Investing in “Digital” Health

It is important in life to learn to do the unpleasant things; to take on the difficult tasks.  So it is with a heavy heart that I summarize a report on investing in digital health.  So many buzz words, so little time.  (SUH Report)  The single most frightening piece of information in the report is the estimate of 7500 companies worldwide working on digital health.  On the other hand, lots of material for my Headlines.   The first quarter of 2015 saw $900 million invested in digital health, compared to $1.5 billion in the year-ago quarter.  (Is sanity returning?)  The top ten investments by size accounted for 45% of all investing.  The largest category was “big data/analytics”, with $202 million in 6 transactions.  (No, it’s not.)  Then came wellness, $137 million in 10 deals; patient experience, $107 million in 20 investments; and medical device/diagnostics, $106 million in 11 deals.  Geographically, the Bay Area led with $390 million in 25 financings, followed by San Diego with $127 million in 4 transactions.  Boston, Salt Lake City and NYC companies also drew a fair amount of investment.  Slightly more money went to investments after the seed investment, as the industry begins to “mature”.  The median size for an early-stage investment also declined, while later stage amounts rose somewhat.  Corporate venture groups were active, along with the usual vc suspects.  One area of focus continues to be companies aiming at older Americans, the 50-plus crowd, with about 40% of funding in the first quarter going to companies targeting this segment, many with products and services to manage chronic diseases.  And while I love to mock and ridicule the hype that often surrounds emerging companies and sectors, all this investment provides a lot of good jobs, at least for some time, and a few might provide a return to investors.  One or two might even develop a product that actually improves people’s health status or the care they receive.