Data analytics tops venture capital investment in first quarter

Register now

Data analytics is drawing the most venture capital dollars from investors who are putting dollars in healthcare technology, gaining $557 million in the first quarter of this year.

That’s according to Mercom Group’s first quarter venture capital report. The independent research firm also listed mHealth apps and telemedicine as second and third with investors, spending $392 million and $220 million, respectively, the study shows. Healthcare booking came in fourth at $177 million, followed by clinical decision support at $107 million.

Digital health practice-focused companies raised $926 million in 66 deals in the first quarter and accounted for about 46 percent of the total $2 billion in funding raised worldwide, the study shows. Consumer-focused companies raised $1.1 billion in 83 deals and accounted for 54 percent of the total funding raised during the same period.

Venture capitalists spent $2 billion in health IT globally, in 149 deals, with a total of 371 investors participating, Mercom says.

Activity in the U.S. was focused on the coasts, with California and New York drawing the most VC funding deals, with 22 originating in California, worth $456 million and 16 originating in New York, for $166 million, according to Mercom.

In the most recent first quarter, there were 45 M&A transactions involving digital health companies, down from 48 such transactions in the same quarter last year, the study shows.

Practice-focused companies dominated mergers and acquisitions activity this year, accounting for 25 of the 45 merger and acquisition transactions in the first quarter, trailed slightly by consumer-focused companies, which participated in 20 merger and acquisition deals.

Health IT thought leaders saw this coming. Charles Alessi, chief clinical officer at Healthcare Information and Management Systems Society predicted in January that this would be the year when digital health would “come of age globally.”

In his “Top Digital Health Trends in 2019,” blog, Alessi predicts “notable successes” in artificial intelligence, “both in terms of prediction as well as execution.”

“[T]here is potential for digital technology to do more of what it was initially designed to do,” Alessi says, and that is to “act as a clinical extender, assisting patients in achieving health outcomes and creating a healthier work-life balance for doctors to mitigate the stress levels inevitably contributing to burnout.”

In a Health Affairs blog, “Health Care In 2019: Five Key Trends To Watch,” Susan DeVore predicted that in 2019 the table would be set “for a new health care paradigm,” where she says, “bets made in 2018 start to get collected and change becomes visible in real time.”

“We see some clear trends taking shape that should guide strategic thinking,” DeVore says. One of those trends, she denotes is: "disrupt or be disrupted."

For reprint and licensing requests for this article, click here.