A Silicon Valley VC in the hottest area of healthcare explains what it looks for in new startups aiming to disrupt the $35 billion addiction market

Daiana Lorenz/YoutubeSilicon Valley-based digital health venture firm Rock Health recently made its first forays into the addiction treatment space, an estimated $35 billion industry.Bill Evans, Rock Health's managing director, called addiction treatment among the largest opportunities to deliver tremendous value to patients and the healthcare system.In a new report, researchers at Evans' firm lay out what they look for in a startup that claims to help treat addiction - along with the red flags they avoid.With more than 20 million Americans currently living with addiction and a treatment market that's estimated to be a $35 billion industry, it's clear to the folks at one venture capital firm that the problem is an area ripe for new, tech-driven solutions.We see this as an exciting space with significant potential to have a positive impact, Bill Evans, the managing director of the firm - a Silicon Valley-based digital health fund called Rock Health - told Business Insider.In the past, Rock Health has backed buzzy startups like Virta Health, which boldly claims to reverse diabetes without drugs using Silicon Valley's favorite diet, as well as Sano, a startup that aims to make a non-invasive blood sugar monitor.And recently, they funded some of their first addiction therapeutics platforms, such as Marigold Health, a brand new tool that links people with addiction to text-based peer support.But choosing the right addiction-treatment startup to fund is hard work. Although thousands of apps currently claim to help treat everything from alcoholism to opioid addiction, very few are truly equipped to help make a dent in the problem, according to Evans and his team.So in a recent report, the researchers at Rock Health outline what makes a startup in the addiction space worth backing. They also lay out several red flags they aim to avoid.One of the 'largest opportunities to deliver tremendous value to patients and the healthcare system'Shayanne Gal/Business InsiderRoughly 63,000 Americans died in 2017 from drug use disorder, commonly known as addiction.One of Rock Health's main criteria for backing an addiction-focused startup is ensuring that it's grounded in comprehensive research, Chipper Stotz, one of the report's authors, told Business Insider.That's not always an easy task. With thousands of apps currently available that claim to treat some aspect of substance use disorder - whether it's curbing alcohol cravings or working up the courage to attend a peer support group meeting - it can be difficult to distinguish a legitimate tool from a scam.As an industry there are 100s if not 1000s of apps that might 'help' with substance use disorder, but whether they're actually collecting data on their efficacy and viability is another matter, Stotz said.Two startups in the report that Rock Health felt met these criteria were Marigold Health, a platform that links people with addiction to text-based peer support, and Chrono Therapeutics, which uses a combination of wearable patches and an app to help people quit smoking.Read more: A 22-year-old Johns Hopkins dropout is pioneering a new way to treat drug addiction using your phone, and health VCs are lining up to investEvans believes there will be a shift in addiction treatment spending toward more services that take after the Marigold model, something that he said makes the industry among the largest opportunities to deliver tremendous value to patients and the healthcare system.Something that 'works better than the current gold standard of treatment'BITo ensure that a startup is worthy of their investment dollars, Stotz and his peers at Rock Health look for at least two key things, he said:Are they working with academic medical centers, such as the University of California, San Francisco's Headache Center or the University of Pennsylvania's Penn Medicine?Do they have a full-time staff dedicated to collecting that evidence-based data?We're not looking at solutions that are pen-to-napkin scenarios, said Stotz. We're really looking for evidence-based programs and solutions that have had some success in different trials.Those trials could be large peer-reviewed papers or smaller-scale clinical trials. The most important factor is that there's data behind the program. This isn't just important from a patient perspective, Stotz said. It's also vital to encourage buy-in from insurance providers who are considering whether to cover the cost of an intervention.Providers want to see that [a tool] works better than the current gold standard of treatment, Stotz said.Areas ripe for a tech solutionAlthough addiction treatment models have been around for decades, many of them aren't well-regulated, and the quality and kind of care can differ immensely from place to place. Patients in one zip code, for example, may get one kind of treatment, while patients in another are offered an entirely different set of options.Medication-assisted treatment, for example, is largely regarded as the gold standard for treating opioid use disorder, or addiction to painkillers like fentanyl or morphine. The treatment involves providing patients with access to medications such as buprenorphine and naltrexone which have been shown to curb deaths from the disorder.But very few rehabilitation facilities offer the treatment, instead pushing patients to completely abstain from all medications.Read more: Most rehabs don't offer a science-backed treatment for drug addiction. A new initiative aims to change that.The great majority of people seeking treatment do not receive anything approximating evidence-based care, the report reads.New digital solutions could help avoid this type of situation by capturing more data on a more consistent basis, allowing clinicians to see how well a program is working and tweak it accordingly.Digital tools could help in another way, too: they can help ensure that patients have more regular and consistent contact with the support systems they need to stay healthy.That continuous support might take one of many forms, whether it's texting with a therapist, video calling a peer group, or doing text-based cognitive behavioral therapy, a heavily researched clinical approach to mental illness that encourages people to examine how they react to challenging situations.Ongoing support is really critical, Stotz said. 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A Silicon Valley VC in the hottest area of healthcare explains what it looks for in new startups aiming to disrupt the $35 billion addiction market

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