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Insight Partners charges ahead in digital health despite bubble burst

Top digital health investors in Q2 2022, by number of companies invested in
Data: CB Insights; Chart: Simran Parwani/Axios

Despite digital health's burst bubble, high-profile firms such as Insight Partners are only doubling down on the sector per a new report from CB Insights.

Why it matters: Digital health funding levels dipped to their lowest since 2020 in Q2'22, so taking a look at who continued to invest that quarter reveals some of the sector's most committed players.

  • "While overall deployment has slowed down, we’re still very active," Scott Barclay, Insight Partners' managing director of health care tells Axios. "We’re definitely writing checks."

Driving the news: In Barclay's words: "FOMO is out. Trust is in."

  • That means less overall investment activity and more bets on empathetic, experience-driven founders with whom Barclay and other partners at the firm can build trusted relationships, he says.

Details: Insight Partners backed nine digital health companies in Q2'22 including:

  • Behavioral health tech startup Clarify Health, which that quarter raised $150 million in Series D funds.
  • Medical imaging company, which raised $100 million in Series D funds in Q2.
  • Clinical trials startups Unlearn, which that quarter raised $50 million in Series B funds, and Florence Healthcare, which raised $27 million in Series C funds in Q2.
  • Fertility tech startup AiVF, which in Q2 raised $25 million in Series A funds.

Be smart: Investing in health care isn't new for Insight Partners.

  • The firm made its first bet in the space in 2000 on RxCentric, a developer of online marketing tools for drug companies. (It was acquired in 2003 by Physicians Interactive, FKA Allscripts Healthcare Solutions.)

Yes, and: Insight Partners began accelerating its bets in health tech towards the end of 2021, with investments in companies including...

  • Rhyme (FKA PriorAuthNow), a health tech startup focused on streamlining treatment approvals for which it led a $25 million round in February.
  • Kintsugi, a telemental health startup using voice biomarkers to spot signs of depression and anxiety.
  • Iterative Scopes, a company using AI to develop precision-based tools for gastroenterology.

What they're saying: Despite market volatility, health care makes up a huge chunk of the nation's GDP — and that's not disappearing anytime soon, says Barclay.

  • "The problem is a moral imperative," says Barclay. "We need to invest early to build the future we want our children and grandchildren to experience."

And while there are dozens of similar digital health companies that have yet to differentiate, Barclay says there's still a ton of opportunity in the sector.

  • "The amount of surface area where we need to entirely rebuild or unlock broken markets in health care is tremendous," he says. "It’s global and it's across every disease state."
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