VC investment in mHealth surpasses last year

Venture capital continues to pour into startups looking to cash in on the mHealth explosion. From January to August of this year, 50 mobile health companies secured $310 million in VC money compared to $229 million raised by 42 firms during the same period in 2012, according to a blog citing a recent research report by Rutberg & Co. 

"During the first 8 months of 2013, the top three recipients of VC funds in mobile health segment were Proteus Digital--a smart-pill maker, Fitbit, maker of popular fitness measurement bands, and Withings, another maker of fitness bands," states the blog. "Whereas Proteus's product--a tiny silicon chip embedded in a pill that is activated by stomach acids upon swallowing and communicates with a smartphone--is a regulated device, Fitbit and Withings are consumer devices that do not require FDA approval."  

In August, Fitbit, the San Francisco-based startup that has helped drive the growth of the health and fitness sensing market with its activity tracking devices, raised $43 million in new venture capital funding. Softbank Capital led the round, joined by existing shareholders Foundry Group and True Ventures, as well as new investors Qualcomm Ventures and SAP Ventures. In March, TechCrunch reported that Fitbit was looking to raise $30 million at a $300 million valuation. The company previously raised $23 million.

"Overall, we believe healthcare will be revolutionized by mobile, and we are bullish on the macro-economic impact from venture-backed startups," Rajiv Chand, Rutberg's Managing Director and Head of Research, is quoted as saying in the blog. "However, he adds a sober note: 'We caution that it is very difficult to grow companies within the sector and that although several companies are emerging as breakout leaders, most are struggling with adoption and/or revenue growth. Of note, the tremendous innovation in mobile health startups is impressive.'"

Last year, the mobile healthcare sector saw venture capital investments reach more than $900 million and in 2013 mHealth-related VC money is expected to exceed $1 billion. In related news, according to a recent report by mobile research firm research2guidance, within the next four years, the mobile healthcare services market will begin the commercialization phase and reach $26 billion worldwide as smartphone apps enable the mHealth industry to monetize these services.

To learn more:
- read the blog