there are currently 38 VC-backed digital health unicorns worth a combined $90.7 billion.

In the United States, the top three highest valued healthcare unicorns according to the report are all biotechnology companies led by Samumed with its $12 billion valuation and followed by the $7 billion valuation of Roivant Sciences and the $3.5 billion valuation of the recently embattled Intarcia Therapeutics.

Nine-figure megaround into companies like Chicago-based Tempus and French healthcare practice management startup Doctolib have resulted in continued increases in valuation figures. The report counts 8 digital health mega-rounds around the world since the beginning of this year including investments in Collective Health, Encoded Therapeutics and Weimai.

Projecting outward, CB Insights sees total investment dollars slowing in the second half of 2019, but deal count continuing to rise to more than 4,500.

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With SoftBank’s backing, Cybereason set to join cybersecurity’s rapidly growing unicorn club

Cybereason has raised $200m in investment from Japanese conglomerate SoftBank Group and its affiliates, leaving the firm just shy of a $1bn …

Cybereason has raised $200m in investment from Japanese conglomerate SoftBank Group and its affiliates, leaving the firm just shy of a $1bn valuation that would see it enter cybersecurity’s fast-growing unicorn club.

Cybereason has grown rapidly over the past two years, having watched its customer base increase by more than 300%. The company now monitors more than six million endpoints globally. That growth is largely down to its success in the endpoint protection (EPP) market. Its endpoint detection and response (EDR) platform has delivered customers superior security results while using fewer resources.

The firm has achieved a ratio of one analyst to 150,000 endpoints, compared to an industry average of one analyst to 20,000 endpoints. This is achieved by automating large parts of the threat detection process, which helps in part to overcome the current shortage of approximately three million cyber analysts.

“We are leading the wave, becoming the world’s most reliable and effective endpoint prevention and detection solution because of our technology, our people and our partners,” Lior Div, CEO of Cybereason said. “We help all security teams prevent more attacks, sooner, in ways that enable understanding and taking decisive action faster.”

With total equity reaching $389m following the latest funding round, Cybereason plans to ramp up operations in all geographies, “aggressively” growing its number of partners while continuing to improve its EPP platform.

The firm plans to build the world’s first full stack offering for truly autonomous security, which Cybereason CTO Yonatan Striem-Amit says will “democratise and transform” the cybersecurity profession by freeing up time for cybersecurity analysts.

A recent study carried out by security research firm Ponemon Institute found that 65% of cybersecurity analysts have considered quitting their role due to workplace stress. However, 67% believe that increasing spending on automation would improve their current situation.

Cybereason SoftBank investment pushes value towards $1bn

With an additional $200m in investment, SoftBank has increased its total investment in Cybereason to approximately $360m.

SoftBank first invested $59m in the firm in 2015, before adding another $100m to the pot in 2017.

Cybereason is one of a number of promising technology companies that has attracted the attention of the Japanese conglomerate since it launched its $100bn Vision Fund to invest in growth stage tech startups in 2017. SoftBank has invested billions in the likes of Didi Chuxing, Uber, WeWork, Grab and Flipkart.

As well as SoftBank, Cybereason has also raised capital from venture capital firms CRV and Spark Capital, as well as the investment division of defence giant Lockheed Martin. Combined, these investments have given the firm a total value of $900m, which leaves it just short of achieving unicorn status –– a $1bn valuation, and the holy grail of growth stage technology startups.

According to data from CBInsights, just nine cybersecurity firms had achieved unicorn status prior to 2019. However, four firms have joined the club already this year.

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In fact, the cybersecurity unicorn club had grown by 44% in less than six months since IT monitoring solution Kaseya hit the milestone in March. Auth0 followed in May, as a $103m series E funding round confirmed that it had doubled its value in 12 months. KnowBe4 and Druva’s own funding rounds both confirmed their place in the club in June.

They join Qi An Xin, Darktrace, 4Paradigm and Netskope, all of which achieved a $1bn valuation in 2018.

Number of private cybersecurity companies valued above $1bn

Investors are responding to security breaches, but investment could dry up

According to Aarti Samani, the product and marketing director for biometric technology firm iProov, who has decades of experience seeking finance for high-growth startups, investors are likely responding to the various highly-publicised security breaches that have occurred in the past few years.

Regulators are getting tough on those that fail to protect consumer data. The United States Federal Trade Commission (FTC) broke its record fine for privacy violations twice in a week last month. That was shortly the UK’s Information Commissioner’s Office (ICO) handed British Airways a record £183m fine for a 2018 breach.

Given the potentially costly consequences of poor cybersecurity, business spend is expected to reach an all-time high in 2019, and investors have seen dollar signs.

“Last year saw a number of security breaches, and this will only continue as more services are accessed digitally by more people,” Samani explained. “Innovative technology is currently being deployed to fight these problems, which has caught the attention of investors who are making funds available for cybersecurity firms.”

However, while cybersecurity firms are reaping the rewards now, Samani doesn’t believe that will last forever. As the market becomes more saturated – and companies like Cybereason continue to do more with less – investors will begin to air caution when investing in the cybersecurity market, ensuring that the products they are betting on provide genuine value.

“The space is becoming increasingly competitive however, and it’s getting more and more difficult to identify genuine disruptors from the general noise,” Samani told Verdict. “We expect investors will turn their due diligence process up a few notches and begin target the real problem solvers.”


Read more: SoftBank investments: The businesses, industries and technologies backed by the Japanese conglomerate


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Venture capital investment in AI and mental health startups surges in Q2: report

Top investors Centene, Google Ventures, Oak HC/FT, Norwest Venture Partners, and Y Combinator are flocking towards mental and behavioral health …

Investment in healthcare artificial intelligence startups and companies focused on mental health and wellness soared in the second quarter as both sectors hit funding highs, according to a new report.

Healthcare AI companies raised $864 million in the second quarter, compared to the $764 million AI startups raised in the second quarter of 2018, according to technology market intelligence company CB Insights’ global healthcare report released on Tuesday morning.

The $864 million in AI healthcare investment was led by a $200 million round to Tempus in May. Tempus develops an AI-enabled precision medicine software based on its collection and analysis of clinical and molecular data.

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Patent applications for AI healthcare technology also continue to grow with GE, Philips, and Siemens among the top patent applicants, CB Insights said.

Mental health and wellness companies raised $321 million across 26 deals, in the second quarter of 2019, with large rounds going to Quartet and Talkspace. That compares to $227 million invested in mental health startups during the same quarter in 2018.

RELATED: Digital health funding in first half of 2019 hits record $5.1B: report

Top investors Centene, Google Ventures, Oak HC/FT, Norwest Venture Partners, and Y Combinator are flocking towards mental and behavioral health, the report said.

It’s been a record first half of the year with the amount invested in healthcare companies globally rising to $26.9 billion across 2,258 deals so far in 2019 compared to $26.5 billion in the first half of 2018.

In-demand sectors including mental health and healthcare AI could drive a record annual deal high projected by the end of this year. CB Insights projects 4,516 deals by year’s end compared to 4,395 deals in all of 2018. The company is projecting global venture capital-backed healthcare deals and financing to reach $53.9 billion in 2019, a slight dip from the $59.5 billion raised in 2018.

RELATED: Accenture: AI, blockchain will have ‘transformational’ impact in next 3 years

Digital health funding is on the rise for the second straight quarter, reaching $3.5 billion, up 23% versus the first quarter of 2019. There were 371 digital health deals compared to 354 in the first quarter, according to the report.

CB Insights also identified 38 so-called unicorns, global VC-backed digital health startup companies valued at $1 billion or more. These highly-valued startups are worth a combined $90.7 billion, according to the report.

Among U.S. companies the list includes Oscar Health, ZocDoc, Proteus, Clover Health, One Medical, Calm, Tempus, 23andMe, and Hims.

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“The cohort’s total valuation in 2019 continues to grow as a result of continued mega-rounds to existing unicorns, such as Tempus and Doctolib, among others,” the report said.

Other healthcare segments also saw strong investment growth including women’s health startups.

Women’s health venture capital funding totaled $284 million in the second quarter of 2019, compared to $129 million in the same quarter last year. Companies like Kindbody and Modern Fertility are disrupting traditional fertility services with technology-enabled platforms. Startups Elvie and JioVio are targeting maternal care with pregnancy trackers and wearable breast pumps connected to mobile apps, the report said.

Genomics startups saw a slight dip in venture capital investment in the second quarter of 2019 but still raised $638 million.

Cannabis startups raised $1 billion in 107 deals in the second quarter of 2019. Of those deals, startups with a hemp and/or CBD business took a record 25% of cannabis funding. Investment in this sector was led by a $420 million round to Pax, a company that provides internet-connected vaporizers that allow users to track the potency of consumed cannabis.

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Meet the Humble CEO Who Wants to Build the Biggest Cybersecurity Company Ever—Data Sheet

SoftBank, a Cybereason customer that became an investor in 2015 and co-led the company’s last fundraising round in 2017, is apparently tripling …

Lightricks. Monday.com. DataRobot. Hippo. MoneyLion.

So-called unicorn tech startups just keep on proliferating. July saw a dozen privately owned firms cross the $1 billion-plus threshold—more than any other month this year, per Pitchbook data. By August, there were 62 new unicorns minted in 2019, more than the 51 inducted by that time in 2018, or the 33 crowned by then in 2017.

The latest addition to the not-so-mythical beast’s ranks is Cybereason, a Boston-based cybersecurity firm. The seven-year-old startup said Tuesday that it has raised $200 million of funding in a round led by SoftBank, the Japanese telecom and tech investing giant. Cybereason’s investors, which include CRV, Spark Capital, and Lockheed Martin, have marked up the company’s private valuation to north of $1 billion, a source not authorized to discuss the deal’s terms tells Fortune.

SoftBank, a Cybereason customer that became an investor in 2015 and co-led the company’s last fundraising round in 2017, is apparently tripling down on its bet. Marcelo Claure, SoftBank’s chief operating officer, praised Cybereason’s data security prowess and “A.I.-driven technology” in a statement.

It’s no wonder why SoftBank is interested. In June, Cybereason exposed an espionage campaign that had burrowed into at least 10 mobile carriers in order to track 20 or so high-profile political and military targets. While Cybereason declined to provide any other clues about the identities of the hacked telcos or the subjects of surveillance, it attributed the call record-stealing spycraft to a hacker group associated with China. (You can read the full report here.)

Lior Div, Cybereason’s co-founder and CEO, aims to revivify an industry wherein attackers too often evade incumbents. “Companies like Symantec and McAfee simply don’t catch” as many threats today, says the alumnus of Israel’s prestigious Unit 8200 hacking division, referring to the legacy pioneers of antivirus software.

Div compares his technology to Facebook’s social graph. Instead of delineating interpersonal connections, Cybereason maps out the relationships between devices on corporate networks using data collection and machine learning techniques. This week at Black Hat, a Las Vegas cybersecurity conference, the company plans to demo how it is expanding its PC- and server-protecting offerings to mobile devices.

“We think of it as a real-time blueprint of an organization,” Div says.

Since investor Aileen Lee coined the term “unicorn” in 2013, businesses such as Cybereason have become far less rare than her moniker suggests. Perhaps this is due to the magnitude of the challenges faced by the business world, or perhaps it is a consequence of the contagious, ever-inflating ambitions of today’s cocksure entrepreneurs.

Div, for one, is no shrinking violet. “I am on the quest to build the biggest cybersecurity company that exists ever,” he tells Fortune. Then as an afterthought he adds, “in a humble way, step by step.”

This columnist is beginning to think unicorns need a new name, given their dizzying rate of propagation. I propose bunny-corns.

Robert Hackett

On Twitter: @rhhackett

Email: robert.hackett@fortune.com

NEWSWORTHY

Sometimes it’s better to be lucky than good. After yesterday’s essay about the Apple Card went out, Applebegan sending out applications to a limited number of customers to apply for the new credit card. The application should be available to all U.S. iPhone owners later this month, Apple says.

Firm commitments. And speaking of SoftBank-backed startups, the Wall Street Journal is questioning whether the Japanese tech giant’s new investment fund is really quite as large as the $108 billion figure cited in a recent press release. The total may include debt and contributions from unnamed firms that have not formally signed on yet, the paper reports.

I heard that. Opening a new front in the privacy wars, regulators in the United States and Europe are reviewing the recent revelations that people working for Apple, Amazon, and Google listened to recordings of smart speaker users, Bloomberg reports. The companies have recently suspended the programs, which aimed to make the speech recognition features more accurate. Separately, Japan’s Fair Trade Commission is probing whether Apple’s deals with component suppliers in the country thwarted competition.

The printer is listening. Opening a new front in the global hacking wars, Russia’s Fancy Bearunit was caught intruding on printers, voice-over-IP phones, video decoders, and other smart devices by researchers at Microsoft. “These simple attacks taking advantage of weak device management are likely to expand as more IoT devices are deployed in corporate environments,” Microsoft warned.

As the Googleplex turns. In the latest employee feedback controversy at Google, a worker out on maternity leave penned a memo alleging that she was discriminated against for being pregnant. Vice reports on the memo, which is titled “I’m Not Returning to Google After Maternity Leave, and Here is Why.” Google said it prohibits retaliation in the workplace but declined to discuss the specifics of the situation. Google also announced it would reduce its carbon footprint by changing shipping methods and incorporating more recycled material in devices like the Pixel phone.

What goes down. As telegraphed yesterday morning, Monday was an awful day in the stock market, particularly for tech stocks, which are seen as particularly vulnerable to the escalating U.S.-China trade war. Nvidia dropped 6%, Apple, Alibaba, and Hewlett Packard lost 5%, while IBM, eBay, Facebook, Dell Technologies, and Oracle fell 4%. Roku, a beneficiary of the cord cutting trend (see below) was a rare stock in the green, rising 2%.

Programmed for good. If you want more in-depth coverage of artificial intelligence, don’t forget to subscribe to our weekly Eye on A.I. newsletter. The newest issue comes out later today.

ON THE MOVE

Care.com founder and CEO Shelia Lirio Marcelo is shifting to the position of executive chair, as the company searches for a new boss…GoDaddy is hiring Aman Bhutani as its new CEO, after Scott Wagner resigned for health reasons. We noted Bhutani’s departure from Expedia last week…CRV, the VC firm formerly known as Charles River Ventures, nabbed Anna Khan from rival Bessemer Venture Partnersas its 10th general partner…Cloud infrastructure provider DigitalOcean named Yancey Spruill, former COO of SendGrid, as its new CEO, replacing Mark Templeton, who resigned after only about a year on the job…and in NOT on the move news, AMD CEO Lisa Su tweeted on Tuesday morning that there was “zero truth” to a story that she was preparing to depart the company.

FOOD FOR THOUGHT

Lyft and Uber have found themselves at the center of the debate over whether the ride hailing services are helpful or harmful to the overall urban transportation equation. Now the two companies have released a study of their impact on traffic done by well-regarded consulting firm Fehr & Peers. Laura Bliss delves deep into the study’s results and methods in an analysis for CityLab. The companies appear to have shared previously confidential data about their trips–and the results are perhaps not what they may have hoped.

But now, less than a decade into this experiment, the industry is ‘fessing up. Today the ride-hailing giants released a joint analysis showing that their vehicles are responsible for significant portions of vehicle-miles traveled in six major urban centers. Still, Uber and Lyft’s combined share is still vastly outstripped by personal vehicles. As Chris Pangilinan, Uber’s head of global policy for public transportation, wrote in a blog post accompanying the findings, “although TNCs are likely contributing to an increase in congestion, its scale is dwarfed by that of private cars and commercial traffic.”

IN CASE YOU MISSED IT

Apple Will Absorb Tariffs on Its Chinese-Made Products, Analyst Says. Apple Stock Says Something DifferentBy Don Reisinger

Cord Cutting Is Canceling Television Subscriptions at a Record Rate in 2019—and Cable Company Stocks Are Loving ItBy Aaron Pressman

Trump Once Again Blames Video Games for Mass Shootings. Experts Disagree.By Chris Morris

Why Hate Site 8chan Is So Hard to Knock OfflineBy Alyssa Newcomb

Certain AT&T Customers Can Get Spotify Premium For Free Starting TuesdayBy Chris Morris

BEFORE YOU GO

We all love those crazy optical illusions, like the blue box that seems to change color. But Kokichi Sugihara is a virtuoso of the field, creating incredible illusions and sculptures that will warp your brain. On Monday, this Sugihara video of an arrow that seemingly always points the same way was blowing up on Twitter. Give it a whirl.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.

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AI-Powered Cybersecurity Startup Cybereason Raises $200 Million

Artificial Intelligence-powered cybersecurity startup Cybereason has raised $200 million in its latest financing round from SoftBank Group and its …

Artificial Intelligence-powered cybersecurity startup Cybereason has raised $200 million in its latest financing round from SoftBank Group and its affiliates. With this funding, the company has officially joined the rank of unicorns.

SoftBank has been on an investment spree lately pouring money in promising tech startups across the globe. Cybereason stated that this new funding would be geared towards geographic expansion and development of cutting edge technology that would enable the services to be autonomous.

Marcelo Claure, CEO at SoftBank Group, stated that cybersecurity played a leading role to help companies manage cybersecurity threats and protect people’s information.

The Japanese investment firm has been strategically investing in tech startups all over the world to gain access to emerging technologies. SoftBank plans to upgrade its existing security software and products using Cybereason’s technology to keep pace with the hackers.

Co-Founded by Lior Div, Yonatan Striem-Amit, and Yossi Naar, the Boston-based startup creates tools and software that are integrated into the mainframe systems to establish communication with a ‘brain’ in the cloud server.

Cybereason Raised $200m Dollars From Softbank

Cybereason Raised $200m Dollars From Softbank

The ai-powered platform detects and isolated the vulnerabilities in the system. CEO Div’s experience stems from the time he spent in the Israel army’s 8200 unit that focused on addressing cybersecurity threats.

“We have developed a machine that works faster than hackers hack, but we need to continue to learn and evolve. Cybersecurity doesn’t standstill. Countries are not using spies to do espionage. They are using cybertechnologies. It is much safer, much more elegant, and much more effective” quoted Div.

Cybereason’s previous funding round was closed at $100 million funded entirely by SoftBank in the year 2017. The company is also backed by CRV, Spark Capital, and Lockheed Martin. The total venture capital of the firm stands at $400 million. The company operates across five continents with offices in Boston, Tel Aviv, Tokyo, and London.

The cybersecurity market space looks very crowded with more and more companies such as Kaseya, KnowBe4, and Auth0 joining the Unicron club recently. Cybereason is en route to go public by 2021.

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