With everything happening in the world around us I am sure at times it seems unreal, surreal, and just downright scary. Each time we’ve found our footing and gained some control over the COVID-19 pandemic something happens and the light at the end of the tunnel dims as it moves further away.
Take a breath, Zenter (Zenfully Center) …

and realize that what has happened in days past, is just that, in days past.

We can learn from the past but cannot live in it.

We can use its knowledge to adapt and grow but cannot change it.

How we, both individually and collectively, move forward each day matters, and this virus has truly shown just how interconnected we are as a species.

It is easy to become distressed by the continual news of retailers and restaurants closing or filing for bankruptcies. These are signs of the severe economic distress caused by this pandemic and we are only now beginning to see its long-term traumatic effects. The future does look uncertain, we all know this to be true. We need to focus on taking care of each other in the now, and then the rest will surely follow.

A few months ago I heard a statement made by Mark Lowcock, the U.N. Undersecretary-General for Humanitarian Affairs, that has stuck with me:
“No one’s safe until everybody’s safe.”

I believe we’d all agree, now more than ever, that this statement is true for every human being, in every country, and every corner of the globe. So, as we move on, to the economic outlook, funding, mergers, and acquisitions, and the path forward remembers that…

We, as a species, are all in this together, as we have always been and always will be.

In order to understand the current healthcare startup funding climate and to be able to forecast the future economic landscape, we need to understand where COVID-19 and the pandemic are at this point.
The Numbers

Globally, as of 07/29/2020, we are at nearly 16,852,522 known cases with 662,738 deaths. In the United States alone there are roughly 4,403,935 cases and 150,159 deaths. By the time this article is published, less than a few days from now, we will have surpassed all of the statistics collected by the John Hopkins Corona Resource Center.

The Mutation Rate and Symptoms

“On average, the coronavirus accumulates about two changes per month in its genome… Most of the changes don’t affect how the virus behaves, but a few may change the disease’s transmissibility and severity.” Although it is hard to get definitive data about where we are currently in new strains, back in April a study from China said there were 30. When we see new mutations, it doesn’t always mean it is going to produce a new and nastier version of the COVID-19 virus. However, understanding the pathology of this virus is one of the keys that will ultimately make a global vaccine a success. “Understanding how transmissions are happening won’t be a magic bullet, but it will help us respond better…This is a race against time.”. This statement was made by Pardis Sabeti, a computational biologist at Harvard University.

According to the World Health Organization, there are 13 symptoms verified with another half dozen or so in consideration but more data is needed. In comparison with the flu, COVID-19 infection and contagiousness are still not completely understood. What is understood is that individuals with COVID-19 or asymptomatic individuals stay contagious longer than anyone who has contracted the flu.

This is important for many reasons but especially because it ties into the effectiveness of a vaccine and in lowering transmission in the interim. Effective therapeutics will eventually lead us into stability in the investing market and finally establish the “new normal”.
The Progress on A Vaccine

To stop the SARS-CoV-2 virus, there is a critical need to invent proper vaccine and antibody-based therapy against this virus [21]. Across the globe scientists and researchers are doing their best to develop a viable vaccine. There are currently hundreds of vaccines being worked on around the world and according to the World Health Organization, there are 25 potential coronavirus vaccines in clinical trials internationally. There is a handful that is really promising and rapidly moving along the continuum of clinical trials.

It is not over when a vaccine arrives according to Axios. However, once a true champion emerges, it will be a good indicator that things will start to stabilize globally. The “new normal” will be identified and world economies and investing will slowly begin to return. Until then it is going to be a perilous road and each person, each nation and humanity as a whole must take well-calculated steps forward in order to mitigate the continuing surge and resurgence of the virus currently being seen across the globe.

Current Economic Funding Climate

A good source of information for the global funding climate is always CB Insights. According to CB Insights:

· Global deal activity plummeted 16% QoQ in Q1’20 as Covid-19 spread

· Global VC funding rose 11% in Q1’20 despite the pandemic

· US deal activity fell 6% in Q1’20 and is set to decline further in Q2’20

· Startup funding in the US rose 22% in Q1’20, due to an uptick in mega-rounds, but is expected to recede in Q2’20

This year to date, startups developing supply chain and logistics technology have attracted the largest year-over-year increase in deal activity, followed by startups in digital health. Investment in these sectors is one indication that Covid-19 is accelerating the evolution of these industries, and transformational startups may emerge.

Unfortunately, the above numbers are stark for the majority of the investment markets and we are still waiting for all the Q2 numbers to come in. The outlook may be a bit more grim due to the major COVID-19 surge in the United States and the resurgence across the globe as countries attempt to reopen their economies.

For more in-depth information regarding the global economic recovery you can read the following:

· Global Economic Effects of COVID-19

· World Economic Outlook Update, June 2020
Digital Health

We are now seeing a major uptick in the digital health and education spaces and a surge in funding across multiple different sectors especially virtual healthcare and virtual education. This makes the first 2 quarters of 2020 a good indicator of a record year in digital health and virtual platform funding.

Mercom Capital Group reports that Global VC funding for Digital Health companies in the first half (1H) of 2020 shattered all previous 1H funding records, bringing in $6.3 billion. Funding activity was up by 24% during 1H 2020, compared to $5.1 billion raised in 1H 2019. These are all really good signs for the digital health market, however, Mercom reports that in Q2 2020, Digital Health companies raised $2.8 billion in 161 deals, a 23% decrease compared to Q1 2020. Year-over-year, funding was down by 11% compared to $3.1 billion in 169 deals in Q2 2019.

According to Rock Health, US digital health companies raised $5.4B in venture funding across the first six months of 2020. The sector is on track to have its largest funding year ever. Large deals are once again driving the overall trend as average deal size hit a record $25.1M. As you may have heard or guessed, a large bulk of these investments are going into the AI, Pharma, Telehealth and Remote Patient Monitoring market segments.

Although you may think this is an overall good sign for all digital health, funders are concentrating on making investments in already well-established digital health startups running later stage funding rounds. These rounds are being driven by the investing market’s well-known FOMO (Fear of Missing Out) and then by FOLE (Fear of Losing Everything). As a result, less money is being spread across earlier stage funding.

Rock Health has tracked these mega-rounds and states that Eleven $100M+ mega deals led the way for digital health in H1. Notably, five of these deals occurred in May and June, well into the COVID-19 outbreak and resulting economic downturn in the US.

· ClassPass raised $285M in a Series E in January to expand their global presence and product offerings, connecting users to in-person fitness classes. ClassPass then quickly pivoted to offer a catalog of pre-recorded classes and enabled partners to host virtual classes

· Alto Pharmacy provides a full-service digital pharmacy and prescription delivery service and raised $250M in a Series D in January

· Amwell raised $194M in May to meet increasing demand for telehealth services as a result of COVID-19

· Element Science, which makes a wearable defibrillator that stems cardiac arrest, raised $146M in a Series C in March

· Insitro, an AI-driven drug discovery platform, raised $143M in a Series B in May

· DispatchHealth, which provides on-demand urgent care services, raised $136M in a Series C in June

· Outset Medical, a durable medical equipment company that delivers a connected dialysis system, raised $125M in a Series E in February

· Cedar, a developer of a software platform for health systems to manage patient payments, raised $102M in a Series C in June

· Mindstrong Health, which built a platform to deliver evidence-based therapy and psychiatry, a $100M Series C in May

· Tempus raised a $100M Series G in March to redefine how genomic data is used in a clinical setting

· Verana Health raised $100M in a Series D in February to become the “Google for physician-generated healthcare data”
Behavioral Health and Transformative Technologies

All of this is a good sign for the behavioral health and transformative technologies sectors moving forward. Established companies can stay the course, by watching their expenditures and mitigating risk as much as possible till we finally begin approaching the “Recovery Stage” of disaster response. Previous post event data has shown that there will be an additional surge in mental health and addiction-related issues bubbling to the surface as we move into the recovery phase of the pandemic.

This is due to the traumatic impact of grief and loss, the economic toll of the pandemic, the uncertainty of the world, the increased stress, anxiety, depression and many other known and unknown factors affecting us as a species. We are already seeing these mental health effects significantly rise in pocketed geographic areas with increases in suicidality and homicidality. I wrote at length about the forthcoming recovery phase and what we could expect in a previous Medium article, Adopting A Virtual Care Platform NOW Is Critical for Behavioral and Physical Healthcare, and This Is Why.

According to Fierce Healthcare, the current funding climate for digital health is looking strong: In the first half of 2020, digital behavioral health startups scored $588 million, roughly the annual funding for this segment in any previous year … This also means that behavioral health is beginning to take a bigger piece of the funding pie then previous years, moving from 7% in 2019 to the current 11% of all completed deals.

Here are a few of the most recent notable deals in the behavioral health and transformative technologies space:

· Headspace landed $140 million to continue building its mindfulness and meditation application

· Mindstrong, which makes an app that pairs patients with a network of providers to deliver personalized mental health care and utilizes a digital biomarker tracker of mood and cognition via patterns of smartphone interactions raised $100 million in a series C

· Lyra Health, a platform designed to deliver customized behavioral and mental health care virtually and/or in-person, alongside self-care lessons and exercises, closed a $75 million series C

Mergers and Acquisitions

The M&A market has slowed down and many deals on the table have been put in stasis. There is still movement, though, and Rock Health sees it as such, Across industries, funds have pressed pause on many potential deals as they assess market recovery timelines and work to conduct due diligence remotely. Despite this slowdown, investors have generally supported acquisitions that strengthen market position, with several deals announced this year. Notably, digital health companies were the acquirers in 52% of digital health acquisitions this year, twelve percentage points higher than in 2019.
The Path Forward Hasn’t Really Changed

The end message from the last edition of “When Mental Health Goes Digital” rings true now just as it did back in April. It is always better to be safe than sorry and AngelList Sequoia Capital has outlined the following to their portfolio companies:

· Get ready, cut expenses, preserve cash. Think through how much cash you have. “Do you really have as much runway as you think? Could you withstand a few poor quarters if the economy sputters?”

· The money is going to dry up. Don’t count on raising money. “Private financings could soften significantly,” Sequoia warned, before adding an optimistic note. “Many of the most iconic companies were forged and shaped during difficult times. We partnered with Cisco shortly after Black Monday in 1987. Google and PayPal soldiered through the aftermath of the dot-com bust. More recently, Airbnb, Square, and Stripe were founded in the midst of the Global Financial Crisis. Constraints focus the mind and provide fertile ground for creativity.”

· Prepare to survive tough sales. Be forewarned that sales might fall apart. “Deals that seemed certain may not close. The key is to not be caught flat-footed.”

· Cut advertising and marketing expenses. Take a hard look at your marketing spend. “You might find that your customer lifetime values have declined, in turn suggesting the need to rein in customer acquisition spending.”

· Be prudent with capital spending. Take a look at capital spending. “Examine whether your capital spending plans are sensible in a more uncertain environment.

The stark truth is that, amidst the chaos, the road ahead through and beyond the pandemic is going to be a long one. In the end it is the job of those steering the ships to do everything possible to batten down the hatches and to be prepared for the onslaught of the oncoming waves. Try to keep in mind that now is not a time to see others in your space as competitors, but instead, to view them as your community and as potential partners. Extend a hand whenever possible and help each other navigate the sandbars and jagged rocks. In the end paying it forward is just the right thing to do.

Selfcare and Our Mental Health

Selfcare is monumental in everyday life, and especially so during this global crisis. Taking care of yourself allows you to be healthy enough to help take care of others. Wear masks, sanitize, wash your hands frequently, don’t touch your face, and listen to the data and research by trusted organizations like the ones used for this article.

What is self-care?

Self-care is any activity that we consciously choose in order to take care of our mental, emotional, and physical health. Although it’s a simple concept in theory, it’s something we very often overlook. Good self-care is key to improved mood and reduced anxiety. It’s also crucial for good relationships with oneself and with others.

The perspective we take matters more than anything else. Fear, panic and anxiety can be contagious in a highly negative manner and can lead far down the rabbit hole. Remember COMPASSION, GRATITUDE, KINDNESS and EMPATHY. Take a moment to look at the amazing research being done by Neurosurgeon James R. Doty, MD, and his team at THE CENTER FOR COMPASSION AND ALTRUISM RESEARCH AND EDUCATION.

When it comes to our individual and collective mental health, doing our best to stay on an even keel is going to be critical. Visit the American Psychological Society or the U.S. Center for Disease Control and Prevention for resources and tips like the following:

Things you can do to support yourself:

· Take breaks from watching, reading, or listening to news stories, including social media. Hearing about the pandemic repeatedly can be upsetting

· Take care of your body. Take deep breaths, stretch, or meditate. Try to eat healthy, well-balanced meals, exercise regularly, get plenty of sleep, and avoid alcohol and drugs

· Make time to unwind. Try to do some activities that you enjoy

· Connect with others. Talk with people you trust about your concerns and how you are feeling
In closing

How we all continue to respond to this crisis and to each other is of paramount importance. Our perceptions and actions can be taken from a place of fear or from a place of compassion. If we take care of ourselves, and of each other, a future of closer unity is sure to follow.

Be COMPASSIONATE to yourself and to each other. Lend a hand; text or phone with persons you care about on a daily basis.

Be GRATEFUL for all the healthcare and behavioral healthcare workers on the front lines, for the garbage collectors, the mail delivery service providers, the restaurants keeping the lights on for to-go orders and deliveries, grocery workers, retailers and for everyone else who goes to work every day to keep our global system functioning.

Be KIND and take only what you need. Help others who can’t or shouldn’t go out to get their needs met. We can’t make it through what’s coming if we deplete our resources out of fear, anxiety, and panic.

Be EMPATHETIC with each other. Share how you are truly feeling, let yourself feel outside your bubble, and give others the chance to share with you. There is no time for hate, finger-pointing or alienation. Especially not now.
We continually wish each and every human good health and mental health

Stay strong, be mindful, be compassionate and caring of each other, but most of all smile, laugh when you can, and remember that.