Digital Health: Funding Still on Upward Trajectory in USA

By July 05, 2013
Digital Health:  Funding Still on Upward Trajectory in USA

Unsurprisingly, a report on digital health funding for the first half of 2013 shows that investment in this sector is still on the rise.

In spite of an overall slowdown in the growth rate, funding for digital health in the United States increased by 12% in the first half of the year, with a total of $849 million investedbetween January and June 2013. Similarly, first half 2013 showed a 25% rise in deal volume compared with the same period in 2012. These are among the figures published by health sector incubator and resources provider Rock Health, in its 2013 Midyear Digital Health Funding Update.  As many as 90 digital health companies have each raised over $2 million in 2013. Among these firms, 31% are based in the state of California, nearly double the number of those in Massachusetts (9%) and New York (8%) combined. The five biggest deals done during this half year account for 20% of all funding raised, the report reveals.

Funding pattern: new services up, traditional services declining

Following the trend shown in Rock Health’s end 2012 report, funding for traditional healthcare products and services continues to fall.  The incubator’s analysis of Q1 2013 funding shows a 2% decline in investment in biotechnology and a 29% drop in medical device funding. By contrast, the figures indicate a 12% increase in investment in overall digital health, with a 38% increase in financing for related software. Up to mid-year 2013, several emerging themes comprise approximately half of all funding. Among these new services are remote patient monitoring (with 12 deals representing $102 million), hospital administration (8 deals totalling $79 million), Big Data (7 deals raising $78 million), Electronic Health Records (8 deals amounting to $69 million) and wellness (6 deals for a total of $62 million).

Healthcare development increasingly linked to crowdfunding

Among the companies enjoying the greatest success in this field are firms that offer a tangible product monitoring personal health. Examples are amiigo, with its Android and iPhone compatible fitness bracelet; and Scanadu, whose device reads a person’s vital signs and sends them to his/her smartphone. Both these projects have been financed through crowdfunding.  In fact there is an increasing trend for entrepreneurs setting up digital health businesses, who tend to face a lack of capital from the very outset, to make use of the crowdfunding approach.  In the last two years theindiegogo platform has seen an increase of 2,779% for healthcare-related campaigns.  In the same vein, in one year AngelList has seen a rise of 272% in funding for health sector startups. In addition to these general crowdfunding platforms there are a number of others which actually specialise in health, such as Health TechHatch, HealthFundr, MedStartr and VentureHealth. In total, thus far in 2013, over $4.5 million has been raised to fund 38 digital health care projects, the Rock Health update reveals.

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