In 2018, Digital Health Start-ups collectively raised $ 8.1 billion, with an average of $22.2 million per deal. Investments grew during the pandemic, as a 2021 report from CB Insights, a business analytics platform, says, “Global deals and dollars to digital health startups reached new highs in 2021. Funding to the sector grew 79% YoY to reach a record $57.2B.” But reports from the same platform in 2023 indicate, investments in digital health startups have since contracted.
As investors get picky and seek startups with strong fundamentals, perhaps, Silicon Valley has discovered that the entrenched weight loss business continues to be profitable, is projected to grow further and segues nicely into the digital health space.
Found was co-founded by Emily Yudofsky and Swathy Prithvi at the incubator Atomic; Yudofsky has since moved on to another telehealth startup trying to capture the $80 billion disability market. Since then Found has gone on hire Sarah Jones Simmer, a former executive at women-centric dating app, Bumble. Found came out of stealth mode last year with $32 million in funding, and a few months later secured another $100 million.
Weight loss has for long been considered a traditional business and as a space does not have the edgy tone associated with Silicon Valley or Silicon Valley folklore the same way fasting did. Pre-pandemic coverage of weight loss and the Bay Area typically involved founders and execs fasting or biohacking. But perhaps, Ozempic is buzzy enough (and profitable enough) for the Bay Area to take notice.
To be sure, Found is no Noom, a scrappy immigrant-led startup that struggled for close-to a decade and then made $400 million in revenue in 2020. While both startups have different origin stories, with Noom’s pivot to Ozempic prescriptions early this year, both programs look similar and seem to have the selling point. Other weight loss startups that prescribe semaglutide, the active ingredient in Ozempic that was originally meant to treat diabetes, are Ro and Calibrate. While most of these startups offer Noom style counselling and lifestyle advice, the real draw might well be the fast and easy access to semaglutide.
Incidentally, early this year, Weight Watchers, poster child for an old-world weight loss business, acquired Sequence, another telehealth startup that features drugs like Ozempic, Wegovy (higher concentrations of Semaglutide) and Mounjaro (active ingredient Tirzepatide, which, a study has found better offers better weight loss results than Semaglutide).
And generics of semaglutide is not the only category that has caught the founders’ eye. Atomic, the incubator & investor of Found, was founded by Jack Abrahams who co-founded and early invested in what is now Hims & Hers that offers convenient prescriptions to generics for hair loss, anxiety, sexual health. Again, not the only startup doing so.