Digital health companies raise $2B in Q1, on record pace

Steven Loeb · May 27, 2016 · Short URL:

The space is on track to see dollars rise 40% to $8.1 billion in 2016

If you were thinking of starting a digital health company, now is the time to do it, as that space is taking off like a rocket this year so far.

Digital health companies have generated over $2 billion in funding in the first quarter of this year alone, according to data out from CB Insights, representing a third of all the funding the space saw in 2015.

If the numbers continue going this year, the digital health space will see $8.1 billion invested, a 40 percent increase from $5.8 billion invested last year, and 1.264 deals, a 23 percent increase from 1,025 deals in 2015. This will be the fifth straight year, at least, in which both dollars and deals in digital health companies increase. 

It also  means that this year is currently on pace to easily best the previous record in both funding and deals, which also happened to be set in 2015.

The rash of funding has been so far driven by three mega-rounds, meaning they were at least $100 million: Oscar Health, which raised $400 million; Flatiron Health, which raised $175 million; and Jawbone, which raised $165 million in January.  The round that Oscar raised represented nearly a fifth of the total dollars invested into the space in the first quarter.

Even with those big, late-stage rounds, the majority of deals were still in the earliest stages, with seed and angel funding making up 52 percent of all deals during the quarter. That is up from 44 percent of deals in 2015.

Meanwhile, late stage deals have bee decreased, with only 5 percent in Q1, down from 7 percent in 2015.

CB Insights also took a look at where these deals are happening, and it was no surprise that California was first by a lot, with 54 deals. New York came in second with 35 deals, including the big rounds in Oscar and Flatiron; those two deals are partially what drove investments in the New York City ecosystem up 73 percent in Q1.

Other New York digital health companies that raised money include Hometeam, which raised $5 million; LifeBeam, which raised $16 million; and AiCure, which raised $12.25 million. 

Texas came in third with 17 deals, while Massachusetts saw 14, Illinois had 11, Pennsylvania had 10, and Maryland and Colorado both saw seven deals in the first quarter. 

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