Dollar funding to digital health startups is up 36% in the most recent four quarters as big-name investors back startups like Oscar, Jawbone, and Proteus.
Digital health is increasingly a hot area for investment, especially as more valuable applications emerge for hospitals, doctors, and consumers. We used CB Insights data to take a look at the overarching financing trends in digital health, as well as top investors and companies.
Deal growth has been steady on an annual basis. The number of digital health deals grew from 118 in 2010 to 396 in 2014, more than 3x growth. In 2014, funding reached a multi-year high of $3.5B. That is 4x the amount of dollar investment seen in 2010.
Quarterly deals and dollars
The quarterly breakdown gives us a more in-depth look at the industry’s growth. In the most recent four quarters, including Q2’15, funding to digital health rose 36% compared to the funding amount in the previous four quarters. Q2’15 saw about $1B invested over 105 deals. It was the third $1B+ quarter for digital health funding since the start of 2014. The biggest Q2’15 deal was a $145M investment in Oscar Health Insurance by Goldman Sachs, Founders Fund, and others.
Deal and dollar share by investment stage
Deal distribution by investment stage has been fairly consistent over the last five years. Early-stage investments ranged from 61% to 54% of deals. Mid-stage (Series B and C) accounted for 19% to 24% of deals, while late-stage investments accounted for a 4% to 10% share.
Dollar share has varied a bit more. The proportion of dollars going to early-stage rounds has hovered above 20% (it ranged from 20% to 24%). Mid-stage investments have taken an increasingly large share of dollars, with a 39% share in 2013, 46% in 2014, and 48% in the first half of 2015. Late-stage dollar share peaked at 31% in 2012, but was at 14% in the first half of 2015.
Most well-funded companies
Jawbone, Fitbit’s fitness-tracking rival, claims the top spot for most well-funded companies in digital health, having raised a total of $613.8M. However, $393M of the funding is debt. Second on the list is Privia Health, with a total of $414M invested by Goldman Sachs, Health Enterprise Partners, and others. The full list is below.
|3||Proteus Digital Health|
|4||Oscar Health Insurance Co.|
The most active investor in digital health is Rock Health, with over 45 investments in companies including Collective Health and Honor Technology. However, many of their investments have been seed investments in the ~$100K range. Second on the most-active list is Khosla Ventures with 21 investments in companies including Oscar Health Insurance and HealthTap.
|6||Kleiner Perkins Caufield & Byers|
|7||HLM Venture Partners|
|10||Merck Global Health Innovation Fund|
Rock Health is also the most active early-stage investor with nearly all of its investments being early stage bets. Second on the list is 500 Startups, which has also invested exclusively in early-stage deals. Some of 500 Startups’ investments include Transcriptic and BetterDoctor.
|5||The Social+Capital Partnership|
|8||First Round Capital|
|9||General Catalyst Partners|