Health IT

StartUp Health: Digital health investment reaches $7.9B across 585 companies in 2016

I would love to see StartUp Health do a report dedicated to life science companies with an IT component in 2017.

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The digital health investment landscape of the past 12 months has continued to grow, despite the fact that more funding is going to fewer deals. StartUp Health’s report on 2016 digital health deal flow records a whopping $7.9 billion invested in 585 companies. Among the trends of note this year: non U.S. companies accounted for three of the top 10 deals, digital health companies with products centered on the patient experience accounted for the most deals this year and collectively raised $2 billion. Also, GE Ventures, Safeguard Scientifics, and StartUp Health dramatically ramped up digital health investment in 2016 compared with the previous year.

Here are some of my takeaways from the report:

  • Patient experience companies were once again the largest category as 163 companies raised $2.8 billion.
  • In 2017, I would love to see StartUp Health do a report dedicated to life science companies that have a health IT component. It’s a bit bizarre to me to produce a digital health funding ranking and have Onduo at the top of the charts. Onduo is a life science company launched by the pharmaceutical company Sanofi and Verily — the life science arm of Alphabet. Sure Onduo’s main area of interest is behavior change but it seems like it is more life science than digital health and would be a perfect example of the kind of hybrid companies that deserve a category and report of their own. Goodness knows there are enough companies that fit the description of part life science-part digital health, such as Human Longevity to Inscopix to personalized medicine companies that a separate report would be justified. I imagine it would make a compelling read. The only drawback I can think of is that such a split would reduce the overall numbers for digital health investment and deal flow. So what? It seems like the market has matured enough to justify such a split.
  • Non U.S. companies PingAn Good Doctor ($500 million) and Babytree ($448 million) and iCarbonX ($145 million) Thalmic Labs ($100 million) and Mindmaze ($100 million) accounted for just under half of the largest deals of the year.
  • Series A stage and early stage companies continued to dominate.
  • The largest digital health investor was a corporate venture investor GE Ventures with 18 deals with businesses at varying stages of development, compared with 10 deals last year. Khosla Ventures had 15 and Startup Health had 10 compared with two deals last year. Blue Cross Blue Shield Venture Partners and Andreessen Horowitz tied at nine deals apiece. Safeguard Scientifics and 500 Startups each had eight — a considerable increase for Safeguard which only had three deals in 2015.

Image: Hong Li, Getty Images

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