Digital Health Funding Maintains 2014 Pace Through Q2 2015


Rock Health publishes its mid-year digital health funding report, looking back on investment activity, as well as mergers and acquisitions, though the first half of 2015. In total, digital health startups have raised $2.1 billion in fresh capital so far this year, maintaining the investment levels seen throughout 2014. While it does not look like 2015 will break the unprecedented growth seen in 2014, it should be taken as good news for entrepreneurs that investments into the sector have continued at an aggressive pace.


While total investment dollars are near identical to those seen in 2014, the distribution of investments has taken on a slightly different pattern. Seed and Series A rounds continue to make up more than 50 percent of the deals thus far; however, Series B rounds have increased to 22 percent of total deals, up from 18 percent in 2014. Series C rounds are also up, while Series D rounds have dropped off significantly. Average individual deal size grew from $10 million in Q1 2015 to $15 million in Q2, beating out 2014’s average size of $14.6 million.

In total, 136 startups have closed funding rounds north of $2 million this year. Wearables raised the most in new funding, led by Jawbone, which closed a $3oo million funding round. Analytics, patient engagement, telemedicine, employer wellness, and EHR optimization startups rounded out the six most funded startup profiles. Collectively, startups operating in these categories received more than 50 percent of the total funds invested.

There has also been a notable uptick in exits in 2015, a good sign for the industry and indication that investment dollars spent in digital health are returning dividends to VCs engaging with the market. Four digital health companies have gone public so far this year. Evolent Health raised $196 million in its IPO, followed by Fitbit, which raised $732 million and saw stock prices jump 50-percent on its first day of trading. Teladoc raised $157 million through its IPO, and also saw 50 percent stock price growth during its first day of trading. Mergers and acquisitions are also up, with 92 deals in just the first half of 2015, compared to 95 total deals in all of 2014. Publicly traded health IT companies are also outperforming on the NYSE, beating out the S&P by a significant margin.

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