StartUp Health, a New York-based accelerator, and Rock Health, a San Francisco-based seed fund, each recently released its independent 2015 first quarter report on venture funding and transactional data of the digital health sector. The following are some key observations:

  • Funding is Down Compared to Last Year’s First Quarter. While 2014 was a record-breaking year for digital health funding—increasing by more than double compared to 2013—both reports show that 2015 is off to a slower start. StartUp Health reported a decrease in overall venture funding in the digital health sector from $1.5 billion in the first quarter of 2014 to $900 million in the first quarter of 2015, while Rock Health, which uses different reporting metrics, reported a decrease from $700 million in the first quarter of 2014 to $630 million in the first quarter of 2015.
  • Big Data/Analytics Is the Most Active Subsector.   According to StartUp Health, the top five subsectors to attract venture capital in the digital health sector were big data and analytics ($202 million), wellness ($137 million),  patient and consumer experience ($107 million), medical devices and diagnostics ($106 million), and personalized health ($85 million). Rock Health, using different reporting metrics, also reported that big data and analytics is the top subsector with $107 million, but its findings differed for the remaining four spots with consumer engagement coming in second with $68 million, electronic healthcare records (EHR) and clinical workflow ranking third with $63 million, digital diagnostics was fourth with $55 million, and  population health management and digital medical devices tied for fifth—each with $40 million.
  • San Francisco Bay Area Continues to Dominate.   StartUp Health’s report shows that start-ups headquartered in the Bay Area continue to attract the most venture capital in the digital health sector (approximately 43% of all digital health funding).  San Diego is a distanced second, followed by Boston, Salt Lake City, and New York City.
  • Record Quarter for Mergers and Acquisitions.  Rock Health reported 42 mergers and acquisitions in the digital health sector in the first quarter of 2015, almost half of the total number of mergers and acquisitions in the sector in 2014. The largest such digital health deal in the first quarter of 2015 was the acquisition of MyFitness Pal, a nutrition-tracking platform, by Under Armour for $475 million.  Other notable deals included Fitbit acquiring FitStar (a developer of the popular FitStar exercise apps) and Athenahealth acquiring RazorInsights and WebOMR (both providers of EHR solutions).