VC funding for health IT in 2013 already almost equal to 2012 total

A new report from Mercom Capital Group reveals that venture capital funding in the healthcare IT sector continued to grow rapidly this quarter, with $623 million raised.

There were 168 funding deals this quarter compared to 104 the previous quarter, and 163 total in 2012 totaling $1.2 billion. At half year mark, VC funding for HIT is nearly equal to all of 2012 the latter figure.

"VC funding in Healthcare IT is now on pace to exceed $2 billion in 2013," Mercom CEO Raj Prabhu said in an announcement. "The government's initiative to open up healthcare data has been a contributor to the surge in activity and investments in consumer-focused companies as they turn available data into usable applications and services."

There was a considerable shift of VC money going from practice-focused technologies toward consumer-focused technologies. Specifically, consumer-focused companies made twice the amount of funding--$416 million in 112 deals--while practice-focused companies made $207 million in 56 deals.

Health information management (HIM) received the most VC funding--$222 million, with mobile health coming in second at $150 million.

The top five money-raising companies? Proteus Digital Health, at $45 million; lifeIMAGE at $35.6 million; Blue Health Intelligence at $35.5 million; WorldOne at $35 million; and Watermark Medical at $32.2 million. Of those, lifeIMAGE, Blue Health Intelligence and WorldOne all focus on the secure sharing of medical data.

The report seems to contrast a recent report by health accelerator Rock Health, which said that while investment in digital health startups is growing, it's not at the same torrid pace as a year ago. Overall, the Rock Health report said, digital health startups attracted $849 million in the first half of the year, up 12 percent over the same period a year ago; however, the growth rate during the first six months of last year was 73 percent.

To learn more:
- here's the Mercom report's executive summary (.pdf)
- read the announcement

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