Digital Healthcare Investment

Digital health investments are on track to hit an all-time record in 2016, according to Katya Hancock, director of strategic partnerships at StartUp Health, who spoke at the Digital Healthcare Innovation Summit.Year-to-date for 2016, digital health companies have raised over $6.5 billion in investments, already surpassing the $6.1 billion that was invested in the space last year.The sector set a record in the third quarter when companies raised $2.37 billion, the most raised in a single quarter.

Total investments in digital health since 2010 have amounted to $20 billion. According to Hancock, the general consensus at StartUp Health is that digital health is still only in its early stages, and that we are far from a market bubble.Currently, StartUp Health has 170 companies, across 26 countries, in its portfolio. The firm has an ambitious mission, “to improve the health and well-being of everyone in the world,” and aims to do this by supporting and investing in entrepreneurs who hope to reinvent and transform health care.StartUp has recently outlined 10 major moonshots that it feels will have the greatest impact on health: improving access to health care, decreasing health care costs, curing diseases, cancer, women’s health, children’s health, nutrition, brain health, mental health, and longevity. In addition, StartUp Health actively tracks 7,500 companies outside its portfolio to gain market insights into the digital health space.

Through its market research, the company has identified a number of latest deals in 2016 in the digital health market that are worth noting:

US and Global Growth: As mentioned previously, digital health investments are growing with year-over-year increases. In addition, international investments are increasing rapidly. Some of the largest deals are in fact happening abroad, in particular in China. Two of the largest investments, in fact, have been in China, with a seed-stage investment of $500 million in start-up Ping an Good Doctor and $448 million in Baby Tree, both based in China.

Digital Health’s “First Wave”: Digital health is still in its “first wave,” with early investments in sensors and wearables still in early stages and not yet realizing returns. A second wave is expected that may include more sophisticated sensors, which are likely to offer deeper insights and improved solutions.

An Active Investor Ecosystem: The digital health investor ecosystem is extremely diverse, with over 500 unique investors in the space, with over 140 making multiple deals in 2016.

Unique Collaborations: Stakeholders with specialized expertise are coming together for unique partner collaborations. One example is the large $500 million investment by Google and Sanofi into diabetes start-up Onduo. We can expect more of these unique partnerships going forward, aiming to bring together parties with different skillsets to tackle difficult health care challenges.

The Rise of the Rest: Finally, there is a rise of new innovation centers and hubs away from the prominent East and West Coasts to include other sites in the US and internationally. New ecosystems are attracting investors to locales previously undeserved by digital health.

Digital health funding has high potential for improving health outcomes, and it is expected that investments will continue to grow in the US and internationally going forward. As it is still a young market, only time will tell if returns are realized on this potential.

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