A R O C K
R E P O R T B Y 2012A YEAR IN REVIEW DIGITAL HEALTH FUNDING 2013 JAN Annual funding report

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 Aberdare Ventures, Accel Partners, Genentech, Harvard Medical School, Kaiser Permanente, Kleiner Perkins Caufield & Byers, Mayo Clinic, Mohr Davidow Ventures, Montreux Equity Partners, NEA, Nike, Qualcomm, Silicon Valley Bank, UnitedHealth Group, and UCSF. For more information, visit rockhealth.com About REPORT For our 2012 Year End Funding Report, we have compiled more data than ever before so you can get a better look into digital health funding. The findings reinforce our positive outlook and excitement for the potential of technology to transform healthcare. This report sources data from Capital IQ, SEC, company websites, CrunchBase, NVCA and the Rock Health funding database. Produced by this Halle Tecco @halletecco Malay Gandhi @mgxtro Edison Chang, NEA Nick Mathers, KickLabs Amy Puliafito, Rock Health With help from:

January February March April May
June July August September October November December $69 $229 $269 $356 $583 $765 $797 $1,029 $1,115 $1,209 $1,289 $1,413 $5 $47 $167 $250 $305 $390 $459 $581 $638 $740 $810 $968 2012 2011 Cumulative funding in millions VC funding of digital health grew significantly in 2012 46% more money 56% more deals compared to 2011 Note: only includes companies that received $2M+ in venture funding

Digital health funding has grown
in the face of declining investment in traditional healthcare Source: PwC Money Tree (updated from previous version on 1/19/2013 to reflect full year data versus TTM through Q3 2012) YoY change in funding (2012 versus 2011) Digital health Medical devices +46% -13% -10% All sectors -15% Biotechnology Software +10% Tech Healthcare

134 digital health companies each
raised $2M+ in 2012

Four common themes representing more
than 1/3 of all deals emerged during 2012 Hospital administration Managing the business of a hospital $78M Personal health tools and tracking Tracking individual health with products and tools $150M Capturing clinical information and surround applications EMR / EHR Health consumer engagement Helping consumers with healthcare purchases $237M $108M

25 50 75 More than
half of the deals in 2012 were rounds of $5M or greater $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $100 Number of deals by amount raised (in millions) Series A: $3.8M All deals: $6.0M Series B: $8.4M Series C: $10.5M Series D or higher: $19.0M Median raise Note: only includes companies that received $2M+ in venture funding

enables employees to compare costs
and quality of healthcare services $100M T. Rowe Price, Redmile Group $50M Norwest Equity Partners health insurance comparison website $50M Institutional Venture Partners, Matrix Partners, NEA and Trinity Ventures online marketplace for families to find caregivers $58M Google Ventures, NEA making the human genome searchable The largest five deals of 2012 represent more than 20% of the entire year’s funding $45.5M Brown Brothers Harriman arms employees with access to expert physicians to help make decisions

Deals by series (2012) A
B C D or higher 43 34 16 A strong funnel of deals has formed in the space, potentially leading companies to IPO Interwest Partners asked: Who will be the next digital health company to IPO? Top 3 companies identified by respondents Raised $34M Series C Raised $100M Series D 11 Note: only includes companies that received $2M+ in venture funding Raised $75M Series C (2011)

While 179 organizations invested in
digital health companies, most only did a single deal 1 2 3 4 5 6 Number of deals by each investor (2012) 0 8 34 179 investors #ofdeals Note: only includes companies that received $2M+ in venture funding

Qualcomm Ventures Aberdare Ventures Merck
Global Health Innovation Fund NEA West Health Investment Fund BlueCross BlueShield Venture Partners Council Capital Khosla Ventures Just eight investors made three or more digital health investments in 2012 Note: only includes companies that received $2M+ in venture funding

27 20 6 7 7
5 5 5 The hubs for digital health investment have been established in the Bay Area and Boston No investment >$0-25M >$25-100M >$100-250M >$250M # of deals Total funding by state (2012) 5 Note: only includes companies that received $2M+ in venture funding

$900K Keith Rabois, angels $1.0M
KPCB, MDV, Aberdare, Mayo, Morado, S-Cubed, Rock Health “Six Figures” Dalmore Investments connects people with mental health providers for online counseling & psychiatry brings trainers and clients together for training sessions over live, two-way video mobile platform for first responders and the hospitals they serve $1.3M Undisclosed connects parents with their children’s doctors Also, some notable startups have raised seed funding during 2012

Funded digital health companies have
significant talent needs 10% 20% 30% 40% 50% 1-10 11-50 51-200 201-500 Distribution of digital health companies by size (employees) Source: LinkedIn, company websites (as of December 21, 2012) 600+total positions are open across the companies number of employees Other Sales / Acct Mgmt Product / Marketing Business / Ops Engineering / IT 33% 32% 13% 12% 10%

Women remain underrepresented as CEOs
of digital health companies Bachelors MBA Masters PhD MD JD 37% 32% 15% 8% 5% 3% CEO educational background CEO gender 93% 7%

Presentation copyright © 2013 Rock
Health @rock_health research@rockhealth.org Want more data? • Full list of 2012 deals • Funded company information • List of deals by investor visit: rockhealth.com/research