Though funding slowed from the $2B per quarter pace in the first half of the year, digital health companies raised $1.3B in venture capital in Q3 2019 for a total of $5.5B in the year to date. This puts the sector on track for the second largest funding year ever. As in 2018, large deals continue to drive the overall trend. In this market update we discuss public market performance of the five 2019 digital health IPOs (early results are mixed) and two hot areas of investment: behavioral health and women’s health.
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Digital health funding levels off after 2018’s high water mark
Digital health venture funding remains near all-time highs. Startups in the sector are on track to raise an estimated $7.3B by the end of the year—1.3X more than 2017, though short of the record $8.3B invested in 2018.
As with the overall VC industry, large deals are driving the funding trend in digital health. Investors are placing bigger bets on a small number of companies—average deal size in 2019 is $20.9M, up 32% from 2017 and in line with 2018’s $21.7M average deal size. Meanwhile, we anticipate the number of digital health deals in 2019 will be 5-10% lower than in 2018—potentially the first time deal count has declined year-over-year since we began tracking in 2011.
Date: October 08, 2019
Source: Rock Health