The pace of innovation in Healthcare Information Technology, aka Digital Health, has speeded up over the last six months. Investors have been particularly attracted to consumer-focused technologies.

Digital Health Continues to Attract Investment Ahead of Other Sectors

Despite an overall slowdown in venture capital funding in the United States, investment in Digital Health technologies has continued to rise. During the last six months $1.12 billion has been injected into the sector, an increase of 65% compared to first-half 2012. A report on Healthcare IT venture capital funding and Mergers & Acquisitions activity published by global communications and consulting firm Mercom Capital Group estimates that this figure is likely to reach $2 billion by the end of the year. CEO Raj Prabhu underlined that the US government’s initiative to open up healthcare data for use by businesses has contributed to the surge in activity and investments in this sector.

A switch towards consumer-focused technologies

The report reveals that there was a major turning point in the first quarter of 2013, which saw venture capital players stepping up their investment in consumer-focused Health IT technologies, where $416 million was raised in 112 funding deals, with less interest in providers of health-practice technologies, for which $207 million was raised in a total of 56 funding deals. Mobile apps, portable devices, sensors and remote monitoring for consumer-patients were the service areas that attracted the largest investments. Proteus, a Californian digital health feedback system provider, was the top beneficiary, raising $45 million.

Health-specific crowdfunding platforms have less appeal

In the same vein, another report published by the Rock Health accelerator confirms the increase in Digital Health startup financing in the United States. Rock Health says that the hottest trends – which account for nearly half of the funding tracked – are remote patient monitoring, analytics and big data, hospital administration and electronic health records. Interestingly, the report also points out that while crowdfunding is emerging as a powerful channel for early-stage Health startups, the funding platforms specifically dedicated to the Healthcare sector have not gained the same traction as general crowdfunding sites.

By Ruolin Yang