Venture capital funding for health IT continued at "an astonishing pace" during first quarter of 2014, with the sector raising its highest infusion of cash in a single quarter to date, according to global communications and consulting firm Mercom Capital Group.
The sector raised $858 million in 163 deals, up by 154 percent from the $337 million raised in the previous quarter, according to an announcement.
Healthcare practice-focused technology companies received half the investment--$460 million in 60 deals. There were eight deals in practice management ($124 million total), two deals worth $78 million in health information exchange and seven in data analytics worth a combined $43 million.
The mobile health category ($198 million in 61 deals) led among consumer-focused companies, which raised $398 million in 103 deals. Telehealth companies received $79 million in 14 deals and six deals in the scheduling, rating and shopping category needed $66 million.
Rock Health reported earlier this month that digital health funding broke yet another record during the first quarter when investors poured $700 million into the sector.
The average deal increased to $13 million, up from $10 million last year, with patient care and ventures out to save companies money emerging as new trends. Analytics and big data are still considered "heavyweights," though.
Health IT companies, along with health and wellness businesses, made up 61 of the 153 deals in 2013 of raising $1 billion or more in venture capital, according to CB Insights.
That's given rise to talk that a bubble similar to the tech boom of the 1990s is forming with health IT.
While entrepreneurs without solid business plans might be willing able to raise Series A and angel rounds of investment, "when it comes time for these companies to raise a larger, Series B round, they are going to have to answer a lot of tough questions about their business plans," investor and entrepreneur Anne DeGheest told The Wall Street Journal.
At the same time, savvy innovators are poised to siphon off tens of billions of dollars from traditional healthcare's $2.8 trillion in revenue, a PricewaterhouseCoopers's Health Research Institute report says.
To learn more:
- find the announcement