The third quarter of 2018 was the biggest funding quarter for digital health ever, according to StartUp Health Insights. The research group attached to healthcare startup alliance StartUp Health reported $4.5 billion in digital health funding.
With $11.1 billion invested so far, investment is only $600 million short of last year’s overall total, even including the fourth quarter.
The top five deals of the quarter were Peloton’s $550 million round, Oscar Health’s $375 million, Grail’s $300 million, 23andMe’s $300 million and American Well’s $290 million. The most active investors were Khosla Ventures with 13 deals, while Founders Fund, NEA and F Prime had 10 each.
Why it matters
In addition to the broad takeaway of more funding than ever, StartUp’s report also showcases some other interesting investment trends.
International digital health companies are raising more money, especially those based around Beijing, China, which saw $863 million raised and fostered five of the top 10 international deals. Three other Chinese cities, Zhenjiang, Shanghai and Hangzhou, did $100M or more in deals.
While there is still plenty of seed and early funding, late-stage funding is making up a larger part of the pie every year. Forty-three percent of deals were series B through F, the highest percentage since 2010.
Patient empowerment was the biggest category with 149 deals, followed by wellness with 64 deals and biometric data acquisition with 50 deals.
Digital health is certainly not mobile health anymore. Web app-oriented companies raised $4.4 billion, most of the total, while mobile app companies raised $2.9 billion.
What’s the trend
StartUp Health is one of a handful of companies that tracks digital health funding on a quarterly basis. The numbers tend to fluctuate because different groups define the category differently.
Rock Health’s recent report put funding for the quarter at a more modest $3.3 billion, but its analysis of the trends — the biggest quarter ever, fueled by larger-sized deals, lined up.
On the record
“Q3 was the largest digital health funding quarter in the history of our industry. We’re building toward another record year, definitely on track to be the largest year as well,” Katya Hancock, StartUp’s director of strategic partnerships, said at the Digital Health Innovation Summit today in Boston. “We’re seeing more follow-on investments and later stage deals and a steady increase of unique investors — so more people coming into the space and an increase in deal sizes.”