Despite Industry Turmoil, VCs Believe the Case for Telehealth Startups Is Stronger Than Ever

Samson Amore

Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.

Despite Industry Turmoil, VCs Believe the Case for Telehealth Startups Is Stronger Than Ever
Photo by Intel Free Press

Telehealth startup Cerebral entered the medical tech scene two years ago, backed by over $400 million in venture funding and a promise: remote access to mental health professionals and treatment that could help patients with a range of behavioral challenges, from depression to anxiety to ADHD, all bundled in a neat monthly subscription priced at $100 per month.

But by May of this year, Cerebral’s practices began to crumble under scrutiny. The company’s problems accelerated when an ex-executive filed a lawsuit in April alleging he was fired for speaking out against the Cerebral’s tendency to over-prescribe ADHD stimulants. The lawsuit then led to a Justice Department investigation into the company’s “possible violations” of the federal Controlled Substances Act, which is still pending alongside a separate inquiry from the Drug Enforcement Administration.


After the investigation, Cerebral fell on hard times. It paused prescriptions for ADHD medication for new patients and former CEO Kyle Robertson was ousted in May. But the strategy never panned out. This week, Cerebral announced it would cut 20% of staff, an estimated 400 people.

Cerebral’s troubles have rippled throughout the industry. One of the company’s partners, Truepill, a tech platform that helps telehealth companies offer prescriptions and diagnostics conducted its fourth round of layoffs in September. Noom, a similar telehealth coaching platform, laid off roughly 500 people and lost its CFO earlier this month.

But despite all the turmoil in the telehealth landscape, local venture capitalists say they don’t anticipate these issues to be a harbinger of doom for the entire industry. In fact, the VCs dot.LA spoke with said they believe the use case for telehealth and digital doctor’s visits is stronger than ever as COVID-19 cases and other infections are expected to tick up during the winter.

“There was definitely a correction in the market due to the amount of cash that has entered the digital health space in past years,” Upfront Ventures investor Kesar Varma told dot.LA. He said he’s seen less funding go towards health tech in recent months – part of the overall funding slowdown as VCs remain cautious about investing their accumulated wealth – and that investors are more keen to wait for healthtech startups to prove a proof of concept before backing later rounds.

Still, Varma noted that in the wake of Cerebral’s public flame-out, investors are more cautious. He said that when companies that raised at massive revenue multiples struggle, it trickles down to smaller startups.

“I think there was a view that telehealth could be applied to every type of care delivery modality, but there are some areas of healthcare where an in-person meeting will always be preferred by the patient,” Varma added. “We do believe that things like teletherapy are here to stay, it's just important to grow in a sustainable and thoughtful manner and not overpromise.”

Varma wasn’t the only local investor who said they thought the telehealth landscape over-expanded.

“Investors pumped the brakes on ‘general’ VC investing, based on the narrative behind the April 1 NASDAQ downturn,” explained Jay Goss, partner at Pasadena-based health investment fund Wavemaker Three-Sixty Health. “In short, health-tech investing is down, but for lots of good reasons, it’s down slightly less than non-health-tech.”

Goss pointed to some of the use cases – other than therapy and online prescriptions – where telehealth could really fill a need as one reason why he’s still optimistic about the industry at large. In particular, he said “a lot of use cases where the patient simply prefers it,” and provided the example of new mothers accessing “lactation consultants at 2 in the morning.” In addition, Goss said there’s a high demand for care and simply not enough physical space at doctors offices or hospitals, which led to excruciating wait times during the pandemic.

“On the supply side, we are simply running out of supply,” Goss added. “In urban and rural markets, we don’t have enough hospital beds and clinics and the problem gets worse as the senior population grows.” Moreover, there’s already a huge clinician shortage, which only got worse during the pandemic due to burn-out. “As a society, we must start taking care of people outside the four walls of a hospital or clinic,” Goss said.

So while Cerebral’s use case for prescribing antidepressants to virtual clientele might not be the most viable long-term business model, there is definitely a growing need for telehealth that can accommodate patients who can’t come in for a physical appointment. The Cerebral saga might be a cautionary tale, but it could also be a valuable learning experience for both investors and founders looking to create the next generation of telehealth unicorns.

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🚁 One Step Closer to Air Taxis in LA
Image Source: Joby Aviation

🔦 Spotlight

Joby Aviation, a pioneering electric air taxi company, has achieved a significant milestone by successfully flying a hydrogen-electric aircraft demonstrator for 523 miles with only water as a byproduct. This groundbreaking flight showcases the potential for emissions-free regional travel using vertical take-off and landing (eVTOL) aircraft, eliminating the need for traditional runways. The company's innovative approach combines its existing battery-electric air taxi technology with hydrogen fuel cells, paving the way for longer-range, environmentally friendly air travel.

For LA residents, this development holds exciting implications for future transportation options. Joby's technology could potentially enable direct flights from LA to destinations like San Francisco or San Diego without the need to visit conventional airports, offering a cleaner and more convenient alternative to current travel methods. The company's progress in both battery-electric and hydrogen-electric aircraft positions it at the forefront of next-generation aviation, promising to revolutionize urban and regional mobility.

Notably, Joby Aviation has already made strides in Southern California by securing an agreement with John Wayne Airport earlier this year to install the region's first electric air taxi charger. This strategic move sets the stage for LA to be among the initial markets where Joby will launch its electric air taxi service. With plans to commence commercial operations as early as 2025 using its battery-electric air taxi, LA residents may soon have access to a fast, quiet, and environmentally friendly mode of transportation that could significantly reduce travel times and traffic congestion in the region. In the not too distant future, LA might find itself in an identity crisis without traffic and excess smog 🤞🤞.


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Fuel Innovation: 7 Unforgettable Team Building Experiences in LA
Image Source: Discover LA

In today's competitive business landscape, team building activities have emerged as a crucial tool for fostering a positive work environment, enhancing productivity, and crucially, improving employee retention. Studies have shown that such activities help employees feel valued, with one report indicating that 93% of those who felt appreciated were more motivated at work. Importantly, team building events may improve retention rates, as employees who feel connected to their colleagues and company culture are more likely to stay long-term. With these benefits in mind, let's explore some of the most engaging and effective team building activities available in Los Angeles.

Pickleball

Image Source: Modern Luxury Angelino

Pickleball is a fantastic team bonding activity because of the easy-to-grasp rules and gentle pace make it perfect for everyone, regardless of age or fitness level. The game thrives on communication and teamwork, as players must collaborate and strategize to outplay their opponents, boosting team cohesion. Plus, the lively, fast-paced action sparks friendly competition and laughter, creating a fun and spirited atmosphere that brings everyone closer together. Los Angeles boasts numerous pickleball courts that are easy to rent if you have your own equipment. If you need additional assistance organizing your pickleball outing, there are plenty of full-service companies ready to handle every detail for you.

Resources: Pickle Pop, Corporate Pickle


Escape Room

Image Source: The Escape Game

Escape rooms are a great way to build camaraderie. They require participants to work together, combining their problem-solving skills and creativity to overcome challenges and puzzles. The immersive and time-sensitive nature of escape rooms fosters collaboration and communication. Additionally, the shared experience of tackling complex tasks and reaching a common goal helps build trust and foster positive emotions among colleagues.

Resources: The Escape Game, 60Out


Day Trip to Catalina Island

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Catalina Island is a perfect day trip for a team because it provides a break from the usual work environment, allowing team members to relax and connect in a new setting. Shared experiences during the trip, such as exploring new places and participating in fun activities, help build stronger relationships and foster a sense of camaraderie. There are numerous team-building activities such as an arboreal obstacle course, an island tour, scavenger hunts and more.

Resources: Catalina Island Group Activities


Top Golf

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Topgolf is an excellent team building event because it provides an inclusive, relaxed atmosphere that accommodates players of all skill levels, fostering personal connections and improving team morale. The unique blend of competition and entertainment creates an ideal setting for building trust, enhancing communication, and revealing hidden skills among team members. Additionally, Topgolf offers structured team building packages with guided activities, discussion prompts, and lessons on culture, change, collaboration, and strategy, making it a versatile and effective platform for strengthening relationships and boosting overall team performance.

Resources: Topgolf El Segundo


SoFi Stadium Tour

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A SoFi Stadium tour offers a unique, behind-the-scenes experience of one of the world's most advanced sports venues, allowing team members to explore exclusive areas like premium suites, team locker rooms, and the player tunnel together. The tour provides a shared, memorable experience that can foster camaraderie and spark conversations among team members, regardless of their interest in sports. Additionally, the stadium's state-of-the-art features and impressive architecture can inspire creativity and innovation, while the group setting encourages interaction and collaboration, making it an engaging and enjoyable activity for teams of various sizes and backgrounds

Resources: SoFi Stadium Group Tours


Corporate Volunteering

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Volunteer work serves as an excellent team building activity by uniting employees around a shared, meaningful cause, fostering a sense of purpose and collective accomplishment. It provides opportunities for team members to collaborate in new ways, often revealing hidden strengths and leadership qualities that may not be apparent in the regular work environment. Additionally, engaging in community service can boost morale, enhance the company's reputation, and instill a sense of pride among employees, leading to improved workplace relationships and increased job satisfaction.

Resources: Habitat for Humanity, L.A. Works, VolunteerMatch


Corporate Improv Sessions

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A corporate improv class encourages spontaneity, creativity, and quick thinking, skills that are valuable in the workplace. It promotes active listening and collaboration, as participants must work together to create scenes and respond to unexpected situations, fostering better communication and trust among team members. Additionally, the playful and often humorous nature of improv helps break down barriers, reduces stress, and creates a shared positive experience that can improve team morale and cohesion long after the event.

Resources: Improv-LA, Groundlings, Improv for the People

🎬 Paramount and Skydance Are Back On
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Happy Friday Los Angeles! Hope you all had a fantastic Fourth!!

🔦 Spotlight

Paramount and Skydance Media have rekindled talks to merge after negotiations abruptly halted in June. The proposed deal, contingent on approval from Paramount’s board, aims to combine Paramount’s extensive media holdings—including CBS, MTV, and Nickelodeon—with Skydance’s film expertise showcased in hits like "Top Gun: Maverick." This merger signals a potential transformation in the media landscape, positioning the new entity to compete more effectively amid challenges from streaming services and the decline of traditional cable TV.

Led by Shari Redstone, Paramount’s controlling shareholder via National Amusements, the deal represents a pivot towards revitalizing Paramount’s strategic direction amidst financial struggles and shareholder concerns. The involvement of major investors like RedBird Capital Partners and David Ellison underscores the financial backing aimed at stabilizing Paramount’s operations and addressing its $14 billion debt burden. Importantly, the agreement includes provisions to protect National Amusements from potential legal challenges, addressing previous hurdles that stalled earlier negotiations.

The deal also includes a 45-day period for Paramount to explore alternative offers, highlighting continued interest from other potential buyers like Barry Diller’s IAC and media executive Edgar Bronfman Jr. This flurry of activity underscores the significant stakeholders’ interest in Paramount’s future and its potential as a key player in a rapidly evolving media industry.


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  • Sidecar Health, a startup that offers personalized health insurance plans to businesses that allow members to see any doctor and pay directly at the time of service, raised a $165M Series D led by Koch Disruptive Technologies. - learn more

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