Sunday, 19 January 2020 23:25

Venture capital funding in digital health declining Featured

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Global venture capital (VC) funding in digital health, including private equity and corporate venture capital, declined in 2019 with US$8.9 billion raised in 615 deals, a 6% drop compared to US$9.5 billion in 698 deals in 2018, according to a new report.

The report by Mercom, a global communications and consulting firm focused on digital health, cleantech and financial communications, notes that in 2019, debt and public market financing for digital health companies decreased by half from the previous year, with approximately US$1.7 billion raised in 20 deals in 2019, compared to US$3.5 billion in 21 deals in 2018.

Mercom says that approximately 67% of Digital Health funding went to US companies in 2019, with US$5.9 billion in 426 deals compared to US$7 billion in 420 deals in 2018 - a 16% decline in funding year-over-year (YoY).

The United Kingdom was second with US$853 million, followed by China with US$663 million and France with US$372 million.

According to the Mercom report, since 2010, digital health companies have received US$44 billion in VC funding in over 4,500 deals and almost US$14 billion in debt and public market financing (including IPOs), bringing the cumulative investments into the sector to US$58 billion.

Mercom says that large funding deals declined in 2019, with eight companies raising US$100 million or more compared to 2018 when 16 companies raised over US$100 million each.

“After three consecutive years of growth, venture deals, and dollars for digital health companies declined in 2019. After a long dry spell, there were four US IPOs, but their performance so far has been underwhelming,” says Raj Prabhu, CEO of Mercom Capital Group.

“M&A activity also declined in 2019. The big winners were telemedicine companies, with a 55% increase in funding YoY while digital health products that were powered by AI, brought in over US$2 billion.”

Mercom reports that the top funded categories in 2019 included: telemedicine with US$1.8 billion, closely followed by data analytics with US$1.6 billion, mHealth apps with US$1.2 billion, clinical decision support with US$748 million, mobile wireless technology with US$556 million, and booking with US$537 million.

And categories that witnessed significant YoY funding growth included: healthcare service booking, telemedicine, medical imaging, wellness, and clinical decision support.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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