Despite slowdown fears, digital health VC keeps pace
July 7, 2015 in Medical Technology
Venture capital for the digital health market is still holding its own, keeping pace with last year’s “record-breaking growth,” according to a new report from digital health startup accelerator Rock Health.
In fact, this year’s Q2 raked in $2.1 billion from investors for digital health startups, just shy of last year’s mid-year number which reached $2.3 billion.
“Now at the half-year mark, investors have spoken,” wrote Malay Gandhi, managing director at Rock Health, in a July 6 post, unveiling the numbers. “Digital health isn’t slowing down.”
Although the number of deals were fewer than last year at this time – 139 deals in 2015 compared to 146 in 2014 – the average deal size was $400,000 bigger this time around.
[See also: 2014 venture cash: Digital health nails it.]
One of the big changes this year was around the most funded digital health category. Last year, the winner was payer administration startups, which collectively scored $211 million. This year, wearables and biosensing companies walked away with the lion’s share of funding, at $387 million. However, San Francisco-based wearable company Jawbone accounted for $300 million of that pie.
Analytics and big data came in at No. 2 for most funded digital health category, bringing in $212 million by mid 2015. That represents a $16 million increase in this category from last year’s numbers. Salt Lake City-based analytics startup Health Catalyst brought in $70 million.
According to another digital health accelerator StartUp Health’s mid-year report, however, analytics and big data came in third place, below wellness/benefits and patient/consumer experience. The company bills itself as the world’s largest portfolio of digital health companies.
One category in Rock Health’s report that failed to emerge as top theme last year – EHR and clinical workflow – brought in $74 million this time around. One of those startups, the San Francisco-based Augmedix, which integrates Google Glass with the electronic medical record, earned $16 million of that.
This year, Rock Health officials also tracked digital health IPOs, which “outperformed” SP 500 by the end of Q2.
“Coming off a record-smashing year for digital health funding, where dollars into the space totaled more than 8 percent of all venture funding, it would not have been surprising if 2015 was a letdown,” Rock Health officials wrote in the 2015 mid-year report. “However, 2015 has more or less kept pace with 2014.”
But this growth, as they explained, also comes with a drawback. And that’s “noise.” In other words, it’s a tough, saturated market, with a record number of digital health companies “vying for the attention of both the industry and the consumer.”