Technology development is expensive, and there are no guarantees that a company will be a financial success. Still, money continues to flood into the digital health industry, according to a new report from Rock Health, a venture capital fund dedicated to encourage technology projects aimed at improving healthcare.
The new report, “2016 YTD digital health funding: 10 things you should know,” offers insights into the investments made throughout the industry so far this year. To date, the total dollar value of the deals is in line with last year’s numbers, indicating a steady level of investment. One of the interesting details is that wearables captured the third-highest amount of investment so far this year — $263 million — largely as the result of a $165 million deal for further funding for Jawbone. Digital medical devices captured $202 million in new funding, but this was apparently spread over more companies as the largest deal in this section was $50 million for Proteus Health. The leading area of investment was analytics and Big Data, gaining $339 million overall.
People tend to view the digital health industry as a hotbed of startups and entrepreneurial energy. While that may be true, it is interesting to note that the six companies that garnered the six largest deals so far in 2016 — combining for about one-third of all investment deals in the sector — are 10 years old on average. This could indicate that the segment is not so new as we might like to think, and there are already companies established in several of the niches that could make it more difficult for newcomers to succeed.
The bottom line is that there is still money available to help companies grow, but investors are watching carefully and not anxious to raise the stakes significantly. That’s still good news for the industry, as we begin to see some of the promised returns that digital health solutions have to offer.