A review of venture capital funding of digital health companies in 2013, totaling $849M through June (Q2). This report covers the major companies, investors and trends in digital health that are emerging in 2013. Purchase this report here: https://gumroad.com/l/TgefY
2013 Midyear Digital Health Funding by @Rock_Health
1. A R O C K R E P O R T B Y
2013MIDYEAR
DIGITAL HEALTH FUNDING
2013 JULY 1
2. ABOUT
REPORT
this We have been tracking data for the previous 181 days for the 2013 Midyear Funding Report,
going deeper than ever before and expanding our review to include crowdfunding. This
comprehensive view provides a look into the companies, investors, and trends in digital health
in 2013. Not to our surprise, funding growth has continued, overall. We’re delighted to see so
many people working together to bring transformation to healthcare through technology.
This report sources data from Capital IQ, SEC, company websites, CrunchBase, NVCA and the Rock Health
funding database.
LEARN MORE AT
rockhealth.com
PRODUCED BY WITH HELP FROM
HALLE TECCO
@halletecco
MALAY GANDHI
@mgxtro
DANIEL AXELSEN NEA
KYRA DEETH-STEHLIN Rock Health
ERIN TRIMBLE Rock Health
ELISE XU Rock Health
ROCK HEALTH is powering the future of the digital health ecosystem, bringing together the brightest
minds across disciplines to build better solutions. Rock Health funds and supports startups building
the next generation of technologies transforming healthcare.
ROCK HEALTH partners include Alexandria Real Estate Equities, Boehringer Ingelheim, Fenwick & West,
GE, Genentech, Harvard Medical School, Kaiser Permanente, Kleiner Perkins Caufield & Byers, Mayo
Clinic, Mohr Davidow Ventures, Montreux Equity Partners, NEA, Ogilvy Public Relations, Qualcomm
Life and UCSF.
3. | PRESENTATION Ⓒ 2013 ROCK HEALTH
DIGITAL HEALTH FUNDING IS UP 12% IN THE FIRST HALF OF
2013; HOWEVER, GROWTH IS SLOWING OVERALL
3
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
$216
$312
$365
$533
$670
$849
2012
Cumulative funding in millions through June 30, 2013
2013
Note: Only includes companies that received $2M+ in venture funding
$757
$343
2011
$1,401
$890
25% more deals in
2013 versus 2012
4. | PRESENTATION Ⓒ 2013 ROCK HEALTH
TRADITIONAL VENTURE FUNDING OF HEALTHCARE
CONTINUES TO DECLINE
4Source: PwC Money Tree; based on Q1 2013 (latest data available)
Medical devices
HEALTHCARETECH
Change in Q1 2013 funding versus prior year quarter
Biotechnology
Digital healthSoftware
All sectors
+12%
+38%
-2%
-29%
-6%
5. | PRESENTATION Ⓒ 2013 ROCK HEALTH5
90 digital health companies
each raised $2M+ in 2013
Gamgee
6. | PRESENTATION Ⓒ 2013 ROCK HEALTH
THE LARGEST FIVE DEALS OF 2013 YTD
REPRESENT 20% OF ALL FUNDING
6
personalizing therapy by
connecting it to your
mobile phone
solving healthcare data
warehouse issues for
health systems
diagnosing and treating
sleep disorders through
an end-to-end service
incubating multiple
advanced technologies to
improve healthcare
connecting millions of
people with trusted health
information and doctors
$45M $41M $32M $31M $24M
Oracle, Otsuka
Pharmaceuticals,
Novartis
CHV, KP Ventures,
Norwest, Sequoia,
Sorenson
John Sculley, Rho
Capital Partners, South
Ocean Growth Equity
Undisclosed Asset Management
Ventures, Khosla
Ventures, Mayfield
Fund, Mohr Davidow
Ventures
7. | PRESENTATION Ⓒ 2013 ROCK HEALTH
EMERGING THEMES OF 2013 COMPRISE APPROXIMATELY
HALF OF ALL FUNDING YEAR-TO-DATE
7
REMOTE PATIENT MONITORING
$102M
12 deals
HOSPITAL ADMINISTRATION
$79M
8 deals
ANALYTICS / BIG DATA
$78M
7 deals
EHR
$69M
8 deals
WELLNESS
$62M
6 deals
010000100110
100101100111
010000001100
100011000010
111010001100#
Administrative, clinical, ‘omics, and/or passive data aggregation
and analysis for a wide range of use cases and customers
Monitoring and information capture for patients in situations where
care provider and patient are not physically nearby
Management and administration tools for running the
business of a hospital
Clinical data capture (general or
specialty-specific) and surrounding
ecosystem of applications
Services designed to improve the
health and well-being of
individuals or employeesNote: Only includes companies that received $2M+ in venture funding
8. | PRESENTATION Ⓒ 2013 ROCK HEALTH
MOST SILICON VALLEY-BASED DIGITAL HEALTH COMPANIES
HAVE EXPERIENCED UP ROUNDS SINCE 2012
8
60%
40%
62%
88%
74%
75%
Directional round to round price change for Silicon Valley technology companies (2012-Q1 2013)
47%
51%
57%
73%
81%
91%DIGITAL HEALTH
SOFTWARE
INTERNET; NEW MEDIA
HARDWARE; ELECTRONICS
LIFE SCIENCES
CLEANTECH
2012 Q1 2013
Up Flat Down
Note: These charts reflect the average percentage change between the price per share at which companies raised funds in a quarter, compared to the price per share at which such companies raised funds in their prior round of financing. In calculating
the average, all rounds (up, down and flat) are included, and results are not weighted for the amount raised in a financing. This data was derived from Fenwick & West’s quarterly Silicon Valley Venture Capital Survey (www.fenwick.com/vcsurvey).
9. | PRESENTATION Ⓒ 2013 ROCK HEALTH
THE BAY AREA DOMINATES VC FUNDING IN DIGITAL HEALTH
9
No investment
>$0-25M
>$25-100M
>$100-250M
>$250M
# of deals5
3
23
5
3
8
Total funding by state (2013 YTD)
6
3
3
4
4
Note: Only includes companies that received $2M+ in venture funding
10. | PRESENTATION Ⓒ 2013 ROCK HEALTH
2-3 DEALS
IN 2013
10
One of the top areas for me was healthcare, just
because every interaction in every area related to
health is just so shitty... there is a lot of value that
people like us can add because you have a very
different perspective on how the system should
work.”
LESS DABBLING, MORE COMMITMENT FROM INVESTORS
5 DEALS IN 2013
“
-CHAMATH PALIHAPITIYA FOUNDER AND MANAGING PARTNER
There is a general awareness among institutional and
strategic corporate investors that this health vertical is
very important going forward.”
“
-PROMOD HAQUE PARTNER
4 DEALS IN 2013
Note: Only includes companies that received $2M+ in venture funding
11. | PRESENTATION Ⓒ 2013 ROCK HEALTH
PROGRESS CONTINUES AS A NUMBER OF COMPANIES
MATURED TO C-ROUND DEALS
11
A
42%
B
31%
C
19%
D
6%
E+
3%
A
39%
B
34%
C
16%
D
6%
E+
6%
Three 2012 A-round
companies have raised a B-
round in the first half of 2013
Seven 2012 B-round
companies have raised a C-
round in the first half of 2013
2012
2013
Percentage of deals by financing round (2012-2013)
12. | PRESENTATION Ⓒ 2013 ROCK HEALTH
WITH A DEARTH OF SEED FUNDING ($500K-$1M), EARLY STAGE
ENTREPRENEURS TURN TO CROWDFUNDING FOR CAPITAL
12
increase in
health campaigns
from Q1 2011-Q2 2013
increase in health
startup profiles
in the last year
Source: Indiegogo, AngelList
CROWDFUNDING PLATFORMS
Kickstarter
Indiegogo
appspllt
Rally.org
FirstFunder
BountySource
RocketHub
HealthTechHatch
MedStartr
REWARDS-BASED EQUITY-BASED
AngelList
Fundable
SecondMarket
RockThePost
CrowdCube
CircleUp
SeedUps
HealthFundr
VentureHealth
HEALTHCARE-SPECIFIC
2779%
272%
13. | PRESENTATION Ⓒ 2013 ROCK HEALTH
PERSONAL HEALTH TRACKING COMPANIES WITH A PHYSICAL
PRODUCT HAVE BEEN AMONG THE MOST SUCCESSFUL
13
$
1,270,024 $
846,675 $
580,809 $
580,000 $
135,000
Scanadu Scout:
the first Medical Tricorder
Misfit Shine: an elegant,
wireless activity tracker
Amiigo: fitness bracelet for
iPhone and Android
Radiate Athletics: advanced
workout shirt
HAPIfork: eat slowly, feel
better
Note: As of June 28, 2013
14. | PRESENTATION Ⓒ 2013 ROCK HEALTH
BUT HEALTHCARE-SPECIFIC PLATFORMS HAVE YET TO
COMPETE WITH BROADER CROWDFUNDING SITES
14*Only includes campaigns that were successful or completed in 2013 (as of June 28, 2013)
2013 DIGITAL
HEALTH CAMPAIGNS*
successful
failed
AVERAGE AMOUNT
RAISED AND TOP
CAMPAIGN
$3K
$158K
$136K
$1.2M
CROWDFUNDING in healthcare
isn’t easy—Health Tech
Hatch turns to Indiegogo to
make it work”
“
$580K $5.8K
15. | PRESENTATION Ⓒ 2013 ROCK HEALTH
ELECTRONIC HEALTH RECORD COMPANIES HAVE BEEN
ACTIVE ACQUIRERS IN THE FIRST HALF 0F 2013
15
DBMOTION
Connected healthcare and
interoperability platform ($235M)
JARDOGS
Cloud-oriented patient
engagement (Undisclosed)
EPOCRATES
Point-of-care mobile application
for physicians ($293M)
LABOTIX AUTOMATION
Clinical laboratory automation
(Undisclosed)
PUREWELLNESS
Employee wellness programs
(Undisclosed)
100PLUS
Personalized health prediction
platform (Undisclosed)
16. | PRESENTATION Ⓒ 2013 ROCK HEALTH16
MBA
PhD
MD
Masters 6%
11%
13%
21%
CEO educational background
CEO
gender
95
5
WOMEN CONTINUE TO BE
UNDER-REPRESENTED AS
DIGITAL HEALTH CEOS
%
%
Note: For companies funded in 2013
17. | PRESENTATION Ⓒ 2013 ROCK HEALTH
SUMMARY
FINDINGS
of Funding of digital health companies continued to grow overall, totaling $849M in the first half of 2013.
Funding in the first half of 2013 represents 12% growth in investment and 25% growth in deals
YoY. For comparison, overall VC funding in the first quarter of 2013 (latest data available) is
down 6% YoY (source: PwC MoneyTree). Additionally, venture funding of traditional healthcare
continues to decline, medical device funding is down 29% and biotech is down 2%; software
is up 38% (source: PwC MoneyTree).
90 digital health companies each raised more than $2 million dollars in the first half of 2013.
Of these companies, 31% are located in California, nearly double that of the next two states
combined, Massachusetts (9%) and New York (8%).
Four investors made three or more digital health investments in the first half of 2013.
The Social+Capital Partnership led the way with five digital health investments, followed closely
by Norwest. There were no co-investments by these two firms, demonstrative of a divergent
focus in digital health investing among the most active investors. 146 identified investors
participated in 1-2 deals each.
With few seed investors ($250K-$1M range), crowdfunding has become an attractive option for digital
health entrepreneurs.
There were a total of 38 digital health campaigns across Indiegogo, Kickstarter, Medstartr, and
Fundable. Over $4.5M was raised through completed or continuing crowdfunding campaigns
in the first half of 2013. The top six campaigns represented 75% of all crowdfunding dollars
raised in the first half of 2013. About 40% of campaigns that closed in the first half of 2013
failed to meet their goals.
17
18. | PRESENTATION Ⓒ 2013 ROCK HEALTH
ROCK HEALTH PORTFOLIO
18
2012 2013
June-November 2011 January-May 2012 October 2012-February 2013
2014
V1 V2 V3 V4 V5
June-August 2012 June 2013-September 2013