Digital health funding has continued to grow in the first quarter of 2016, according to Rock Health’s latest figures. According to their data, which looks at disclosed U.S. based deals over $2 million, the market has experienced an uptick with 13% TTM growth and almost 50% YoY growth (when compared to the first quarter of 2015). Total funding for Q1 2016 reached $992.7 million, making it the highest first quarter since 2011, though still less than the most lucrative quarter ever (Q2 2015 which hit $1.5B).
The two largest deals of the quarter accounted for over 34% of the quarter’s transaction value and contributed to the largest average deal size ($17.7M) since Q2 2015. However, the number of deals is down 11% compared to last year. During this first quarter, seed stage and Series A deals represented 55% of all deal volume (up from 50% of Q1 2015), but there was a significant decline in the percentage of Series D+ deals (35% to 12.5% of total deal volume).
The top six categories accounted for over 77% of the deal value for Q1 2016, with only wearables and healthcare consumer engagement maintaining a place on the list from the end of 2015.
Similar to 2015, three types of services dominated the landscape: accessing the correct health information, tracking the data points they produce, and providing context for what that data means and how it can impact care.
When it comes to the M&A activity, Rock Health emphasized two big deals: Asics – Runkeeper, and One Medical Group – Rise.
Rock Health concludes that if the funding activity continues like it was for the last two years, the industry will realize another record year. Digital health funding is still within a healthy percentage range of overall venture funding, but with all the cautious statements around a correction in the market, it’s something to keep an eye on.