Los Angeles is seeing a renaissance in medical technology.
Earlier this month a venture capital firm headed by two former Amgen executives announced they raised $500 million to boost and incubate new life science and biotech companies across Los Angeles. And the firm, Westlake Village Biopartners, is working to develop a 30,000 square foot campus in Thousand Oaks.
Across town, the 20,000 square foot LABioSpace is set to open. Funded through the county, federal funds and private donations, the incubator will feature lab space dedicated to bioscience research and collaboration and is designed to house up to 25 companies.
And yet, another "innovation hub" backed by the county and private funds called BioScienceLA is expected to launch its own space in Culver City next year.
"For years, we have lost talented scientists and entrepreneurs to other regions, due to lack of investment capital and start-up and expansion space for growing companies," said David J. Whelan, the CEO of BioscienceLA. "We are finally at an inflection point, with funding, space, and talent supporting each other to grow the LA life sciences ecosystem."
Here are some trends to watch in healthtech.
Telemedicine Brings Health Access and Equity to Patients at Home
Doctors visits and at-home testing have been made easier during the pandemic as more companies launch platforms to deliver health information to patients from home.
COVID-19 has sparked new demand for telehealth services to test and treat consumers. And more clinics and hospitals are adopting the tech. According to a PitchBook report, companies in the virtual health segment raised about $534 million in venture funding in the second quarter of 2020.
L.A. startups like Healthvana and ConsejoSano, a platform for patients and providers that aims to make healthcare easier to access for multiple cultures and languages. Last week, the North Hollywood company raised $17 million to build out its services like scheduling appointments and coordinating transportation to a patient's provider.
Meanwhile, Los Angeles-based MotiSpark developed a digital tool to send personalized reminders to users. And in September, the Santa Monica-based prescription discount platform GoodRx, went public and became the most downloaded medical app, boasting five million active users and 70,000 pharmacies.
More Investment in Diagnostics
Diagnostic companies typically have a hard time securing capital, but this year changed that. Kevin Zhang, a partner at Upfront Ventures who leads health and biotech investments, said the life sciences industry has seen a spike in gene therapeutics companies over the last few years. And the wave of new drugs brings with it new demand for lab testing.
"Frankly, it was a bit of a dead zone for venture investment," he said. "It's one of the least sexy areas to put money into. Now that's grown tremendously"
The pandemic has only accelerated that need, Zhang said, and investors have shifted their attitude about biotech companies focused on diagnostics.
Since March, L.A. biotech companies and labs like Curative have pivoted to developing and administering COVID-19 tests. The team's testing technology is now being deployed across the nation. Meanwhile, several companies are now producing vaccines and COVID-19 therapeutics as the nation gears up for mass distribution.
Employers Using Mental Health and Wellness Tech
The anxiety and stress caused by the pandemic has stoked demand for mental and physical wellness apps, including several based in Southern California. Experts see interest continuing into the new year as these wellness companies tap corporate partners to drive growth.
Earlier this year, Headspace, the Santa Monica-based meditation app, began offering free subscriptions to healthcare providers and teachers.
"We've seen explosive growth," said Headspace co-founder and CEO Rich Pierson at dot.LA's Summit in October. "CEOs have realized now that mental health is being discussed in every boardroom. That was not the case pre-COVID."
Calm, Talkspace and BetterHelp are among the handful of tech startups selling meditation classes and more affordable therapy access. And both Calm and Headspace offer a corporate product as employers and insurance companies have worked to make mental health resources more accessible since the pandemic began.
Exercise subscription platforms are also seen a boom. Apple launched its Fitness+ app in December, whose classes are filmed at a Santa Monica studio. As gyms remain closed in many parts of the country, consumers are buying up Pelotons and Mirrors. The craze is expected to continue to grow into the next year with several Southern California companies poised to benefit.
Indoor cycling app Zwift scored a $450 million investment in September. The Long Beach-based company is taking on Peloton building "hardware," presumably stationary bicycles, to go along with its 3-D generated worlds where users can compete from their living room. Another L.A.-based company Presence Fit raised $1 million in October for its two-way live interval training classes. And then there's FightCamp, which promises to capture the feeling of a boxing gym in your home.
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GoodRx Shares Tumble but CEO Says he Never Looks at Stock Price: ‘If I Did, I Would Jump out this Window’
By all accounts, Santa Monica-based GoodRx delivered a strong first quarter as a public company. Year-over-year revenue beat analyst expectations, soaring 38%. Monthly active users increased a robust 29%. As the pandemic continued to rage across the United States, a record 4.9 million consumers used GoodRx to fill prescriptions.
"I think across the board I was really happy," said co-founder and CEO Doug Hirsch.
But Wall Street was not as pleased, with the stock closing down more than 6%. After mostly zigzagging since their September debut, shares now trade near where they did the first day of trading.
Asked on a brief Zoom video call if he was surprised by Thursday's drop, Hirsch replied: "I'm not surprised because I don't really look at it to be honest. If I did, I would jump out this window." (A representative for Hirsch later clarified he was joking.)
If there was one thing for investors to nitpick it would be the company's $50 million net loss after recording a $19 million profit in the third quarter of last year. But that mostly due to $98 million of stock-based compensation awarded to Hirsch and his co-founder, Trevor Bezdek, for taking the company public.
The company's margins also decreased slightly from the second quarter as it spent more on advertising to try to entice consumers back into pharmacies after stay-at-home orders ended.
Hirsch shrugged off the loss and said he is focused on growth.
"We're going to continue to invest," he said. "We're doubling down on new products and new services."
In the last quarter, the company expanded its subscription service, GoodRx Gold and its telehealth offering, HeyDoctor. The company also extended a partnership as the exclusive prescription savings program for Kroger, the largest grocery chain in the U.S.
As consumers continue to stay at home for the foreseeable future, the company forecast 40% year-over-year revenue growth next year.
Founded in 2011, GoodRx is a beacon for the Southern California tech community – the rare startup that has gone public and faced the unrelenting scrutiny of Wall Street.
"It's intense," said Hirsch. "It's certainly a journey. I've learned the hard way that I have to take the long view."
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GoodRx earned dot.LA's top 2020 Startup award on Wednesday, beating out the popular sneaker reseller GOAT, the meditation application Headspace, mobile gamer Scopely and viral-video app TikTok.
"GoodRx started in Los Angeles, and will always be a Los Angeles-based company," said co-CEO Doug Hirsch. "We're so excited about the support we've received over the last decade from both entrepreneurs and investors and just incredible people that make up the ecosystem here in California and specifically in Los Angeles."
GoodRx was the first Los Angeles tech company to go public this year. It's mission to lower the prices of prescription drugs for Americans has made it one of the most-downloaded medical apps in the country.
"We're excited for the future and we appreciate the recognition," he said.
dot.LA wrapped up its inaugural Summit with the 2020 Startup Awards that honor the ingenuity and creativity propelling the startup scene in Southern California. More than 120 nominations were received from dot.LA's audience. The winners were chosen by a blue ribbon panel of judges, along with more than votes from the public.
Other winners included Entrepreneur of the Year, Tala CEO Shivani Siroya, Curative for Pivot of the Year, Blavity CEO Morgan DeBaun for Rising Entrepreneur, Openpath for Rising Startup and Social Justice Award went to Act One Ventures partner Alejandro Guerrero.
"We wanted to use this opportunity to shine a light on some of the most exciting, most driven and most world-changing people in companies in our world today," said dot.LA CEO Sam Adams.
Pivot of the Year: Curative Inc.
Curative was founded earlier this year by Fred Turner, an Oxford dropout. His company was then based in the Bay Area and tested for sepsis before it pivoted to provide COVID testing. As the pandemic emerged, he established a lab in San Dimas with the help of local venture capitalists that would eventually become Curative's home base. The company's saliva- based tests now account for about 10% of all testing nationally and Curative has an exclusive deal with the city of Los Angeles to provide testing.
"On behalf of our CEO Fred Turner and everyone who just want to thank you," said Curative spokesman Pasqualle Gianna. As you know, we pivoted from sepsis testing to COVID testing."
Quantgene: The company typically offers AI-powered blood test systems for early cancer detection but now provides COVID testing and logistics for those going back to work.
Swoop: The startup focused on group transportation but developed software that limousine charter operators and their suppliers, could utilize during the pandemic as regular business dried up.
PRISM Bags: This company planned to launch their signature product, a woman's work bag but as the pandemic beared down created one suited that included mask pockets.
WELL Health Inc.: Funded and engineered the Rapid Release Program in March '20, which allowed health systems to manage urgent COVID-19 patient communications at scale.
Social Justice Award: Alejandro Guerrero
More than 20 VCs have signed onto to Act One Ventures partner Alejandro Guerrero's Diversity Rider Initiative.
The firms have pledged to add language in term sheets submitted to startups that they will make their "commercial best efforts to offer and make every attempt to include as a co-investor in the financing" at least one Black check writer or other underrepresented group."
Guerrero is the child of Mexican immigrants who said he often found he was the only person of color in the room when investment deals north of six figures were being made. He said he was inspired by the George Floyd protests and the push the industry to recognize long-standing inequities.
Candace Walker, Co-Founder of Just US app: Created a hands-free voice control app that notifies your designated contacts when you've been stopped by police.
Derek Smith, Founder of Plug-In South LA: Created a tech startup community and accelerator program for entrepreneurs from under-represented backgrounds; produced the Urban Tech Connect conference.
Lolita Taub, Co-Founder and GP at The Community Fund: First-generation Latinx operator and investor that launched a $5 million early-stage fund to invest in community-driven companies.
Miki Reynolds, Executive Director, Grid110: Leads a no-equity, LA-based accelerator for underrepresented founders
Rising Entrepreneur: Morgan DeBaun
Morgan DeBaun is the founder and CEO of Blavity Inc., a leading news company and media brand for Black millennials and Gen Z. The outlet has been a leading voice for diversity. She launched Blavity in 2014; it now reaches over 30 million millennials a month.
Cristina de la Peña, CEO & founder of Synapbox
Jessica Nouhavandi, co-CEO of Honeybee Health
Ksenia Yudina, CEO of UNest
Robert Luo, CEO & founder of Mi Terro
Rising Startup: Openpath
The property-tech firm provides s touchless-entry activated by one's mobile device to doors, gates, elevators and lobby check-ins.
James Segil and Alex Kazerani co-founded Openpath in 2016 along with Chief Technology Officer Rob Peters, Chief Security Officer Samy Kamkar, and Chief Revenue Officer Phil Goldsmith.
The company recently raised $35 million and has seen their value proposition become all the more useful in the post-pandemic era.
"I'm incredibly honored and humbled to be here amongst so many great entrepreneurs and great companies here in L.A.," Kazerani said. "On behalf of about 450,000 Openpath users and our entire team, we really want to thank dot.la"
Pipe: A platform that offers non-dilutive financing to SaaS companies through an instant cash advance against the full annual value of software subscriptions.
PlayVS: Connects online games with official school administration and branding, elevating Esports from hobby to school-sponsored activity.
Outer: A direct to consumer outdoor furniture brand.
Wave: An entertainment technology company that turns performers into digital avatars and puts them on virtual stages.
Entrepreneur of the Year: Shivani Siroya
Shivani Siroya is the CEO and founder at Tala, a fintech company that offers microloans to people that often don't have a formal credit history. The company has extended $1 billion in microloans to 4 million customers in emerging markets and was last valued at $700 million. Siroya has been named one of Forbes' "40 under 40."
Alex Canter, CEO and co-founder of software company Ordermark
Andrew Peterson, CEO and co-founder of Signal Sciences
Doug Hirsch and Trevor Bezdek, co-founders and co-CEOs of GoodRx
Imran Khan, fo-founder and CEO of Verishop
Startup of the Year: GoodRx
The prescription-discount app GoodRx became one of the first Los Angeles tech companies to go public this year.
Co-founded by former Facebook executive Doug Hirsch and Trevor Bezdek, the Santa Monica company makes money by collecting fees from pharmacy benefits managers.
GoodRx is the most downloaded medical app in the United States and boasts 70,000 pharmacies on its platform. It's also profitable. The company earned $54 million in profit for the first six months ending in June, up from $31 million over the same time last year.
The company expanded into telehealth with the purchase of Heydoctor in 2019.
GOAT: Fast-growing global luxury shoe and apparel retailer.
Headspace: A meditation app that recently raised $100 million in debt and equity.
Scopely: A mobile video game company that acquired FoxNextGames from Disney in January.
TikTok: The video-sharing platform was the top grossing app on iOS App Store globally in Q2 2020.
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