Digital Health Accelerators Find Expansion Opportunities In International Markets

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The US digital health ecosystem has undergone a dramatic transition over the last five years driven largely by stipulations found within the American Recovery and Reinvestment Act and Affordable Care Act that monetize the expanded use of health IT tools in care delivery. These regulatory changes have sparked an influx of new investment dollars from VC firms hoping to cash in on the next generation of must-have digital health tools. In 2011, the digital health industry attracted under $1 billion in VC investments, but by 2013 that number had doubled to $2 billion, and just a year later in 2014 investments spiked an additional 125 percent, bringing $4.1 billion into the sector by the end of the fiscal year. In response to this fresh capital, a digital gold rush climate emerged as health-focused accelerator programs sprang up across the country. Dozens of new organizations launched investment programs, and existing organizations expanded to offer larger classes in more locations.

Six months later, and it has become clear that investment activity has stabilized in the US. By the mid-year point, 2015 was on pace to match the $4.1 billion raised by digital health startups in 2014, but the once soaring plot line measuring funding growth over the years has plateaued. With health accelerators now up and running in most major US cities, organizations that missed the boat, or are hoping to continue expansions, are now turning toward international markets.

Johnson & Johnson’s innovation lab, JLABS, launched from its San Diego headquarters and now occupies campuses in San Francisco, Boston, and Houston. The company announced this week that its next expansion would be north of the border in Toronto, where it will open a 40,000 square-foot facility in the MaRS Discovery District. The new campus will be funded through a partnership between Johnson & Johnson, the University of Toronto, and the Ontario government, which will donate $19 million to help bring the new facility to Toronto.  Scheduled to open in spring 2016, the new campus will have enough space to host up to 50 startups.

In similar news, the investment arm of Johns Hopkins announces a new partnership with Luminox to co-launch an Israeli-based accelerator program. Johns Hopkins already runs a US-based accelerator program for digital health startups called the Hexcite initiative. In this partnership, Luminox will manage the recruitment and early development of startups in Israel, and selected teams will be sent to Baltimore to work with the team at Hexcite and executives at Johns Hopkins.


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