Search
Close this search box.
Search

So far start-ups have been disrupting healthcare but the big tech can pick up the baton.

A Record Year For Digital Health Start-Ups But A New Disruptor Comes

At the close of its third quarter, 2018 is already the most-funded year ever for digital health startups. There has never been a better time to raise money, with founders securing larger and more frequent rounds – informs Rock Health. But Amazon, Google or Apple can significally impact startups plans.

There has never been a better time to raise money in digital health than in Q3 2018. The pace of fundraising by individual startups suggests it’s an entrepreneurs’ market in which founders are raising larger and more frequent rounds, while the crop of maturing companies in digital health continues to grow.

Taken together, these factors have combined to yield the largest quarter ever in digital health venture funding, with $3.3B invested in Q3 2018 alone. The quarter’s funding surge pushed 2018 YTD (Year-to-date) funding to a total of $6.8B, already exceeding last year’s annual funding total by more than a billion dollars. The sheer amount of dollars and deals is notable – but numbers alone don’t tell the full story of the progress made in digital health thus far in 2018. Larger deals – rather than number of deals – account for this bump.

  • More and more startups continue to crack the regulatory code, with 31 FDA approvals in digital health so far this year.
  • The majority of investors backing digital health companies this year (59%) are repeat investors in digital health
  • More deals are being done than ever before, a sign that more investors are spending more time on digital health

 

Across Q3 2018, digital health startups raised $3.3B over 93 deals, bringing the annual YTD total to $6.8B. Even with one quarter left to go, 2018 has surpassed 2017’s funding total of $5.7B. Larger deals – rather than number of deals – account for this bump, with the average deal size on the year soaring to $23.6M.

 

Investors are supporting the shift to healthcare at home

Across the first three quarters of 2018, companies offering on-demand healthcare services as a primary value proposition attracted the most funding. The largest Q3 round in this category went to American Well ($291M), one of the ten mega-deals so far this year. This category contains diverse services offered in or near real-time through various channels. Examples include: Doctor on Demand, a platform enabling patients to video chat with licensed physicians; Honor, an online senior in-home care agency platform; NowRx, an on-demand prescription delivery service; and Nurx, teleprescriptions and home delivery for birth control and PrEP for HIV prevention.

The top six most-funded value propositions support a shift in the care paradigm, enabling patients to manage their health at-home. While there is still consumer demand for in-person provider relationships, there is an increasing focus on companies that connect patients (and patient data) with providers and care in more continuous, accessible, convenient ways.

Big tech’s continued push into healthcare

In the first half of the year, Amazon doubled down on its PBM* strategy and acquired PillPack, sending shockwaves across the pharmacy space. Then, just a few weeks ago, Apple announced its Apple Watch Series 4, which has fall detection and an FDA-cleared sensor capable of taking ECG readings and testing for atrial fibrillation. But Apple isn’t the only company exploring elderly monitoring – Google is considering how its Nest product could offer home monitoring for the aging population (and Nest’s own digital health ambitions were revealed by the news that Nest, not Google, acquired smartphone-based health monitoring developer Senosis). Amazon’s Alexa could have similar applications.

 

The top six most-funded value propositions support a shift in the care paradigm, enabling patients to manage their health at-home. While there is still consumer demand for in-person provider relationships, there is an increasing focus on companies that connect patients (and patient data) with providers and care in more continuous, accessible, convenient ways.

 

It’s unclear exactly how big tech’s strategies will impact startups operating in these market segments. After the Apple announcement, AliveCor’s CEO noted Apple is doing “the thing we’ve been doing for seven years,” referring to its products for detecting atrial fibrillation, one of which received FDA clearance in 2014.

While companies may point to proprietary algorithms, competitive pricing, and other features as a means to stay differentiated, big tech entering into the remote monitoring and home care spaces could be a big competitive disruptor. Conversely, the attention big tech brings to digital health is likely to stoke demand and educate consumers, expanding the market for all players.

* PBM – in the United States, a pharmacy benefit manager (PBM) is a third-party administrator (TPA) of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), and state government employee plans (Wikipedia).

Read the full report here

Whixx

ICT&health World Conference 2024

Experience the future of healthcare at the ICT&health World Conference from May 14th to 16th, 2024!
Secure your ticket now and immerse yourself in groundbreaking technologies and innovative solutions.
Engage with fellow experts and explore the power of global collaborations.

Share this article!

Read also
Balancing regulatory compliance with seamless adoption, healthcare navigates the integration of AI solutions.
A guide to implementing AI in healthcare amid the EU AI Act
AmyWebb-Stephen-Olker
Futurist Amy Webb claims that wearables will evolve into "connectables"
Digital health solutions empower patients to better manage their health and integrate care into their daily lives.
How to improve Digital Patient Engagement to streamline workflows
For people with diabetes, inaccurate blood glucose measurements can lead to errors in diabetes management, including taking the wrong dose of insulin, sulfonylureas, or other medications that can rapidly lower blood glucose.
Smartwatches measuring glucose level: Harmful but easy to buy fake innovations
How to introduce innovation and AI in healthcare organizations if there is no business model for prevention and quality – Our interview with Professor Ran Balicer, the Chief Innovation Officer at Clalit Health Services and founding Director of Clalit Research Institute.
I see no legitimate rationale for delaying the digital transformation in healthcare
Pioneering Cardiac Arrest Detection for Enhanced Survival.
CardioWatch Revolutionizes Cardiac Arrest Detection
Dr. Oscar Díaz-Cambronero, Head of Perioperative Medicine Department at La Fe Hospital, spearheads innovative telemonitoring initiatives revolutionizing patient care
Smartwatches Saving Lives Inside and Outside the Hospital
EIT 2024
EIT Awards 2024. Two European startups are revolutionizing the treatment of cardiovascular diseases
Bertrand Piccard, Swiss explorer and founder of the Solar Impulse Foundation
EIT Summit 2024. What are the trigger points that drive or inhibit innovation?
MMC pioneers wireless monitoring for premature infants with the innovative Bambi Belt, revolutionizing care with improved comfort and mobility.
Wireless Monitoring of Vital Signs in Premature Infants at Máxima MC
Follow us