During 2014's first six months, 143 digital health companies raised $2.3 billion, setting the stage for a record-breaking year, reports San Francisco-based digital health seed fund Rock Health. Deal sizes grew from an average of $10 million last year to $15.6 million. (The statistics only cover deals worth $2 million and up.)
The half-year total represents 168 percent year-over-year growth. Six categories make up nearly half the funding:
- Payer administration: $211 million
- Digital medical devices: $206 million
- Analytics and big data: $196 million
- Healthcare consumer engagement: $193 million
- Population health management: $162 million
- Personalized medicine: $150 million
Under the radar, payer administration raised only $47 million last year, but value-based care and new payment models are making financial technology a priority with healthcare organizations. Hospital chief financial officers recently called it key to institutional survival, according to a Black Book survey.
Not every segment showed growth, however. Funding for crowdfunding platforms was down almost 50 percent from 2013.
Investor and entrepreneur Anne DeGheest has been among those warning of a bubble in digital health funding, saying that entrepreneurs will face hard questions about their business plans when seeking a second round of funding.
Rock Health's Teresa Wang notes, however, that even with the heady increase in the first six months, the total pales in comparison to the nearly $30 billion raised in the 1999-2000 tech bubble period.
To learn more:
- read the announcement