Deals

Digital health startups have taken $2.2B in funding so far in 2014, already besting 2013 total (report)

health funding
Image Credit: Illustration by Eric Blattberg / VentureBeat

The digital health space has continued to heat up, and it’s looking like 2014 will be a big year for investment in the space.

A new Rock Health report says that halfway through 2014 more than $2.2B has been invested in digital health startups. That’s already more than the $1.97 billion invested in the space during all of 2013, and 2013 was a record year for funding in the space.

“We’re seeing a lot of tailwinds from healthcare reform,” Rock Health managing director Malay Gandhi told VentureBeat Monday. “Healthcare reform has put a lot of pressure on existing stake holders to reduce costs, and startups in the top categories have a direct effect on those pain points.”

The most active venture capital firms in the space were Qualcomm Ventures, Andreessen Horowitz, Bessemer Venture Partners, Emergence Capital, Google Ventures, Matrix Partners, and Venrock.

The largest funding deals so far in 2014 include NantHealth ($135 million), Flatiron Health ($130 million), Alignment Healthcare ($125 million), Proteus ($120 million), MedHOK ($78 million), Lumeris ($71 million), Zenefits ($67 million), and Doximity ($54 million).

Year over year, the amount invested in digital health startups grew by more than 160 percent, the Rock Health report claims.

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The funding deals got bigger, too. The average round in 2014 is more than $15 million, compared with an average size of $10 million last year, the report says.

California digital health startups have taken $891 million (nearly 40 percent) in 2014 digital health funding, continuing to dominate all other states. New York startups have taken $349 million in funding. Florida companies took $219 million. Massachusetts companies took $189 million.

Rock Health’s report also shows that crowdfunding for digital health companies has become less popular in 2014. Crowdfunding in the space was dominated by a single campaign that contributed more than 40 percent of the $2.6 million tracked by Rock Health in 2014 so far. Overall success rates of the crowdfunding campaigns were down 50 percent from last year, Rock Health says.