Digital Health Funding Saw Huge Cash Infusions In 2014
By Christine Kern, contributing writer
Though estimates vary, investments in the digital health sector ranged from $4 to 6.5 billion
Rock Health published a report estimating the level of venture capital (VC) flowing into digital health startups, noting an increase of 120 percent since 2013 to a market size of more than $4 billion.
Now, Startup Health is challenging Rock Health’s findings, releasing its own numbers on digital health funding. Startup Health is reporting year-end funding in digital health companies at $6.5 billion, a 125 percent jump over 2013’s 2.9 billion total.
Regardless of which figures are accurate, it marks positive movement for the digital health field. But the differences between the two estimates also clearly demonstrate that defining digital health is still a murky matter.
Startup Health found there were fewer deals in 2014 (459) than in 2013 (590), but there were also far fewer seed rounds and far more Series A, B, and C rounds suggesting a maturation of the sector in general. The average deal size also saw an increase, with early stage rounds (seed + Series A) averaging $4.6 million, mid-size deals (Series B + C) averaging $12.3 million, and late stage rounds averaging $17 million.
The top three most active subsectors of 2014, according to Startup, were Big Data/Analytics, Population Health, and Navigating the Care System. Geographically, the most digital health growth was seen on the coasts with the majority of funding going to San Francisco, New York, Los Angeles, Washington, D.C., and Boston.
According to an early notification sent to MedCity News, Rock Health reports there was a 120 percent increase in funding this year, to the tune of $2.2 million. Rock Health concurs that the leaders in 2014 were Big Data and Population Health startups, but Rock Health only counted 287 deals suggesting that it utilizes a narrower definition of “digital health” than Startup Health. Rock Health’s figures also discount deals worth less than $2 million, so the full figures ultimately will be higher.
In the preview of the report, Rock Health also predicted the sectors for growth in 2015, stating, “Categories we believe will continue to see significant growth in 2015 include telemedicine, payer administration, and personal health tools/tracking, digital therapies, healthcare consumer engagement, and hospital administration.”