Digital health funding for 186 companies reached $1.97 billion in 2013, a 39 percent growth from 2012, according to a Rock Health report that only looked at companies that raised more than $2 million. The venture funding for digital health will also surpass medical device funding and is already doing better than other traditional healthcare sectors.
The report notes that crowdfunding also took off this year, raking in $9.2 million from 120 campaigns, of which 85 percent were on Indiegogo. One notable campaign was for smartphone-connected medical diagnostic tool maker Scanadu, which raised $1.37 million on Indiegogo, making it the crowdfunding site’s most funded project. The success rate for all the campaigns was around 40 percent.
Around 20 percent of all funding came from six deals, the highest of which was population health management company Evolent with a $100 million funding raise, followed by EHR and clinical workflow company Practice Fusion which raised $85 million. An increased volume of early stage deals is also a primary driver of growth for digital health companies with 51 percent seed or Series A funding rounds, up from 39 percent the year before.
Six themes the report found included electronic health records surrounding clinical workflow; data aggregation and analysis surrounding health use cases; digital medical devices used in clinical settings that focus on disease; consumer-oriented wearables and biosensing products; population health management; and healthcare consumer engagement, such as purchasing health insurance. These themes make up almost 50 percent of all the funding, but the EHR and clincial workflow was the largest, with $254 million or around 13 percent.
A total of 302 investment firms and 27 venture firms participated in funding rounds in 2013. There was a rise of new investors who participated in only one deal last year, which grew 70 percent from the year before, and within this group, 75 percent hadn’t completed deals in the space in 2012 or 2011. Around 32 percent of investors that completed one investment in 2012 invested again in 2013. The Social + Capital Partnership completed the most investments, seven, while Northwest Venture Partners completed six.
California saw the most investments, 60, while the Northeast saw only 26. CEOs were more likely to have a graduate degree: 25 percent had MBAs, 10 percent had PhDs and 9 percent had MDs. Only 7 percent of the total CEOs were female.