2016 is on track to be a big year for digital health funding with almost $2.4 billion in deals in the third quarter alone and funding to date already surpassing 2015’s total funding of $6.1 billion, according to a report from StartUp Health.
Year to date, digital health funding in 2016 now stands at $6.5 billion with 394 deals, according to StartUp Health Insights Digital Health Funding Rankings 2016 Q3 report. So far, funding in the third quarter of 2016 has surpassed total funding for 2010 and 2011 and is on par with total funding of 2012. In the past six years, the best year for digital health funding was 2014 with $7.1 billion and 574 deals, according to StartUp Health’s report.
The report includes international digital health funding deals, and the third quarter of 2016 has seen some of the largest deals to date, such as Ping An Good Doctor and Onduo, both $500-million-dollar deals. Ping An Good Doctor focuses on bringing medical services to the greater Chinese market via mobile. A $500 million investment by Google and Sanofi in Onduo marks a collaboration to tackle diabetes one of the world’s greatest chronic disease challenges.
“Even the smallest deals from Q3 rival the largest deals from previous years,” the report authors wrote.
Other notable digital health funding deals in Q3 include babytree with a $448 million investment, Oscar with a $400 million investment, Human Longevity Inc. with a $220 million investment and Flatiron with a $175 million investment.
The top-funded subsector currently shows a continued push towards patient/consumer experience with $2.5 billion in funding so far in 2016 and 1010 deals, almost triple the total funding of the second-most active focus area. “Even if you exclude the two $500 million deals in patient/consumer experience, it still remains the top funded market in digital health,” the report authors wrote. The second-most-active focus area is Wellness with $918 million in funding, followed by personalized health with $634 million.
Digital health deal flow and funding continues to be significant in the San Francisco Bay area in the Northeast. These regions have yielded 142 deals (36 percent of all deals) and approximately $2.7 billion in funding year-to-date (42 percent of all funding). In the Bay area alone, there have been 79 deals totaling $1.2 billion. The New York City metro area and Boston have a combined 63 deals worth almost $1.6 billion.
“While the coasts continue to attract the majority of capital in digital health, “We are seeing deal counts pick up this quarter in places like Minnesota, Tennessee and Florida. New ecosystems new ecosystems are slowly growing and investors are increasingly supporting startups from places that previously have been overlooked,” the report authors wrote.
More than 500 unique investors have deployed capitol into digital health so far this year, and 140 investors have invested in multiple deals, which points to a diverse investor ecosystem.
According to the report, the digital health sector is in its first save of innovation, with much of the activity still at the earliest stages. “With several significant deals this quarter, and year, both in the U.S. and globally, expect to see more breakouts as the market matures and we enter a second wave of health innovation,” the report authors wrote.
