It is apparent that 2014 will be an enormously successful year for the digital health industry. Investments made in the first half of 2014 have already exceeded the total investments of 2013. A report published by Rock Health says that about $2.2 billion has already been invested in digital health startups. In comparison, total investment in 2013 was $1.97 billion. Incidentally, the previous year made it to the records for highest funding in the sector.
Positive signs and causes
According to Malay Gandhi, the Managing Director of Rock Health, the industry is observing a lot of positive impetus due to reforms in healthcare. This has placed a huge pressure on the existing stakeholders for lessening expenses and top startups are feeling the direct pain of it.
The venture capital companies which exhibited maximum activity were Bessemer Venture Partners, Venrock, Google (NASDAQ: GOOG) Ventures, Andreessen Horowitz, Matrix Partners and Qualcomm (NASDAQ: QCOM) Ventures. The biggest funding deals til now include Flatiron Health ($130 million), Doximity ($54 million), NantHealth ($135 million), Proteus ($120 million), Zenefits ($67 million), Lumeris ($71 million), Alignment Healthcare ($125 million) and MedHOK ($78 million). According to the report published by Health Rock, the quantum of money invested every year increased by almost 160 percent. Funding deals are also getting larger. A median round of funding in 2014 is approximately $15 million. In 2013, it was $10 million.
Environment and crowdfunding
Among states, California continued to dominate all others, with startups in digital health cornering $891 million this year. Startups from New York have garnered $349 million and Florida's got $219 million. About $189 million funding was sent to Massachusetts companies.
The report by Rock Health reveals that the crowdfunding in the digital health space has lost its erstwhile popularity. Only one crowdfunding campaign was notable among the few that actually happened. It contributed almost 40 percent of $2.6 million noted by Rock Health until now. On an empirical basis, the rates of success of crowdfunding campaigns decreased by almost 50 percent in 2014.
There is a good reason for this: Crowdfunding sites like Kickstarter are reluctant towards offering digital health products. In fact, health products in the digital space are placed alongside other less than desirable categories like hate speech, politics and pornography. More particularly, the sites are not interested in any kind of item which claims to prevent, treat or cure any condition or illness through any device or other ways. This includes books, device, apps and nutritional supplements.