Regulatory clarity spurs VC interest in mHealth

Mobile health apps grabbed big investment attention with $220 million in 35 deals in the first quarter of 2015, and a new report attributes the healthy funding to the hands-off regulatory approach by the U.S. Food and Drug Administration and its final guidance on mHealth apps, which provided needed clarity.

Venture capital funding for mHealth companies, overall, accounted for 36 percent of financial investment among digital and IT health companies in Q1 of 2015; mHealth was the lone tech industry that did not experience a significant funding decline compared to Q4 of 2014, according to a Mercom Capital Group report.

Funding for HIT and digital health totaled $784 million, with a total of 112 investors participating in funding rounds, according to an announcement on the report.

Of that total, mHealth received the largest share, 65 percent, of funding among consumer-focused companies with $282 million in 56 deals. The Q4 figures were $284 million in 41 deals.

According to the Marcom report, mHealth companies have seen more than $2 billion in over 500 deals in the past five years alone. Apps have received about $900 million in more than 280 deals since 2010.

The investment news comes at a time when consumers are increasingly embracing mHealth apps for tracking diet and nutrition, medication reminders and tracking physical activity. Yet, not everyone is confident that mHealth apps are ready for prime time, with one Australian expert in e-health systems describing mHealth apps as "useless." Even IBM's leader in healthcare and life sciences, Dan Pelino, believes there's still work to do closing the gap that exists between health data and care coordination by reconfiguring workflow processes related to patient care.

The Mercom report reveals care-focused apps took the lead in terms of VC deals, with fitness, wellness and nutritional apps next in line.

"The focus of care apps that received funding ranged from diabetes, cancer, Parkinsons, cardiac health, chronic disease care and medication tracking among others," the announcement says.

Notable deals included a $40 million investment for mobile patient data capture app vendor Advance Health; ClassPass, a mobile membership app received $40 million in funding; Clinical Ink, which makes a point-of-care mobile data capture app for clinical trials, raised $20 million; and Glooko, creator of a FDA-approved mobile diabetes management app and a metersync device, received $16.5 million.

For more information:
- read the announcement
- check out the report executive summary (.pdf)

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