Health IT venture capital report: Consumer-focused tech is capturing more early-stage deals

As early as February, analysts were saying that it would be a good year for healthcare IT companies looking for venture capital. Communications and consulting firm Mercom Capital echoed that today with results from its first-quarter investment analysis which found that healthcare IT companies raised more VC money last quarter than in any quarter before. […]

As early as February, analysts were saying that it would be a good year for healthcare IT companies looking for venture capital.

Communications and consulting firm Mercom Capital echoed that today with results from its first-quarter investment analysis which found that healthcare IT companies raised more VC money last quarter than in any quarter before.

Almost 190 venture capital and private equity investors pumped $858 million into companies in the sector, according to Mercom’s analysis. That’s almost double the $439 million they invested in the first quarter of last year.

Dollar-wise, enterprise technology companies edged out those making products for consumers, with practice management and health information exchange companies garnering the most capital. But there were more deals in consumer health — 103, to be exact, versus just 60 for enterprise-focused companies.

That’s because early-stage investments (less than $2 million) swayed more toward the consumer side, including 29 accelerator and incubator deals, Mercom said. Mobile health companies accounted for a majority of the $398 million in funding for the consumer health sector, including First Opinion, MedWhat and Opternative.

Meanwhile, practice-focused companies saw the majority of the bigger deals, like an $89 million round for Italy-based Dedalus Group and a $77.5 million investment for MedHOK.

M&A activity was also at its highest level, totaling 53 transactions. Last year, health IT M&A remained relatively flat from 2012, according to Mercom.

Most of the deal activity occurred in the U.S., but Mercom noted that 15 other countries recorded at least one funding deal.