Q1 Digital Health Funding Breaks More Records

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Rock Health has published its Q1 2014 Digital Health Funding Report, which highlights investment activity that rises above the $2 million per deal threshold within the digital health sector. The report paints an exciting picture for those working in digital health, as a third consecutive year of record breaking first-quarters passes.

Backed by a new established track record of sustained VC funding growth in the sector, startups are zeroing in on health IT problem area’s and true innovation is, for what might be the first time, receiving widespread funding opportunities.

Coming out of the gate, January set an unprecedented pace to funding, with $390 million in new deals inked, representing the largest month of funding ever recorded. This funding included giant rounds by: Health Catalyst, which raised $41 million from existing investors; Kareo, which raised $29.5 million for its cloud-based ambulatory EHR solution; and TigerText’s $21 million round for its HIPAA-compliant text messaging platform for clinicians.

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The money continued to flow for the remainder of the quarter, with a total of $700 million committed, an 87 percent increase over Q1 2013. The quarter approached 2011’s year end funding levels, highlighting how far the digital health sector has come in just three years.

The biggest sectors were payer administration and big data analytics, both raking in north of $100 million in deals. Telemedicine and care coordination also fared well, with TigerText ($21 million), Voalte ($36 million), and Specialists on Call’s ($32 million) driving those sectors.

Three health IT companies went public this quarter: Castlight Health which grew 150 percent on its first day of trading and it a $3 billion valuation; Care.com, which climbed 40 percent on opening day; and Everyday Health, which has had a more stable entrance into the stock market but is currently trading slightly higher than its initial stock prick. All in all, the funding is there for startups, and it appears to be there in dividends for VC’s willing to wait out a sale or public offering.


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