StartUp Health expects 2016 to be the biggest year yet for digital health funding yet, and counted $2.4 billion in deals for the third quarter. The company, which counts the year to date at $6.5 billion, also counted an increase in international funding, a lot of interest in early stage deals and a diverse investor ecosystem.
The company still considers the digital health sector to be very much in its first wave of innovation, with much of the action at the early stages and “too few success stories,” but StartUp expects to see more breakout deals as the second wave of health innovation matures.
StartUp counted 500 unique investors in digital health, with over 140 of them investing in multiple deals and signifying a diverse investor ecosystem. The company sees unique collaborations like Google and Sanofi as representative of what’s to come: more relationships that blend very specialized expertise from both parties.
Rock Health, which has tracked $3.3 billion to date for the year ($1.3 billion in the third quarter) has a more conservative outlook. As we have mentioned before, Rock Health only tracks deals over $2 million, avoids conflating investment dollars with transactional costs associated with M&A and has a stricter definition of a digital health funding than StartUp Health.
“It’s unlikely this year will shatter any funding records,” the report authors Mitchell Mom, Mollie McDowell, and Founder Halle Tecco write. They say that, while the actual dollar value is down slightly year-over-year, they expect the year to end on par with the previous two years.
In terms of when the money is coming in, it’s changed since previous years. Unlike StartUp Health, Rock Health points to an all-time low for growth stage deals, representing just over 10 percent of all deals. They do see, however, early stage companies continuing to grab the attention of investors, accounting for nearly 61 percent deals in the year. Similarly, StartUp Health tracked this metric at 65 percent.
The third quarter has seen many new investors becoming active, with 25 firms making three or more investments compared to only 12 funds contributing on that level in previous quarters, Rock Health reports. Some of the biggest deals of the year have happened in Q3, StartUp reported, with major deals like Ping An Good Doctor and Onduo.
Rock Health counted 233 digital health venture deals for 176 unique companies, up from 219 deals in Q3 2015. As far as who’s making up the dollar amounts, the top six deals make up nearly a third of all funding this year. Human Longevity, a genomics and cell therapy company, accounted for $220 million of the total $290 million Series B funding across the industry, not only making it the top deal but also taking the genomics category into the top six for the first time ever.
The $274 million in funding for genomics and sequencing takes it to the second top category of funding, behind analytics and big data ($339 million), and in front of wearables and biosensing ($263 million). Following these are telemedicine ($231 million), digital medical devices ($202 million) and population health management ($190 million).
Rock Health also pointed to reproductive health companies as a category to keep an eye on. While not considered their own category, these companies were noted for their development this year, with several companies raising a healthy amount of funding. These companies are also more likely to have a woman CEO –five out of the seven companies highlighted by Rock Health have female CEOs, compared to just eight percent of the digital health industry overall.
StartUp, on the other hand, saw different digital health subsectors as the top categories: Patient/consumer experience; Wellness; Personalized Health/Quantified Self; Big Data/Analytics; Medical Devices; and Workflow.
Both companies agree the west coast is the prime locale for digital health funding. Rock Health saw California-based companies enjoying 47 cents per VC dollar invested in digital health, giving the state a total of $1.5 billion in investments thus far. New York and Massachusetts follow California, and Rock Health also pointed to emerging hubs of Texas and Illinois, while StartUp noticed Minnesota, Tennessee and Florida getting some more attention. Shop Nike Apparel, Shoes and Accessories