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Rock Health reported that $4.2 billion was invested in digital health companies during the first half of 2019. This places the sector on pace to exceed 2018’s record total annual investment of $8.2 billion.

Strong and Steady with No Signs of Froth

This steady growth should put to rest, at least for the time being, concerns that emerged at the end of last year about a digital health investment bubble. Rock Health provides a detailed “bubble analysis” in its midyear report, but in short the venture fund concludes that the space is not experiencing a bubble thanks to sound business fundamentals, a strong base of repeat investors and the lack of fraud or misuse of funds.

Rock Health also notes that the $4.2 billion in investment was spread over 180 deals. About a third of the money invested went toward megadeals—deals of $100 million or more.

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Continue Reading Q2 2019: Big Deals in China, Drones and the Return of the Digital Health IPO

Insights from Mary Meeker’s 2019 Internet Trends Report

In the latest edition of the Internet Trends report, Mary Meeker highlights the growing digitization of the healthcare sector, framing that growth squarely in the context of a U.S. healthcare system that—in some cases—has room for further innovation to better meet consumers’ demands or expectations.

Meeker, founder of Bond Capital (and former Kleiner Perkins Caufield & Byers general partner), launches the report’s healthcare section with an overview of a system that has the highest expenditures on healthcare as a percentage of GDP among other nations in the Organisation for Economic Co-operation and Development. Adding in the high number of uninsured individuals, high administrative costs and outcomes that are worse than other developed countries, Meeker makes the case that the digitization of U.S. healthcare is driven by consumer demand for better alternatives.

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Continue Reading US Health Consumers Demand More: Can Tech Save Us?

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In its Q1 2019 digital health funding report Rock Health noted that investment in digital health companies leveled off in the first quarter after a record-setting 2018. At $986 million, investment in the first three months of the year was down 21 percent from the fourth quarter of 2018, when it hit $1.2 billion

But the leveling off in funding is more likely linked to an overall decrease in venture investment than to any weakness in the fundamentals of the digital health sector.

The PwC/CB Insights MoneyTree Report Q1 2019 states that global venture funding dropped 22 percent in the first quarter over the last quarter of 2018—from $67 billion in Q4 to $52.2 billion in Q1. U.S. venture investment overall dropped even more in Q1, from $38.7 billion to $24.6, or 36 percent. As a result, digital health venture investment is either even with or outperforming the market as a whole.

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Continue Reading Digital Health Investment Levels Off and Unicorns Emerge

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No matter who is doing the counting, 2018 was an off-the-charts year for venture investment in digital health. Here’s a sampling of the tallies:

  • Our good friends at Rock Health put the total investment at $8.1 billion – an impressive 42 percent increase over 2017’s total of $5.7 billion.
  • The PwC/CB Insights MoneyTree Report posted an even higher total of $8.6 billion up from $7.1 posted in 2017.
  • StartUp Health reported $14.6 billion in global investment in digital health, up nearly 150 percent from 2017’s total of $6 billion (cited by MobiHealthNews).

And it’s not only that more money is going into the sector, it’s going into larger deals. Rock Health reports that the average deal size has grown to $21.9 million. That’s up from $15.9 million in 2017 and $13.6 million in 2016.

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Continue Reading The Year of the Megadeal and a Hot Digital Health Market in China

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The impact of artificial intelligence, or more specifically machine learning, is being felt in every industry sector, but perhaps nowhere more so than in healthcare, where AI funding hit historic highs in 2018, according to CB Insights.

The term AI is commonly used by the media and others to describe a computer-generated solution that is as good, or better than, a solution that could have been produced by a human. That often includes digital health tools that use algorithms programmed by researchers and clinicians. Machine learning is a subset of AI that uses neural networks to simulate or even expand on the level of data analysis that human minds are able to achieve. Deep learning is where software learns to recognize patterns. And these tools are already transforming diagnostic imaging.

The Scope

CB Insights reports that since 2013, $4.3 billion in private equity has been invested in healthcare AI startups across 576 deals. That’s more than AI startups in any other industry have taken in.

In a way, healthcare and AI are almost made for each other. The healthcare sector produces tons of data, but most of it is not being leveraged to provide the kind of insights it potentially could. The hope is that AI will be able to sort through this mountain of information to provide novel insights to improve the treatment or enable the prevention of disease.

In this post, we have rounded up some of the most promising applications for AI/ML in healthcare and examples of companies that are making it happen.

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Continue Reading How AI is Transforming Healthcare: Diagnostics, R&D and Therapeutics

Fenwick & West Digital Health Investor Summit
The Seventh Annual Fenwick & West Digital Health Investor Summit profiled a sector that continues to attract record levels in investment, further matures and consolidates, and that is leveraging the newest technologies in blockchain and artificial intelligence to improve the practice and delivery of health care. Speakers included Rock Health’s Bill Evans and Goldman Sach’s Peter van der Goes, who discussed the possibility of an investment bubble and outlook for 2019, and Ruchita Sinha of Sanofi Ventures, who talked about blockchain in digital health. Fenwick’s Kristine Di Bacco moderated a panel on machine learning and artificial intelligence in healthcare with guest speakers Brandon Ballinger, co-founder of Cardiogram; Alison Darcy, founder and CEO of Woebot Labs; and Christine Lemke, co-founder and president of Evidation Health.

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Continue Reading Takeaways from Fenwick’s 2018 Digital Health Investor Summit

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Private investment in digital health continued apace in the second quarter of 2018, based on our latest look at deal flow. As the sector has matured, growth in investment levels quarter-over-quarter and year-over-year appears sustainable for the foreseeable future.

Likewise, the closing of a handful of megadeals each quarter is becoming the rule rather than the exception. The second quarter saw seven megadeals for $100 million or more. That is right in line with the first quarter, when we also recorded seven rounds of $100 million or greater.

The top investees in the second quarter were diverse, ranging from biopharmaceuticals to artificial intelligence to primary care. This diversity may be a sign that investors are looking beyond the low-hanging fruit of infrastructure and patient engagement, or even diagnostic applications, to areas such as primary care where opportunities for digital disruption are less obvious.

It is also interesting to note that over half of the investment rounds of $100 million or more went to companies based in China. We’ve seen a steady increase in investments in Chinese digital health companies over the past few years. But this is the first time that we have seen them account for half of the top deals—including the three largest rounds for $200 million or more.

Here’s a summary of the seven largest deals of the quarter:

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Continue Reading Digital Health Investment Trends Q2 2018: Megadeals Become the Norm, China Rising

Coming off a year that saw a record number of new drug approvals, significant scientific breakthroughs and a year-end tax reform package that both significantly lowers corporate taxes and provides the long-awaited tax repatriation holiday, it’s not surprising that biotech investors, executives and advisers were in a good mood as they gathered in San Francisco…

Fenwick’s Sixth Annual Digital Health Investor Summit started on an upbeat note with Rock Health’s Megan Zweig sharing the venture fund’s mid-year funding report. After the uncertainty brought by the 2016 presidential election and the political drama surrounding the future of the Affordable Care Act, it would not seem surprising to see investors take…