Omada Health Raises $23 Million To Help People Kick Bad Habits

This marks Andreessen Horowitz's first significant investment in health care startups.

Losing weight, quitting smoking, and staying sober are hard to do, but they're made easier with support groups. Moving these face-to-face interactions to the Web, Omada Health has helped people at risk of diabetes prevent the disease's development with a program offered through employers and insurance providers. As it looks ahead, the San Francisco startup is hoping to replicate that initial success to instill other healthy lifestyle changes by helping people to quit smoking or improve their sleep quality. Spurred by a $23 million investment announced Wednesday, Omada aims to launch its next program, the topic of which has yet to be announced, in 2015.

Venture capital firm Andreessen Horowitz led Omada's series B round, with participation from Kaiser Permanente Ventures as well as existing investors U.S. Venture Partners and The Vertical Group. Excluding smaller seed rounds, this marks Andreessen Horowitz's first significant investment in the health care sector. As part of the deal, the firm's general partner Balaji Srinivasan will join Omada's board.

"Digital therapeutics is clinically validated treatment delivered in whole or in part over the Internet," Srinivasan told Fast Company. "It is a way to essentially make people lose weight over an Internet connection in a reproducible and scalable way." Seeing health care as a multitrillion dollar market, Srinivasan, cofounder and former CTO of genetics startup Counsyl, said the firm will continue to invest in biomedical software companies.

With roots in Ideo, Omada launched its diabetes program Prevent in 2012 as a way to help employers and insurance providers save on health care costs. According to the American Diabetes Association, diabetics average $13,700 in medical costs each year, $7,900 directly attributed to the disease. "Our recipe is taking research that works face to face and using the power of design and digital to scale it," said cofounder and CEO Sean Duffy. "Having social connections, that's the premise of the first program and future programs as well."

Prevent connects motivated people with prediabetes, elevated glucose levels signaling an increased risk of diabetes, with each other using video chat, text message, and other forms of communication. The 16-week program also gives participants a connected scale, progress-tracking tools, and personalized coaching. Omada says those who partake, on average, lose 5% of their body weight by the end of the program. "What tends to work in any sort of behavioral change program is human emotions and emotional connection," said Duffy. "People feel accountable, feel supported, and have a very structured pathway where they have feedback on their goals." Prevent counts 10 enterprise customers, including Stanford Hospital and Blue Cross Blue Shield Louisiana, that offer the program to employees as a covered benefit.

"Our general feeling is there's a couple-year window where our company can go out of the gate and own this space," said Duffy. "We're at a very interesting moment in history where digital and health care and software are convening in a new way."

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