VC funding sets yet another record
July 16, 2013 in Medical Technology
Health IT venture capital funding set a ‘torrid’ pace in the first quarter, but Q2 deals have topped even that, as records continue to topple. There were 168 funding deals this quarter, compared to 104 in Q1 and 163 in the whole of 2012.
With $623 million dished out in the second quarter, “VC funding in healthcare IT is now on pace to exceed $2 billion in 2013,” said Raj Prabhu, CEO of Mercom Capital Group, in a press statement.
“The government’s initiative to open up healthcare data has been a contributor to the surge in activity and investments in consumer-focused companies as they turn available data into usable applications and services,” he said.
The migration of VC money from practice-focused IT towards consumer-focused technologies in the first quarter has only increased in Q2, according to Mercom, with those firms receiving twice the amount of funding ($416 million in 112 deals) compared to practice-focused companies ($207 million in 56 deals).
The largest recipient of funding was Proteus Digital Health, a digital health feedback system provider that raised $45 million. LifeIMAGE, a network for securely sharing medical images and related health information, raised the second highest amount in the second quarter when it closed a $35.6 million Series C round, according to Mercom.
Blue Health Intelligence, a healthcare data and analytics company, raised $35.5 million; WorldOne brought in $35 million and Watermark Medical closed out the top five with $32.2 million raked in.
A total of 161 investors participated in Q2 2013 including accelerators, incubators and crowd-funding platforms – compared to 108 different investors in Q1. Eleven investors participated in multiple funding rounds this past quarter.
Ascension Health Ventures was the most active investor and participated in three deals, according to Mercom. The remaining top investors participated in two deals apiece; those included BlueCross BlueShield Venture Partners, AIB Seed Capital Fund, Cardinal Partners, Enterprise Ireland, Galen Partners, Khosla Ventures, Lemhi Ventures, Milestone Venture Partners, New Enterprise Associates and SV Angel.
Consumer-focused companies specializing in apps, wearable devices, sensors, remote monitoring, patient engagement, rating/shopping, and social health networks for physician-to-physician, physician-to-patient and patient-to-patient were all prominent this quarter.
On the clinical side, imaging, data analytics and electronic health record companies all continued to get notice.
As VC funding increased, merger and acquisition activity in the health IT sector declined in Q2, with 30 transactions of which only two were disclosed – compared to Q1 2013, with 46 MA transactions of which only five were disclosed, according to Mercom.