The first quarter of 2014 brought in an unprecedented level of venture capital for digital health ventures, according to start-up service company Rock Health.

"Digital health is increasingly whetting venture appetites--January set a record month in deals and dollars, and building off that momentum, the first quarter of 2014 set an all-time record for digital health funding in a single quarter," writes Rock Health Strategy Manager Teresa Wang in an April 3 blog. "Nearly $700 million in funding poured into the space, paving the way for the biggest year ever for the industry. Q1 2014 experienced a mind blowing 87 percent year-over-year growth versus Q1 2013."

Wang reports that the average deal size in the first quarter of 2014 increased to $13.1 million, up from an average of $10 million for all deals in 2013. She reveals that the venture funding by digital health category includes: $120 million for payer administration, $107 million for analytics and big data, $61 million for telemedicine, $57 million for care coordination, and $50 million for alternative health tools.

The top five Q1 deals according to Wang:

* MedHOK (Medical House of Knowledge) is a platform for care, quality, and compliance designed for health plans and ACOs ($77.5M from Bain Capital Ventures and Spectrum Equity)

* MindBody provides a suite of marketing tools, scheduling, analytics, networking and point of sales services for alternative health, beauty, and wellness providers. ($50M from Montreux Equity Partners, Bessemer Venture Partners, Institutional Venture Partners, Catalyst Investors, and W Capital Partners)

* Health Catalyst is a data warehousing company for hospitals ($41M from Sequoia Capital, Norwest Venture Partners, Kaiser Permanente Ventures, Sorenson Capital, CHV Capital, and Partners Healthcare)

* Voalte develops smartphone communication alternatives to help improve care coordination for the healthcare industry ($36M from Bedford Capital)

* Specialists On Call provides emergency telemedicine consultations ($32M from Warburg Pincus)

The key themes that dominated in the first quarter were improving patient care and enterprise cost-savings, Wang added.

In related news, 10 health IT start-ups have relocated to Overland Park, Kan., for three months of mentoring from technology professionals, regional healthcare leaders and entrepreneurs. The companies, nine based in the United States and one from Australia, are the first participants in the Sprint Mobile Health Accelerator program, done in partnership with Techstars, which provides seed funding on behalf of venture capital firms and angel investors. In addition to mentoring and honing business strategies, each company will receive up to $120,000 in funding.


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