Good day. With Congress expected to be sharply divided following the midterm elections, passing major legislation in healthcare will likely be difficult.

But startups don’t have to wait for Congress to act to start tackling problems in healthcare.

For example, inflation increases the cost of healthcare, which will particularly affect people with high-deductible health insurance plans, said Amit Mehta, a general partner of venture firm Builders VC. Inflation could also make it difficult for people to afford medical insurance premiums.

Congress and the U.S. medical system may struggle to fix this problem in the near term, but startups with innovative ways to deliver effective and less-costly care can step in now to provide a solution for people struggling to afford medical care and insurance.

“There’s opportunity in that gap for companies, and opportunity for us as investors to back those companies,” Dr. Mehta said.

And now on to the news...

Midterm elections. The growing prospect of gridlock in Washington following the midterm election reduces the likelihood of major federal healthcare legislation and magnifies the importance of state medical policies, venture capitalists said.

• As of Wednesday evening, Republicans were favored to take control of the U.S. House but the Senate remained a tossup, The Wall Street Journal reported.
   
• With neither party likely to gain a sizable majority in either chamber, large-scale packages, such as the Inflation Reduction Act, which granted Medicare authority to negotiate what it pays for certain high-price drugs, will become difficult to enact in the next Congress.
   
• If gridlock prevails in Congress, venture capitalists and entrepreneurs could shift focus to policy in state legislatures. “As a venture capitalist, it’s going to be increasingly important to understand the healthcare policy landscape at the state level,” said Lisa Blau, a founding partner of venture investor Able Partners.

Biotechnology startup Juvena Therapeutics Inc. has raised $41 million in new venture-capital funding to advance technology that could expand the range of treatments for chronic conditions and diseases of aging. Juvena seeks to convert proteins released by cells, known as secreted proteins, into drugs that rejuvenate or regenerate tissue damaged by disease. Drugmakers have turned several secreted proteins into drugs, such as insulin and human growth hormone. But the difficulty of working with complex protein molecules has constrained their ability to capitalize fully on their potential, said Ayman AlAbdallah, a partner with Mubadala Capital, which co-led this Series A round of financing with Horizons Ventures. Recent advances in the ability to use instruments to quantify proteins, along with tools including artificial intelligence, have helped Juvena locate secreted proteins that could be turned into drugs that regenerate or rejuvenate diseased tissue.

Crypto exchange Binance reversed course on a rescue offer for FTX Wednesday, leaving the prominent digital firm with an uncertain future as it faces a shortfall of up to $8 billion, according to people familiar with the matter, The Wall Street Journal reports. Binance chose not to go ahead with the nonbinding offer following a review of the company’s finances, the exchange said. “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said in a statement.

People

European biopharma investor BioGeneration Ventures appointed Elena Ritsou as venture partner and Andree Blaukat as senior advisor. Ms. Ritsou was most recently chief business officer of Gamma Delta Therapeutics. Mr. Blaukat was previously at Merck KGaA.

Playground Global promoted Ben Kim, whose focus is engineered biology, to venture principal. At Playground, he has sourced and led investments in companies including Outpace Bio, Manifold Bio and Lassogen.

Distributed Ventures, an early-stage firm specializing in insurtech, healthtech and fintech investments, hired Joe Flanagan as a growth partner based in Chicago and Alex Carvalho as an associate based in New York.

Exits

Anumana, a provider of digital sensor diagnostic tools for the early detection and treatment of heart disease, acquired NeuTrace, a developer of novel artificial intelligence applications for electrophysiology. Terms weren’t disclosed. Anumana is backed by investors including Mayo Clinic, Matrix Capital Management, Matrix Partners and NTTVC.

Publicly-traded life science research and diagnostics company Bruker Corp. acquired brain-mapping platform Inscopix Inc. for an undisclosed amount. Founded in 2011, Inscopix was backed by Playground Global, AME Cloud Ventures and Floodgate Fund.

Brand building platform Heyday purchased ZitSticka, which offers acne treatment and prevention products, for an undisclosed sum. Last November, San Francisco-based Heyday said it scored a $555 million Series C round from The Raine Group, Premji Invest, General Catalyst, Victory Park Capital and Khosla Ventures. ZitSticka has raised funding from BFG Partners, Interplay, Silas Capital and Propeller Industries.

Zenas BioPharma, a Waltham, Mass.-headquartered developer of immune-based therapies, scored $118 million in Series B funding led by Enavate Sciences. New investors Longitude Capital, Vivo Capital, Rock Springs Capital, Perceptive Advisors, Agent Capital, Pivotal bioVenture Partners and Superstring Capital also joined in the round, alongside previous backers Fairmount, Wellington Management, Tellus BioVentures, Quan Capital and Xencor Inc. Enavate Sciences’ Jim Boylan, Longitude Capital’s Patrick Enright and Vivo Capital’s Hongbo Lu joined the Zenas BioPharma board.

Sensorium Therapeutics, a Boston-based startup developing nature-inspired psychoactive medicines for mental health, closed a $30 million Series A round. Led by Santé Ventures, the investment included participation from Route 66 Ventures, CU Healthcare Innovation Fund, WPSS.bio, Palo Santo, Iter Investments, Ocama Partners and re.Mind Capital.

BC Platforms, a Zurich-based healthcare data management and analytics provider, completed a 20 million Swiss Franc investment (about $20 million) led by Jolt Capital.

Peace Out Skincare, a San Francisco-based startup offering a line of skincare products, picked up a $20 million growth investment from 5th Century Partners.

NRG Therapeutics Ltd., a U.K. startup developing therapeutics to slow or halt the progression of neurodegenerative disorders such as Parkinson's disease and amyotrophic lateral sclerosis, landed £16 million (about $18 million) in Series A financing. Lead investor Omega Funds was joined by Brandon Capital and Parkinson's Virtual Biotech in the round. Claudio Nessi and Francesco Draetta of Omega Funds, along with Brandon Capital’s Jonathan Tobin, will join the board.

Archy, a San Jose, Calif.-based payments and management platform for dental practices, emerged from stealth with $10 million in new funding. Bessemer Venture Partners and CRV co-led the investment, which included contributions from Alven, Adapt Ventures, 2.12 Angels, Diagram Collective and others.

Ibex Medical Analytics, a Tel Aviv- and Brookline, Mass.-based cancer diagnostics startup, fetched a $10 million investment from Kreos Capital.

Topicals, a Santa Monica, Calif.-based skincare startup, nabbed $10 million in Series A funding. CAVU Consumer Partners led the round, with Principal of Growth Jenna Jackson joining the board.

SocialClimb, a Lehi, Utah-based software-as-a-service healthcare marketing platform, fetched $8.5 million in growth capital from Spring Capital Partners and Resolve Growth Partners.

Contraline Inc., a Charlottesville, Va.-based male contraceptive startup, secured a $7.2 million investment. GV led the round, which included additional support from Rhia Ventures, ShangBay Capital, Amboy Street Ventures, MBX Capital, Graphene Ventures and Metaplanet Holdings.

YonaLink, a Boston-based clinical trial software provider, picked up a $6 million investment. Debiopharm Innovation Fund led the round, which saw additional participation from eHealth Ventures.

Sequencing.com, a Pasadena, Calif.-based DNA interpretation startup, raised more than $5 million in financing. Lead investor Lerer Hippeau was joined by Red Sea Ventures, Global Founders Capital, XRC Labs, Correlation Ventures, Red Antler, Mucker Capital and Gaingels in the round.

• Medtronic blood-pressure device curbs hypertension, but misses top goal in study
   
• Uganda struggles to contain its second-deadliest Ebola outbreak
   
• Talkspace names CEO as it pitches remote therapy to employers
   
• Highmark Health finds cybersecurity staff in a tight labor market
   
• How does flu spread compared with Covid? What to know as flu cases surge

• Lifting universal masking in schools (New England Journal of Medicine)
   
• Andreessen Horowitz partners with rural health system (STAT)
   
•  Atlas Venture 2022 year in review (Life Sci VC)
   
• FDA halts Verve plans to test gene-editing therapy for heart disease in U.S. (Biopharma Dive)

This newsletter was compiled by Matthew Strozier, Zachary Cole and Brian Gormley. 

WSJ Pro Venture Capital is a premium service of The Wall Street Journal. We cover venture capital and the global startup ecosystem. Share your tips, comments and questions: vcnews@wsj.com

The Team: Matthew Strozier, Yuliya Chernova, Brian Gormley, Angus Loten, Eric Sylvers and Marc Vartabedian.

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