Venture capital funding for digital health companies grew to $9.5 billion in 2018, up 32% from $7.2 billion in 2017, according to Mercom Capital Group, a global communications and research firm. However, the 698 deals done were 10% down from 778 the previous year.
The US continues to attract the vast majority of VC funding in digital health. Approximately $7 billion, 75% of VC money, flowed into US companies, up from $4.9 billion in 2017. Californian companies were the greatest beneficiaries receiving $2.9 billion in 134 deals, more than the $2.5 billion invested into non-US companies in 38 other countries.
Just over half the money, $5.2 billion was invested in consumer-focused companies, mostly mobile health and telehealth. Health information management was the largest category within practice-centric investments, and overall.
The largest deals were
- $300 million - 23andme
- $291 million - American Well
- $250 million - Butterfly Network
- $240 million - Heartflow
- $200 million - WuXi Nextcode
- $200 million - Helix
- $200 million - SomaLogic
"Venture capitalists' love of digital health companies is evident, but Wall Street is not yet convinced as more than 60% of publicly-traded digital health stocks traded below the S&P 500 in 2018," commented Raj Prabhu, CEO and Co-Founder of Mercom Capital Group. "Funding deals every year have significantly outpaced M&A and IPO activity and exits continue to be a big challenge for digital health companies."
The top VC firms in digital health were Khosla Ventures, NEA, Oak HC/FT, Blue Cross Shield, Box Group, GV, and Sequoia.