On Our Radar: Deals we are paying attention to, for their impact on industry.
It was a good day for artificial intelligence companies in the healthcare space.
A very good day.
Within hours on Wednesday, three firms developing AI-based platforms, PathAI, Bardy Diagnostics and Aidoc, announced separate funding rounds totaling more than $122 million dollars. They were the latest evidence of investors’ belief in AI’s potential, with healthcare among the industries most likely to benefit quickly.
“The case for AI adoption is stronger than ever,” a 2017 report by Accenture said. “AI presents opportunities across a diverse set of therapy areas, including wellness and lifestyle management, diagnostics, wearables and virtual assistants.”
Revenues from AI and cognitive computing systems are estimated to skyrocket from $633.8 million in 2014 to $6.6 billion by 2021, according to research firm Frost & Sullivan in 2016.
“Already playing a critical role in other industries, AI systems are poised to transform how we think about disease diagnosis and treatment,” said Harpreet Singh Buttar, a Frost & Sullivan transformational health industry analyst, in a statement accompanying the 2016 report. “Augmenting the expertise of trained clinicians, AI systems will provide an added layer of decision support capable of helping mitigate oversights or errors in care administration.”
Boston-based PathAI secured a $60 million series B round from a group of investors led by private equity firm General Atlantic. Michelle Dipp, a General Atlantic managing partner, will join PathAI’s board. General Atlantic invests in mezzanine, mid-market and pre-IPO stage companies, among other areas, in four sectors including healthcare and financial services. It has $31 billion in assets under management.
Previous PathAI investors, including General Dynamics, also participated in the funding.
PathAI’s pathology platform uses AI to improve speed and accuracy in diagnosis, leading to improvements in treatment and drug development. The company said in a release that it would use the capital to improve its pathology research platform and fund “research and development into new tools and medical devices.”
“Our goal has been clear since day one – a relentless drive to ensure patients get the right diagnosis and the most effective treatment. We’re looking forward to working with our partners to scale this effective approach across disease areas and around the world,” PathAI co-founder and Chief Executive Officer Dr. Andy Beck said.
Bardy Diagnostics raised $35.5 million in a series B round led by River Cities Capital Funds. The Seattle-based company manufactures a cardiac patch and other devices for monitoring heart function. The company’s technology can detect arrhythmia, a potentially life-threatening condition involving the heart’s rhythm.
River Cities is a Cincinnati-based private equity firm that focuses on the IT and healthcare space.
Other new investors, including HealthQuest Capital and Aperture Venture Partners, and prior investors, including SV Health Investors and Health Enterprise Partners, also participated in the round.
Bardy Diagnostics said in a press release Wednesday that it would use the funds to expand its sales force and monitoring services and for developing its AI and visualization technologies.
"The caliber of our new investors in addition to our exceptional existing syndicate of financiers underscores the exciting opportunity before us," said Dr. Gust H. Bardy, founder and CEO of Bardy Diagnostics. "With these funds, we will grow our business by refining and expanding our primary goal of revealing to patients, and their physicians, the full complexity and meaning of their cardiac rhythm."
Israel-based Aidoc received $27 million in series B funding led by Square Peg Capital. It has raised a total of $40 million since its founding in 2016. The company is a provider of full-body, imaging AI software that allows radiologists to see abnormalities on patient scans. For example, its cancer solution will be able to detect, measure and compare tumor size to previous images.
Square Peg is an Australia-based venture capital firm that participates in early to later stage investments. It normally focuses on IT and online ventures.
Aidoc said that it would use the capital to grow its marketing and technology teams. In a statement, Aidoc CEO Elad Walach said he hoped to expand the company’s clients to 500 hospitals over the next two years.
"From the 100 sites we're already working with, mounting evidence is demonstrating real value to patients," Walach said. "We feel a responsibility to get this technology into as many hospitals as possible, as soon as possible.
James Peter Rubin is a veteran journalist who has written and edited for CapitalWatch, ThirtyK, TheStreet.com, Forbes and the Economist Group, among other media outlets.