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KenSci CEO Samir Manjure. (GeekWire Photo)

Samir Manjure believes engineers at some of the world’s biggest tech firms are yearning for something more.

“What I’m seeing is a lot of technical talent, especially in AI and machine learning, looking at solving problems that have societal impact,” said Manjure, CEO of KenSci, a startup that’s using artificial intelligence to reduce healthcare costs and predict when people will get sick.

The top 10 startups on the GeekWire 200 for June 2019. Click for full index.

Perhaps he’s projecting a bit — after all, Manjure left Microsoft after 17 years to start KenSci. But the evidence is on his side. Digital health has become one of the hottest areas of healthcare, attracting both tech entrepreneurs and gobs of venture capital.

In the past year, digital health companies have shot up the GeekWire 200, our leaderboard of privately held startups in the Pacific Northwest. Across the country, the sub-industry has seen massive investment growth in recent years as well as regulatory changes that make it easier to bring digital solutions to the healthcare system.

Since this time last year, the number of health and life sciences startups on the GeekWire 200 list has grown 22 percent to 22 companies. Within that small-but-mighty cohort, four stand out for climbing up the rankings significantly in the past year:

  • No. 8: Accolade (+11 spots) creates technology to help workers navigate healthcare options.
  • No. 42: Aduro (new) uses mobile technology to make employee wellness programs more effective.
  • No. 66: 98point6 (+14) offers virtual primary care services through an app.
  • No. 142: KenSci (+29) mines healthcare data with AI to find ways to improve care and lower costs.

These up-and-comers have also grabbed the attention of investors with deep pockets. KenSci, 98point6, Accolade and Aduro all raised cash in the past 15 months, reeling in a collective $144 million.

These and other digital health startups are taking advantage of the digitization of health data that has taken place in recent decades. “The natural progression from there is, what do I do with this data? And how do I make meaning of that data?” said Manjure.

(PitchBook Data)

As enthusiasm has grown for digital health startups, so has the size of the funding rounds to support them. “A Series A now is what Series C was three to five years ago,” said Megan Zweig, director of research at Rock Health, a digital health seed fund that also tracks the space. In the past month alone, precision medicine startup Tempus reeled in $200 million from investors, and Zipline, which delivers medical supplies by drone, raised $190 million.

In the U.S., venture capital investment in investment in health tech firms rose to $6.7 billion in 2018, up 24 percent from the previous year, according to PitchBook data.

Zweig said investors show a strong appetite for startups using AI and machine learning to diagnose diseases by reading medical scans. Telemedicine startups have likewise seen a spike in funding and investors are also keen on digital therapeutics, where technology is prescribed for anything from mental health to chronic conditions like diabetes.

Skyrocketing healthcare costs are one of the biggest drivers behind the growth of digital health, said PitchBook emerging tech analyst Alex Frederick. “It’s really important to control, if not reverse those escalating costs of care,” he said.

(Rock Health)

Regionally, startups in the Bay Area continue to take in the most investment, followed by companies in New York and Massachusetts. Washington state landed seven deals in 2018, of which the largest 98point6 and Accolade with $50 million each.

The Pacific Northwest has traditionally been strong in the areas of biotechnology and medical devices, but digital health represents a possible sweet spot for the region, considering the wealth of enterprise software and artificial intelligence talent that it contains.

As Manjure’s resume demonstrates, the presence of Amazon and Microsoft could be a boon to the local digital health scene. Both companies are becoming increasingly serious about their ambitions in healthcare. From making Alexa compliant with healthcare privacy laws to building a Microsoft Azure API for health record sharing, they’re positioned along with other big tech companies to be the platforms for digital health startups.

As those platforms become more adept at handling healthcare applications, “it’s just going to give rise to more and more innovative companies going and building stuff on top of these infrastructure partners,” said Manjure.

Regulations in healthcare will always make life difficult for technology innovators, but Frederick thinks there’s huge potential for those who stick it out.

“If you can get some dogged and scrappy entrepreneurs to really stick to issues and identify solutions working with healthcare providers, that’s where the magic happens,” Frederick said.

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The GeekWire 200 — sponsored by CenterCard — is derived from our broader list of more than 1,200 Pacific Northwest tech startups. The list is designed to provide a better understanding of the startup landscape in the Northwest. The rankings are generated from publicly available data, including social media followings, approximate employee counts (via LinkedIn) and inbound web links. As we mentioned, the most important factor is employee growth, since our goal is to track those companies who may be emerging as the next Microsoft, Amazon or Expedia.

To make sure your startup is eligible for inclusion in the GeekWire 200, first make sure it’s included in the broader Startup List. If so, there’s no need to submit it separately for the GeekWire 200. If your Pacific Northwest startup isn’t among the companies on that larger list, you can submit it for inclusion here, and our algorithm will crunch the numbers to see if your company makes next month’s GeekWire 200. (Please, no service providers, marketing agencies, etc.)

Thanks to everyone for checking out this month’s ranking. And, just a reminder, if you value resources like these, be sure to check out our list and map of out-of-town tech companies with Seattle engineering outposts as well as our list of startup incubators, co-working spaces and accelerators in the region, startup fundings, and our GeekWork job board.

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