The 6 Hottest Startups in Health Care

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Health care presents one of the biggest opportunities for startups--as well as some of the biggest frustrations. The market size and the potential to make an impact in people's lives are nearly unrivaled, as is the level of regulation. Still, in 2016, venture investors poured $12.2 billion into health care, backing companies that promise to change everything from cancer care to the process of finding a new doctor. Here are some of the standouts.

1. Flatiron Health

Google Ventures-backed Flatiron Health has developed a cloud-based technology platform that's currently used by about 260 cancer clinics. The New York City startup takes the patient data it collects from those centers--without identifying details, of course--and shares it with pharmaceutical companies and researchers. The company raised an $8 million series A round in 2013. A little more than a year later, it raised $130 million, and a year after that, an additional $175 million, bringing its valuation to about $1.2 billion. Flatiron is one of fewer than a dozen billion-dollar-valuation "unicorn" companies in the health care space.

Major Investors: Google Ventures, First Round Capital, Roche, Allen & Co.

2. Freenome

Freenome, headquartered in South San Francisco, is one of a slew of so-called liquid biopsy (i.e., blood test) companies to break out over the past few years. The goal is to use a patient's DNA, rather than a tissue sample, to diagnose cancer. Freenome says its tests do better than the current options for diagnosing prostate, breast, colorectal, and lung cancers. The company is using a $65 million round of funding, led by Andreessen Horowitz, to head into clinical trials.

Major investors: Andreessen Horowitz, Founders Fund, Charles River Associates

3. Clover Health

Another health care unicorn, Clover Health is an insurance start-up aiming to use data science to improve preventive medicine. The San Francisco-based company tracks dozens of clinical and social data points to help elderly and low-income patients avoid hospital visits. It currently handles claims for about 25,000 Medicare Advantage patients in New Jersey. With a recent $130 million funding round from Google Ventures and other backers, Clover plans to expand, and begin operations in three more states by this fall.

Major investors: First Round Capital, Sequoia Capital, Greenoaks Capital

4. Zocdoc

New York City-based Zocdoc allows users to find in-network health care providers, book appointments online, and read reviews from other patients. About 6 million patients in the U.S. use the service each month. Providers pay a subscription fee to be listed, and then Zocdoc integrates with their practice management software. Zocdoc recently added a feature that lets patients type in their symptoms using natural language and then matches them with an appropriate provider, such as a doctor, dentist, nurse practitioner, or physical therapist. The company has raised a total of $223 million.

Major investors: Amazon founder Jeff Bezos, Khosla Ventures, Goldman Sachs

5. 23andMe

In 2013, the FDA ruled that genetic-testing company 23andMe, which has raised a total of $233 million, could no longer sell one of its signature services: test results that indicate a person's propensity to develop inherited diseases. Since then, Mountain View, California's 23andMe has mainly been using its genetic testing services to provide information about ancestry and origin. But in April of this year, the company finally won FDA approval to sell direct-to-consumer tests that provide genetic health risk information for conditions such as Parkinson's, Alzheimer's, and hereditary thrombophilia.

Major investors: Google Ventures, New Enterprise Associates, WuXi Healthcare Ventures

6. Babylon Health

London-based Babylon Health, which has raised a total of $85 million, started as a telemedicine company, enabling doctors to make diagnoses via video and allowing patients to rate the quality of each interaction. But it's received more notice lately for another program it's piloting in the U.K.: an AI-powered chatbot that analyzes a patient's condition against a database of symptoms, while incorporating the patient's own medical history and responses to the chatbot's questions.

Major investors: Vostok New Ventures, Hoxton Ventures, Mustafa Suleyman