COVID-19 has disrupted many facets of the global economy, but digital health venture capital (VC) funding nonetheless soared in the first half of 2020, with $6.3 billion in new investments—a 24 percent year-over-year increase.
Consulting firm Mercom Capital Group is previewing this data in advance of its upcoming 1H Digital Health Funding and M&A Report, which is set to be released on July 13. Notably, venture funding reached $2.8 billion during Q2 2020, an 11 percent decrease year-over-year compared to $3.1 billion raised in Q2 2019. But for the first half of the year overall, the $6.3 billion in new digital health investments favorably compares to the $5.1 billion raised 1H 2019, despite the COVID-19 pandemic disrupting the economy.
Healthcare practice-centric companies received 34 percent of the funding in Q2 2020, raising $947 million in 56 deals, and consumer-centric companies accounted for 66 percent of the funding, raising $1.8 billion in 105 deals, the data revealed.
“Adoption of digital health technologies and products have accelerated since the COVID-19 outbreak, which is reflected in the funding spike in the first half of the year. Telehealth hype has been backed by $2 billion in venture funding with no signs of slowing down,” Raj Prabhu, CEO of Mercom Capital Group, said in a statement. mHealth apps, analytics, wellness, and medical imaging were other areas that have received significant funding this year.
Indeed, the top-funded categories in the first half of 2020 included: telehealth with $1.9 billion; followed by data analytics with $826 million; mHealth apps with $794 million; clinical decision support with $545 million; healthcare service booking with $326; and wearable sensors with $321 million. Telehealth use has been skyrocketing at patient care organizations all across the U.S., and in March 2020 alone, private health plans saw a 4,300 percent year-over-year increase in telehealth claims.
Telehealth funding was distributed in 85 companies during the first half of 2020, and top VC deals in this sector included : $194 million raised by Amwell (formerly American Well); $155 million raised by KRY; $144 million raised by Zhiyun Health; $100 million raised by Mindstrong; and $93 million raised by Virta Health.
Digital health funding was distributed in 27 different countries in 1H 2020.
Interestingly, in an April report from venture fund company Rock Health, researchers stated that digital health funding got off to a great start early in the year, though many of those investments were made pre-pandemic. The firm’s researchers painted an uncertain digital health funding picture back in April, while noting that the COVID-19 epidemic has created “twin crises of a global pandemic and massive economic shifts that will rapidly impact all market sectors, including digital health,” adding that solutions in this space can “immediately combat the pandemic.”
Indeed, they contended that because digital health companies offer technologies that support the delivery of care virtually, scaling the medical workforce, and the acceleration of R&D for diagnostics and treatments, startups in this sector can be “uniquely positioned to play both an outsized role in ameliorating the immediate effects of the crisis and in driving sustained, positive changes in its aftermath. While other industries (or other segments within healthcare) must simply cope, some digital health companies are in the drivers’ seat,” the researchers said.
