2013 Midyear Digital Health Funding Update

Halle Tecco
July 01, 2013

With half of 2013 behind us, we’re able to uncover some interesting insights and trends in funding in digital health.  We saw continued growth with $849M invested in 90 different companies.  This is 12% more money and 25% more deal volume than this time last year.

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While not growing as fast as software (which is up 38% in Q1 2013 versus the prior year quarter), digital health has been outpacing traditional healthcare, where investments have dropped precipitously. Medical device funding is down 29% and biotech is down 2% in the first quarter.  

The emerging themes of digital health investing in 2013 include:

It’s a good time to be a digital health startup in Silicon Valley, where many of the funded startups call home. Over half the states had at least one funded company, and eight states had three or more.

State

Total ($) Invested

# Deals

% of Overall

CA

$273.2M

31

33%

MA

$65.5M

8

9%

NY

$67.5M

7

7%

CO

$41.7M

3

3%

DC

$34.8M

3

3%

IL

$21.0M

3

3%

OH

$36.4M

3

3%

TX

$10.9M 3 3%

A few investors were particularly active in the first half of 2013.  Social+Capital Partnership led the way with five digital health investments, followed closely by Norwest Venture Partners. There were no co-investments by these two firms, demonstrative of a divergent focus in digital health investing.  Overall, 146 unique investors participated in 1-2 deals each (there were only 92 firms investing this time last year).

However, there are still few seed and angel investors to fill the gap between accelerator and Series A. This has made crowdfunding an attractive option for digital health entrepreneurs, especially those with hardware components.

Thirty-eight digital health campaigns raised over $4.5M across Indiegogo, Kickstarter, Medstartr and Fundable thus far in 2013 (looking only at campaigns that have either closed or met their goal in 2013). The top six campaigns represented 75% of all crowdfunding dollars, with Scanadu’s medical tricorder taking the cake with over $1.2M (as of this post, the campaign is still taking backers).

Digital Health continues to be an exciting field where technology and healthcare, product and patient, do good and do well, meet.  We’re learning more about the business challenges and opportunities each quarter, and hope you enjoy our latest report.

 

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