Digital health funding didn’t grow quite as much in 2013 as it did in 2012, but even so, Rock Health‘s calculations predict that funding for the sector will top venture funding for medical devices next year.
Investors pumped $1.97 billion into digital health startups this year, according to Rock’s end-of-year funding roundup – 39 percent more than they did last year. (Note: The data only includes funding rounds over $2 million.) Almost one-fifth of it came from the six largest deals of the year:
- Evolent Health’s $100 million Series B
- Practice Fusion’s $85 million, raised in two tranches
- OrthoSensor’s $48 million Series B
- Proteus Digital Health’s $45 million raise
- Fitbit’s $43 million round
- HealthCatalyst’s $41 million
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As the growth of funding has slowed a bit (year-over-year growth in 2012 was 46 percent, compared to 39 percent in 2013) and big-name companies have amassed millions of dollars in VC money, the pressure will be on this year for exits. The number of digital health exits already began growing in 2013, and CEOs of Practice Fusion and Castlight Health, which have raised more than $100 million, have both made mention of an IPO. Two cloud service providers in the healthcare industry, BenefitFocus and Veeva, had IPOs this year, and Care.com announced last month that it’s also planning one.
Rock Health’s analysis attributes funding growth this year to more early-stage deals: More than half of deals by volume were seed or Series A rounds, compared to 39 percent last year.
So-called “dabblers” – venture firms or notable angel investors who participated in just one digital health round – grew by more than 70 percent this year. On the other end of the spectrum, the number of serial health investors grew, too. Last year, we could count the number of VC firms that did three or more digital health deals on two hands. This year, that number jumped to 27 firms.
More early-stage investments also came in the form of crowdfunding campaigns.
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See the full report here.
[Image courtesy Rock Health]
