Digital health continues its torrid pace in venture funding circles, with the first quarter of 2014 setting a new record for deals and dollars. Against that backdrop, however, some of the recent crop of initial public offerings are having a difficult time.
Venture capitalists, in fact, invested more than $700 million in startups during the first three months of 2014, an 87 percent increase over the same period in 2013, according to San Francisco-based Rock Health. That includes a record January haul of $390 million encompassing more than 25 deals.
January saw five venture funding deals of more than $20 million – engineered by MedHOK ($77.5 million), Health Catalyst ($41 million), Kareo ($29.5 million), MDLive ($23.6 million) and TigerText ($21 million), Rock Health's Malay Gandhi explained in a post.
Rock Health's Teresa Wang, meanwhile, reported that the average deal for Q1 2014 rose dramatically as well, increasing from $10 million for all of 2013 to $13.1 million for the first quarter of 2014.
Wang also pointed out that California far outpaced all other states in the number of digital health funding deals, with 22, for a total of $226 million in new venture funding. Following were Florida (five for $165 million), Massachusetts (five for $77 million), Utah (one for $41 million) and Virginia (one for $32 million).
Not all the news is good, though. Wang noted that three digital health companies went public during Q1, but only one is showing continued success.
Castlight Health climbed 150 percent on March 14, its first day of trading, and passed $3 billion in market value before easing back a bit to $25 a share and a $2 billion market cap. The healthcare price-transparency company was launched in 2012 by Giovanni Colella and Todd Park, now the nation's chief technology officer.
In contrast, Care.com – which links those in need of personal services with providers or caregivers – opened on January 24 at 43 percent above its initial price of $17, but has since dropped to under $15 and is now trading as a busted IPO. And Everyday Health, which withdrew its initial public offering in November 2012, finally went public on March 28 and is currently trading right around its initial price of $14.
In all, Wang reported, 43 venture funding campaigns in the digital health marketplace closed during Q1 2014, raising $780,036. That amounts for a 23 percent success rate (percentage of campaigns reaching their target funding goal), which is lower than the 40 percent success rate recorded in Q1 2013.
That said, Wang also noted that Rock Health is currently tracking 10 campaigns now in progress that have brought in more than $1 million.