Digital health funding remains strong in 2017 Q1

Dive Brief:

  • 2017 digital health funding is off to a good start with Q1 showing more than $1 billion in deals, according to the latest reports by Rock Health and StartUp Health.
  • Rock Health tracked 71 deals totaling just over $1 billion. StartUp Health reported $2.5 billion spread across 124 deals.
  • While agreeing it was a strong quarter, the two organizations that track digital funding disagree on some of the details. Through StartUp Health’s lens, the quarter represented an all-time high in funding for digital startups. Rock Health’s report puts investments ahead of 2016, but lower than 2015.

Dive Insight:

The discrepancies between the two groups’ findings are due to differences in funding methodologies. For example, Rock Health only reports funding rounds that exceed $2 million, and doesn’t count non-U.S. deals. Rock Health also has stricter criteria for what constitutes a digital health company. Because of that it didn’t include a $914 million deal with cancer detection company Grail, while StartUp Health did.

After Grail, both groups agreed that the next three top deals were Alignment Healthcare with $115 million, patientslikeme with $100 million and Nuna with $90 million.

Big data and analytics was the biggest winner with 11 deals and $197.5 million, according to Rock Health. Other areas with strong showings were care coordination, telemedicine, hospital administration, patient engagement and wearables/biosensing. StartUp Health pegged population as the big winner, with $392 million across 25 deals. Research, medical devices and workflow also fared well.

The Q1 fundraising follows an active year of deals in 2016. According to a January report by Mercom Capital Group, health IT companies reeled in $5.1 billion in venture funding across 622 deals.

Rock Health’s report includes quotes from two investors concerned about the uncertain health policy environment. “We hear from fee-for-service hospitals and employers that they want to understand the regulatory framework before making substantial purchasing decisions,” Canaan Partners’ Julie Papanek said.

An administration bent on cutting costs could be good for telemedicine and gadgets that support care management in the home and other patient-centric needs. “Any digital technology that enables employers or consumers to be activated and to change their behavior, take control of their health, particularly for chronic conditions, will benefit greatly from any administration,” Frank Moss, co-founder and chairman of Twine Health, told Healthcare Dive following the November presidential election.

Filed Under: Health IT Finance
Top image credit: Flickr user 401(K) 2012