[Livongo Series] History of Livongo: The VC Landscape

In the last portion, I talked about Glen Tullman, the Founder and CEO of Livongo Health. In this article, I will put Livongo into perspective - What was the digital health market like back then? I will start with the funding space.

Some quick info about Livongo‘s funding background

• Jul 25, 2019 IPO - Livongo$355M - $2.5B Valuation
• Apr 11, 2018 Series E - $105M General Catalyst, Kinnevik AB
• Mar 16, 2017 Series D - $52.5M General Catalyst, Kinnevik AB
• Apr 12, 2016 Series C - $44.5M
• Apr 7, 2015 Series B - $20M Kleiner Perkins
• Sep 10, 2014 Series A - $10M General Catalyst
• Nov 1, 2013 Seed - $3M

Who was getting the money?

Let's first go back to a few years back before the founding of Livongo. In 2011, Rock Health published their first report on digital health's funding landscape. It was a 26-paper powerpoints, published on Slideshare. Just wow!

In 2011, there was only 35 deals within the health IT (not even digital health) segment that were larger than $2M. And if you look closely, you would find a company called Lumosity.

Lumosity was the equivalent of Theranos in the cognition training space. It falsely claimed to have built a product that could slow down dementia and improve cognition. Later in 2016, it was fined $50M with the FTC for false advertising.

Although, personally, it was shocking to discover Lumosity's name within a digital health report, it is also indicative of how much the industry has moved forward since.

2011-2013:

From 2011 to 2013, before Livongo Health was founded, the amount of money going into digital health more than doubled. In 2011, it was $968M; 2012, $1.41B; 2013, $1.97B.

The number of deals within the industry also skyrocketed from 35 in 2011 to 186 in 2013.

I believe it was these years that digital health companies, such as Livongo Health, really picked up the pace. Before 2013, the majority of funding went to Series B and later. For example, in 2012 more than 60% of funding went to Series B and later rounds. In 2013, it was the first time that Series A + Seed made up 50% of the total funding space.

Not only was the funding stage shifting to the earlier stages, but also was funding moving towards new segments of digital health. In 2012, the majority of funding is going towards electronic medical records (EMR) and traditional healthcare IT. But in 2013, it was the first time that population health management, or services that are not bonded the four walls of hospitals, came into the view.

2014-2018:

In 2014, when Livongo raised its $10M Series A from GC, digital health saw another huge jump. The total funding raised to $4.1B from $1.8B in 2013, and the number of deals increased to 295 from 189 a year ago. It was an increase of 128% by funding amount, and 56% by deal amount, YoY.

Crazy times!

This kind of growth is normal for a startup but not for an entire industry. In 2015 and 2016, the amount of funding within digital health slowed greatly. A +4.5% in 2015 and a -8% in 2016. A time of uncertainty.

However, with the help from consumer information companies, such as Outcome Health and PatientsLikeMe, the hype returned back to digital health in 2017.

2018 and onward:

In 2018, one year before Livongo's IPO, on-demand healthcare services (you can think of telemedicine in general) became the hype, with Livongo raising $105M and American Well raising $291M. It was accompanied by a ~100% increase in funding of chronic conditions management companies (mostly telemedicine-enabled).

In 2019, after Livongo's IPO, it didn't have a great year. It closed at $25.06, -10.5% from its IPO price at $28. And there had been questions regarding the future of such services and whether they are worth the hype. But the pandemic put an end to that discussion.

Some thoughts:

From 2011 to 2019, there had been three waves driving digital health forward. In the beginning, it was the end of the EMR+data analytics wave. In the middle, it was the beginning of the DNA+personalized medicine wave. And lastly, it was the telemedicine wave.

The telemedicine wave has been magnified by the COVID19 pandemic; there are many other Livongo-like companies, around the world, tackling different types of chronic conditions. And they are driving the new digital health wave forward.

Livongo's funding record was the textbook example - doubling money raised every year, and exiting with an IPO in 7 years.

In Livongo's early days, chronic condition management (on-demand healthcare services) was not the hype. The landscape was covered by "more tech" stuff like DNA sequencing, personalized medicine, and electronic health records. But Livongo was able to steadily move up the ladder and in prime position to capitalize on any opportunity (ex. COVID19 pandemic).

Compared with similar companies we see today, Livongo is definitely one of the earliest pioneer in this specific digital health segment. It is more difficult to seek funding during its development than companies now during the pandemic.

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