Strategic corporate investments at record high in digital health

By Jonah Comstock

digitalhealthcorporatev1While digital health funding in general has been growing enormously year-to-year, so too have strategic corporate investments, according to a new report by CB Insights. The research firm reports that 2014 has already had a record number of digital health deals by corporations (about 70 deals) despite two months left to go.

According to CB Insights, since 2010 corporate investors have made 210 deals totaling $2.34 billion into digital health startups. This year has already seen 89 percent more deals than 2012 and 183 percent more deals than 2011.

The roster of corporations that are setting this trend won't be a big surprise to people who follow digital health investments. The list includes tech, pharma, provider, and payor companies. 

Qualcomm Ventures tops the list, with big investments in Welltok, goBalto, and Fitbit as well as many of the companies in the Qualcomm Life ecosystem. After that is the Merck Global Health Innovation fund, which owns a majority share in Physicians Interactive among other investments, followed by BlueCross BlueShield Venture Partners and Google Ventures. Intel, Johnson & Johnson, Dignity Health, Kaiser Permanente, Reed Elsevier, and GE all make the list as well.

Corporate investment is spread out fairly evenly across early and mid stage companies, with 41 percent of corporate investments focused on early stage companies and 36 percent focused on mid stage companies. Late stage companies, defined as series D or later, made up just 17 percent of deals, with the other 6 percent falling into an "other" category.

CBI also looked at where geographically the companies receiving the strategic investments were located. California was the clear winner, with 36 percent of the deals located there -- not surprisingly the home of both Qualcomm and Google. New York and Massachusetts tied for second place with about 10 percent of the deals each, making those three states account for more than half of the corporate investments in digital health.

Strategic investments are a positive sign for digital health, showing that not only forward-thinking venture capitalists perceive the space as an opportunity. Big companies -- including many in the healthcare space -- want a piece of the action too, and increasingly are signing up.