Investment in Digital Health Triples Over Past Year

It's not just mobile health (mHealth) that is growing fast. The overall digital health sector - which includes mHealth, B2B apps and consumer services such as ZocDoc - is also rapidly expanding. That's if venture capital funding is anything to go by. A report by financial services company Burrill & Company states that private financings in digital health more than tripled in the first half of 2012. This follows a June report from nonprofit foundation Rock Health that showed "skyrocketing" VC funding in the sector.

According to Burrill & Company, digital health investments "grew to $499 million in 46 transactions during the first half of the year, compared to just $156 million in 19 transactions for the same period in 2011."

The 2012 figure was boosted by four significant funding deals. Healthcare pricing consumer information service Castlight Health raised $100 million financing in May, web-based home healthcare software provider Kinnser Software $39.9 million in March, electronic health records provider Practice Fusion $34 million financing in June, and telehealth provider American Well $37 million financing also in June. That's $211 million in funding in four digital health startups; more than the entire funding amount in digital health over the first half of 2011.

Burrill & Company notes that the growing venture investment in digital health is part of "an overall pick-up in venture activity in the first half of 2012 within the life sciences sector," which grew nearly 31 percent globally to $6.2 billion.

Rock Health included more companies in its digital health index, leading to a larger figure of $675 million in digital health funding over the first half of 2012. Its data is sourced from CapitalIQ, CrunchBase, NVCA and the Rock Health funding database.

Rock Health sees four main themes in digital health investment:

  • Physician Tools
  • Sensors
  • Home Health
  • Data

Over the rest of the week, we'll profile an example startup from each of these four themes.