The Essentials:

• Advanced telemedicine market in the US: at least 4 players with USD 200m+ valuation, 1 IPO by Teladoc
• EU: at least 4 significant funding rounds only in 2016 are fueling competition
• EU: players should carefully pick their markets due to regulation and consumer preferences

A couple of quite successful telemedicine players have already emerged in the United States. These companies allow consumers to contact doctors or nurses via mobile apps and web services featuring videocalls and chats. A few years ago, some of these companies started out by offering old-school phone calls (and some also still do).

Players in the United States

Let’s have a glimpse at the most notable American companies, most probably all valued north of USD 200m:

Teladoc (U.S.)

• Founded in 2003
• IPO in 2015, after having raised ca. USD 90m
• Currently trading at ca. USD 600m (Feb 2016)

DoctorOnDemand (U.S.)

• Founded in 2012
• USD 87m total funding, investors include Qualcomm Ventures, Richard Branson, Anne Wojcicki
• Valuation probably at USD 300m+ as of last round

American Well (U.S.)

• Founded in 2006
• USD 123m total funding

MDLive (U.S.)

• Founded in 2006
• USD 74m total funding
• Valuation probably at USD 250m+ as of last round

Players in Europe

These are some of the players in Europe:

Babylon Health (UK)

• Founded in 2013
• Last round in January 2016 by Kinnevik (USD 25m), one of the first investors of Rocket Internet

MinDoktor (Sweden)

• Founded in 2014
• USD 9.1m total funding
• Most recently financed by EQT Ventures (February 2016), a big Swedish PE firm, and apparently one of their first two venture deals
• Footprint in Sweden, plans to enter Denmark
• Claims 10,000 patients consulted

Push Doctor (UK)

• Founded in 2013
• Funded by Partech, Draper Esprit and others with a total of USD 9.4m, last round in January 2016

MeeDoc (Finland/Germany)

• Founded in 2012
• Total funding ca. USD 5.7m, last funding round EUR 3.5m by XLHEALTH
• Team relocated from Helsinki to Berlin in 2015
• Currently active in more than five countries
• Offers straight B2C model, but also collaborates with payors (e.g. IF for Sweden)

MesDocteurs (France)

• Founded in 2015
• USD 1.3m seed funding from Partech and Omnes Capital
• Active in France

Teleclinic (Germany)

• Founded in 2015
• No information about funding available (seed stage)
• Prescriptions not possible (assuming patient had no offline touch points with specific doctor before)

Patientus (Germany)

• Founded in 2011
• No information about funding available (seed stage)
• Free for patients, SaaS to be paid by doctors (B2B2C model)
• Pilot with Techniker Krankenkasse (one of Germany’s biggest health insurers) that pays for consultations of patients insured with them

Situation Analysis in Europe

In the U.S., only about 800,000 of a total of ca. 930m of physician office visits in 2015 were evisits, while the American Medical Association states that 75% of all doctor visits are either unnecessary or could be handled via telemedicine. This means that currently still only about 0.1% of the market potential in U.S. telemedicine is filled. Therefore, I would not expect American players to enter European countries anytime soon and rather focus on higher market penetration in their home turf.

The telemedicine market in Europe is even less mature than in the United States, lagging at least five years behind. However, a fierce battle is unfolding among startups, some of them equipped with deep pockets just recently filled from financing rounds in January and February.

From my point of view, it will be crucial for a telemedicine startup’s current and future market success to be active in markets characterized by quick consumer adoption. In my view, factors favoring this adoption are users accustomed to out-of-pocket expense for healthcare services, possibility for diagnosis and prescription via telemedicine (a regulatory issue), and landscape and propensity of healthcare providers to reimburse telemedicine services. To give you an idea of the extreme ends of the spectrum here: just end of February, it was announced that Finnish citizens will benefit from universal reimbursement of telemedicine services, to my knowledge making Finland the first country in the European Union granting telemedicine full parity to offline doctor visits. In Germany, apart from a few limited pilot projects, citizens are only able to obtain a prescription from German doctors through telemedicine services if they have physically met with the respective doctor before, and reimbursement is even more difficult.

I think it is very important for a telemedicine startup to pick markets wisely and use early consumer adoption to improve marketing and product. International markets should be entered at the right time, when consumers are ready for adoption and regulators have figured out standardized ways to allow at least prescriptions.

Looking at the players around, the ones with a home market slow in terms of adoption and regulation might see their company’s learning curve and market validation broken completely. Even though foreign players might enter later, chances are high that their marketing and product will be much superior.

This prediction seems somehow validated by the fact that the UK sees at least two players quite advanced in terms of funding volume (USD 25m+ and USD 9m respectively), while Germany, the biggest healthcare market in the EU, is home to only a few companies so far still not outside of seed stage.

My prediction is that telemedicine will continue to be one of the hotter categories in (European) Digital Health for the next few years. It will be interesting to see which players are going to pick their markets wisely.

Guido Hegener is Managing Partner at DHV — Digital Health Ventures, a German VC firm focused on Digital Health investments.