SAN FRANCISCO – Data from the third quarter show that 2018 is already the most-funded year in digital health startup investing, according to a recent report from Rock Health.
This stunning activity level is partly the result of digital health technology proving itself in the industry, said Todd Saxton, associate professor of strategy and entrepreneurship at the Indiana University Kelley School of Business.
“Overall, the market is moving up the S curve of innovation from a large number of largely untested apps to a proven set of scalable ventures who are winning—but need funding to continue that trajectory,” he said. “Those ventures that have survived the early part of the S curve are seeing real growth and getting investment reflects that.”
Investors put up $3.3 billion in digital health venture funding over 93 deals during Q3, bringing the total year-to-date funding to $6.8 billion, according to the report. That figure exceeds 2017’s total by more than $1 billion.
Larger deals rather than the number of deals also account for the jump in funding, the report found. The average deal size so far is $23.6 million, and 10 companies have raised funding of more than $100 million so far this year, including chronic disease management company Livongo.
Across the first three quarters of 2018, companies offering on-demand health care services as a primary value proposition attracted the most funding, the report found. Other most-funded value propositions included: fitness and wellness; disease diagnosis; consumer health information; disease monitoring; and disease treatment.
“While there is still consumer demand for in-person provider relationships, there is an increasing focus on companies that connect patients (and patient data) with providers and care in more continuous, accessible, convenient ways,” wrote Megan Zweig, director of research at Rock Health, in the report.