The Rise Of The Health Startup? A Peek At The 13 Companies In Rock Health’s Inaugural Batch

There’s been a bit of a debate going on of late among venture capitalists and investors over whether or not web startups are currently experiencing a cash crunch when it comes to early-stage and series A financing. (You can read Alexia’s recent breakdown here.) As per usual, the answer depends on whom you ask. This recent debate contrasts with the data seen in Column Five Media’s infographic from June, which showed venture funding and investment levels picking back up in the first half of 2011, poised to storm back to pre-2008-collapse levels.

Of course, the data showed that not all tech sectors were experiencing the boom times: Health and medical-related investment, for example, was on the low end, receiving only 3 percent of venture funding over the last year. Yet, there may be some evidence that investment in the digital health space may in fact be heating up. Looking at this data compiled by new healthtech startup incubator Rock Health, we see a list of 41 healthtech startups have been funded in 2011. CrunchBase’s data, which uses slightly more generous paramaters for defining “health tech”, puts that number over 120 or so.

Of those startups that were founded this year, Aza Raskin’s Massive Health raised $2.25 million in seed funding from Andreessen Horowitz, Charles River Ventures, and more. (Well, Massive Health was actually founded in December 2010, but close enough.) And Azumio, which was founded this year, raised $2.5 million in seed funding from Founders Fund and Accel in July.

What’s more, we just covered 100Plus’ $500K seed raise from Founders Fund earlier this week. The personalized health prediction startup was not mentioned in Rock Health’s list, I assume because it is still in private beta.

But the point is, as we’ve seen in Dave Chase’s series of guest posts, the healthcare industry is ripe for disruption. Sure, the industry has a long way to go, but we’re seeing some great progress from startups like Practice Fusion, for example, which is busy becoming the largest provider of electronic medical records in the industry.

There’s also plenty of room for help in the way of incubators. On Friday, Rock Health, the startup accelerator for health-focused startups, hosted its Demo Day at UCSF Mission Bay, where the 13 startups in its latest class introduced their businesses to 250 attendees, among them investors from Accel, NEA, Khosla Ventures, True Ventures, Benchmark, Kapor Capital, SV Angel, The Social+Capital Partnership, Founders Fund and more.

For those unfamiliar, Rock Health provides seed funding ($20K grants, without taking equity), office space, and mentorship to entrepreneurs that want to break into healthcare. We covered their debut here.

The thirteen startups that demo-ed range from BitGym, which makes motion-sensitive iOS video games for working out; to IDEO-spinoff Omada, an online support group to reverse diabetes; toCellScope, a smartphone plugin designed to remotely diagnose ear infections.

It was also great to see that these teams included entrepreneurs that have previously worked in other areas of tech and media and are now bringing their talents to health: For example, Gabe Vanrenen, the former Founder and CTO of Flurry, Jackson Wilkinson, the former head of UX for Posterous and LinkedIn, to Jeff Lieberman, the host of Discovery Channel’s Time Warp.

Again, we covered the initial eight Rock Health startups that were ready to introduce their wares back in June, and you can read about them here. However, five of the startups were not yet ready for the limelight, so we’re providing brief introductions to those below:

Bigevidence provides clinicians focused access to the universe of medical evidence at the point of care and within electronic health records, improving quality of care, while reducing costs and risks.

BitGym thinks you should be using video games to exercise. Their patent pending technology uses an iPad to turn any cardiovascular machine into an interactive
gaming experience.

Cake Health is the best free way to manage your healthcare expenses online. The startup was a finalist at TechCrunch Disrupt San Francisco in September. You can read our initial profile here.

Crohnology is a social health network for people with chronic medical conditions to share and learn what treatments work, meet others near them, and track and share their health.

Heartbeat is a salesforce.com-like enterprise solution for wellness professionals that aims to empower people to be successful doing what they love.

Applications for Rock Health’s next class beginning in January 2012 are open until Wednesday, November 16th.

Shopping Discovery App Zoomingo Raises $1.3 Million

The newly launched shopping discovery app Zoomingoannounced today it has secured $1.3 million in funding from early-stage VC firms Naya Ventures and Benaroya Capital along with several prominent angel investors. Previously self-funded, Zoomingo says it will use the additional capital to enhance its current mobile application, build a retailer platform and grow its community through expanded outreach to customers and retailer partners.

With this funding, Dayakar Puskoor, managing director of Dallas-based Naya Ventures, will also join Zoomingo’s board of directors.

For background, Seattle-based Zoomingo was founded by language learning service Livemocha’s co-founders, Shirish Nadkarni (Zoomingo CEO) and Krishnan Seshadrinathan (CTO). Nadkarni said he had the idea for the service when he noticed that his wife (an avid shopper, he says) was having trouble locating nearby sales using her mobile phone. So many of today’s apps focus on barcode scanning, deals and offers or price comparisons, but none simply rounded up all the nearby sales at local retailers in one easy-to-access mobile application.

Hence, Zoomingo.

The app pulls in sales data from major retailers using a combination of manual and automated means as well as crowd-sourcing via its “Deal Scouts,” who are positioned in several major U.S. cities. Zoomingo now provides access to 70,000 retail outlets in the U.S., and growing.

The app is available on both iPhone and Android.

Processing $11 Million A Day, Jack Dorsey Says: “We Don’t Want To Make Square All About Taxi Cabs”

Jack Dorsey’s mobile payments startup Square is now processing $11 million a day in mobile payments, it was revealed today at the Techonomy conference in Tucson, Arizona. Host David Kirkpatrick threw the number out there as something Dorsey had told him backstage—the last official number was $10 million a day and Square may not be consistently above $11 million yet. Either way, this is up from $4 million a day just last July.

The key to Square’s rapid growth in Dorsey’s mind is the same thing that propels Twitter: “We haven’t defined a lot of how people are going to use them.” He sees both as utilities which can be adopted to different purposes by their users, and that is what makes them so powerful. “We don’t want to make Square all about taxi cabs,”” he says. “And we don’t want to make Twitter all about celebrities and politicians.”

The other thing that Square and Twitter have in common is that they are both essentially communications technologies. Dorsey thinks of the receipt as a publishing medium (kind of like TWitter). “It is a communication medium between the business and the consumer,” he says. But normally it is something we throw away. That communication between merchant and payer is where the “exchange of value” lies. Payments is just something “we need to do” to create that communication.

Taking a swipe at NFC payments, he notes that they lack that communication layer. “NFC only gives the merchant the identity [of the consumer] after the transaction.” By identifying the customer when they walk in the door, as Square is trying to do with its new Card Case product, there is better chance to build loyalty by doing something for the customer before they even pay.

Asked about Twitter’s business model, Dorsey notes that Twitter’s ad products (Promoted Tweets,Promoted Accounts, and Promoted Trends) are getting engagement rates “between 1 and 5 percent.”

He doesn’t call these ads. “We wanted to build a business model that felt like it was part of the network,” he says. “I don’t think of it as advertisement in the traditional sense.” Rather, he wants to “introduce you to something new.” Of course, if those Promoted Tweets were really as delightful as he makes them out to be, they would be clicked more than 5 percent of the time.