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Why investors are committing to healthcare’s digital transformation.
Digital health funding has continued to grow, with investments reaching $3.4 billion in the first half of 2018, a sign that the space and its financial backers are here to stay, according to a new report from the health-tech funder Rock Health.
Funding is pacing to reach $6.9 billion for the year, which would be a substantial increase from last year’s $5.6 billion total, according to Rock Health. What’s more, the average deal size this year is $17.9 million, another record, spread across 193 transactions. (Last year saw 352 deals in the digital-health sector.)
Experts for Rock Health attributed the swelling investments to “the maturation one would expect from a stable, emerging investment sector” and increased activity by investors, who are spending across all sectors at a pace not seen in more than a decade.
“We expect the momentum of the first half of the year to carry throughout 2018,” Rock Health researchers wrote. “Venture investment is on pace for another record-breaking year in terms of total funding, number of deals, and average deal size.”
Of note, according to the analysts, is the level of outside disruption gripping healthcare. Those players include everyone from Amazon and Berkshire Hathaway to JP Morgan, Google, and Apple.
Rock Health also argued that digital health’s proven maturation—whether that be through successful clinical trials, positive peer-reviewed studies, or FDA approvals—has bolstered the industry. These efforts have been strengthened by the effects that digital health has on patients, turning a page on the shadow cast over the industry by Theranos.
And a big winner in the space: tech-fueled behavioral health companies. Collectively, these startups earned more funding than ever before in the first half of the year, Rock Health said.
But despite all the good news, merger and acquisitions in digital health have remained “sluggish,” according to the report. Even so, the venture capital engine is betting that exits will pick up in the “near future.”