Digital health funding more than doubled in the first quarter of 2014 compared to the same quarter last year, spurred by high spending on big data and robust growth for patient engagement projects.
From $599 million in the first quarter of 2013, funding in the digital health care sector more than doubled to $1,359 million in the same quarter this year, according to a report by global health incubator StartUp Health. The number of deals slightly dipped from 144 to 133 deals year-on-year, but projects during the first quarter of this year had significantly larger funding.
Among the biggest deal makers in the first three months of 2014 include cardiovascular diagnostics company HeartFlow ($105 million), health care IT system firm Dedalus Group ($89 million), integrated health care software platform MedHOK ($78 million) and biotech firm Fluidigm ($77 million).
Khosla Ventures, Founders Fund, Qualcomm Ventures, Google Ventures, Silicon Valley Bank, Atlas Venture, Greylock Partners, 500 Startups and Northwest Venture Partners were the biggest venture capitalists in the first quarter in terms of number of deals made so far this year, according to StartUp Health.
The solid numbers continue an upward trend in digital health entrepreneurship since 2010, when funding hit $999 million, followed by $1,553 million in 2011, $2,043 million in 2012, and $2,830 million in 2013. A total of $7.4 billion from 1,393 contracts between health tech entrepreneurs and investors have been dealt since 2010. From the looks of 2014 Q1 data, many startups in the health care space are set to receive robust capital for the remainder of the year.
Majority of funding last year went to big data market deals worth $712 million, while projects that guide consumers along the health care system received $492 million, personal health market deals had $442 million, patient monitoring/sensors nabbed $364 million, and patient engagement deals took $359 million in fresh capital, most of which were the early-stages type.
While big data was the top-funded market in 2013 and patient engagement lagged behind, the ranking was reversed in terms of growth rate. The patient engagement market grew 410 percent while the big data analytics market was relatively slower with a 102 percent growth rate. Sensors and vital signs monitoring, and personal health projects also posted high growth rates in 2013 and will likely continue to do so this year.
The report prepared by StartUp Health co-founder Unity Stoakes indicates 2014 may be the best year yet for digital health entrepreneurs in terms of getting deals and funds. The startups, most of which are based in the U.S. Northeast and Northern California regions, will likely receive resources not only from venture capitalists but also from traditionally risk-averse big corporations who are increasingly willing to fund startups to stay ahead of the game in the burgeoning digital health landscape.
Big companies like Google, Intel, Oracle and GE want to use their health IT expertise to help startups, while health care organizations like Kaiser Permanente and Blue Cross Blue Shield are looking for ways to tap digital health to better engage patients, according to the report entitled “Re-Imagining Health and Wellness: StartUp Health Insights Q1 2014.”
StartUp Health, chaired by former Time Warner CEO Jerry Levin, aims to help digital health startups and entrepreneurs raise capital by partnering with investors, customers and decision makers. A partnership between the U.S. Department of Health and Human Services and OrganizedWisdom, StartUp Health offers a mentoring program, support community and other resources to help entrepreneurs take advantage of the convergence of technology, chronic care demand, health care reform and advances in biomedical science in creating real health solutions while growing their business.