Rock Health to invest more cash into fewer digital health startups with new fund

San Francisco incubator Rock Health said it has raised a third seed fund of an undisclosed amount to support the growth of digital health startups with more capital. With the new fund, Rock Health portfolio companies will get a 150 percent boost in capital investment, from $100,000 to $250,000, with the idea of funding fewer […]

San Francisco incubator Rock Health said it has raised a third seed fund of an undisclosed amount to support the growth of digital health startups with more capital.

With the new fund, Rock Health portfolio companies will get a 150 percent boost in capital investment, from $100,000 to $250,000, with the idea of funding fewer companies with more money.

“With our confidence comes a belief that we should be putting more money into fewer companies, and we know increasing our check size (and selectivity) will be a stronger signal to seed co-investors,” Rock Health’s Managing Director Malay Gandhi said in a blog post announcing the news.

Leading the latest investment are Kaiser Permanente Ventures and Bessemer Venture Partners, along with participation from KPCB, Mayo Clinic, Montreux Equity Partners and Great Oaks Ventures.

While the incubator declined to reveal how much it received in the third fund, the raise is “more than enough to comfortably fund the leading digital health companies through 2017,” a spokeswoman told MedCity News.

To date, Rock Health companies have collectively raised more than $207 million in funding in three years from an array of investors, according to the incubator, which currently has 55 active companies in its portfolio.

The goal of the new fund is two-fold: “Make it easier for our companies to fund raise immediately, i.e., complete their seed round and make it easier for them to raise their next round,” it said in the blog post.

The amount of applications is expected to remain high while the selection process gets more rigorous.

“We expect to review another thousand or more companies this year and in those that follow, while increasing our selectivity to around 1 percent from a historical 2 percent to 3 percent average,” it said.

While headquartered in San Francsico, 30 percent of all Rock Health companies are outside of the Bay Area, with a strong concentration in New York and Boston.

Companies include Omada Health, Lantern, Kit Check in Washington D.C., LabDoor, Augmedix, Aptible in New York City and Podimetrics in Boston, among others. Several have been acquired, including Lift Labs by Google and Wello to Weight Watchers.

In addition to funding, Rock Health also provides its startups with strategic advice and support. It recently added a new class of startups – all focused on digital health – along with new corporate partnerships with Blue Shield of California, Deloitte and Abbott.