Impact of COVID-19 on Characteristics and Funding of U.S. Healthcare Startups: Retrospective Review
Authors: Ganeshan Smitha , Goldstein Joshua , Sohn Young-Jin , Pollack Amie , Phillips Russell S , Rotenstein Lisa 
Published: July 2024

Background
The rise of telehealth and telemedicine during the pandemic allowed patients and providers to develop a sense of comfort with telehealth, which may have increased the demand for virtual-first care solutions with spillover effects into venture capital funding.

Objective
We aimed to understand the size and type of digital health investments occurring in the prepandemic and pandemic periods.

Methods
We examined health care companies founded from March 14, 2019, to March 14, 2020 (prepandemic) versus those founded from March 15, 2020, to March 14, 2022, after pandemic onset. Data were obtained from Crunchbase, a publicly available database that catalogs information about venture capital investments for companies. We also compared companies founded prepandemic to those founded after the first year of the pandemic (pandemic steady-state). We performed a Wilcoxon rank sum test to compare median funding amounts. We compared the 2 groups of companies according to the type of funding round raised, geography, health care subcategory, total amount of funding per year since founding, and number of founders.

Results
There were 2714 and 2218 companies founded prepandemic and during the pandemic, respectively. The companies were similarly distributed across geographies in the prepandemic and pandemic periods (P=.46) with no significant differences in the number of founders (P=.32). There was a significant difference in total funding per year since founding between prepandemic and pandemic companies (US $10.8 million vs US $20.9 million; P<.001). The distribution of funding rounds differed significantly for companies founded in prepandemic and pandemic periods (P<.001). On excluding data from the first year of the pandemic, there were 581 companies founded in the pandemic steady-state period from March 14, 2021, to March 14, 2022. Companies founded prepandemic had a significantly greater mean number of founders than those founded during the pandemic (P=.02). There was no significant difference in total funding per year since founding between prepandemic and steady-state pandemic companies (US $10.8 million vs US $14.4 million; P=.34). The most common types of health care companies included wellness, biotech/biopharma, and software companies. Distributions of companies across health care subcategories were not significantly different before and during the pandemic. However, significant differences were identified when data from the first year of the pandemic were excluded (P<.001). Companies founded during the steady-state pandemic period were significantly more likely to be classified as artificial intelligence (7.3% vs 4.7%; P=.005), software (17.3% vs 12.7%; P=.002), and insurance (3.3% vs 1.7%; P=.003), and were significantly less likely to be classified as health care diagnostics (2.4% vs 5.1%; P=.002).

Conclusions
We demonstrate no significant changes in the types of health care companies founded before versus during the pandemic, although significant differences emerge when comparing prepandemic companies to those founded after the first year of the pandemic.