Quick reads

With 2014 and 2015 seeing record numbers of venture funding in digital health, many analysts predicted that 2016 figures would not approach those same highs. Though we are still in 4Q16, data shows that 2016 is on target to exceed 2014’s and 2015’s venture funding totals. So far, digital health accounted for 8% of total venture funding and 1Q16 produced $1.8B in digital health funding and averaged $15.4M per deal, outpacing the same 1Q15 stats.  Nearly 25% of this total can be credited solely to insurance start-up, Oscar Health. Additionally, 1Q2016 generated 4 deals that raised over $100M, including Oscar Health, while all of 2015 saw 7 similar deals.

A yearly and quarterly breakdown of digital health funding since 2010. 2016 is on pace to produce record funding numbers based on a record 1Q16 total of $1.8B [Startup Health].

A yearly and quarterly breakdown of digital health funding since 2010 [Startup Health].

Compared to 1Q16, 2Q16 funding metrics slightly underperformed. The average deal size decreased by $2M to $13.3M per deal and for the first time since 2013, the Trailing by Twelve Months (TTM) index went negative to -0.67%. These indicators can be attributed to measuring against the unexpected highs from the first quarter, but despite the relative lull, the combined metrics indicate that 2016 will surpass 2015 records, as data from 1H16 and 1H15 show.

Additionally, 2016 has so far seen an increase in the overall number of deals made from 2015. To date, 151 companies completed 153 deals worth at least $2M compared to 136 at the same time last year. This seems to suggest that total deal volume in 2016 will bypass the 302 total digital health deals made in 2015.

One last observation that should be worth noting is the growing involvement of establishment tech giants investing money in digital heath. Recently, Apple established a partnership with Epic, IBM aligned with CVS pharmacy, and Google linked up with Novartis all to expand their traction in the healthcare space. With shifting marketplace ideals and an emphasis on quality, technology giants are taking notice and finding ways to integrate their technology expertise to address business needs.

In the next article in this series, we analyze the exit strategy landscape among digital health companies – http://www.wefundhealth.com/news/exit-strategy-analysis/

Sources

Mom, Mitchell, and Ashlee Adams. “Digital Health Funding 2016 Midyear Review | Rock Health.” Rock Health. N.p., n.d. Web. <https://rockhealth.com/reports/digital-health-funding-2016-midyear-review/#dollars-and-deals>.

Digital Health Funding Rankings Q1 2016.” StartUp Health Insights. N.p., 1 Apr. 2016.
Web. <https://www.startuphealth.com/content/insights-2016q1>.

 Image Source: http://bizmology.hoovers.com/2016/08/p81708/

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