Last year was a great success for the digital health ecosystem, particularly for the 258 companies that managed to secure money from investors. According to Rock Health, venture funding for digital health companies surpassed $4.1 billion, nearly the total of all three prior years combined, representing a 125% year-on-year growth in funding compared to 2013. The average US deal size was $14.1 million, an increase of nearly 40% YoY (looking into $2M+ deals).
The top six categories that accounted for 44% of all digital health funding in 2014 were analytics and big data, healthcare consumer engagement, digital medical devices, telemedicine, personalized medicine, and population health management.
There’s a growing group of serial investors which made three or more deals per year.In 2014, there were 344 dabbling investors (one or two deals per year) up from only 121 back in 2011 – a nearly 3X increase. And there’s a growing group of serial investors which made three or more deals per year; the most active investors in digital health represent a diverse mix of corporate, healthcare, technology, and agnostic venture funds.
Throughout the year, 95 M&A deals were tracked, with disclosed transactions valuing over $20 billion. Large health tech companies continued to be the most active acquirers, though medical device, payers, and tech companies were making moves too.
Additionally, five digital health companies went public during the first half of 2014, raising a cumulative $1.7 billion. The public markets have cooled off a bit in the second half of the year, though.
Looking forward to 2015 and beyond, it will be interesting to watch how digital health companies can / continue to help improve care while reducing costs.
