Global venture capital (VC) funding in the digital health sector, including private equity and corporate venture capital, saw another record-breaking year in 2018 with $9.5 billion raised in 698 deals, a 32 per cent increase from the previous record set in 2017 of $7.2 billion in 778 deals.
According to a report from Mercom Capital Group, a global communications and research firm, the total corporate funding for digital health companies across the world in the year 2018— including debt and public market financing — reached $13 billion, a 58 per cent increase from the $8.2 billion raised in 2017.
The report also said that in 2018, the debt and public market financing for digital health companies increased more than three-fold from the previous year with approximately $3.5 billion raised in 21 deals in 2018, compared to $1 billion raised by 34 deals in 2017.
Of the total funding, companies based in the US raised close to $7 billion while the remaining $2.5 billion was by the players in other countries.
“Since 2010, digital health companies have received $35 billion in VC funding in over 4,000 deals and almost $12 billion in debt and public market financing (including IPOs), bringing the cumulative funding total for the sector to $47 billion,” added the report.
A third of the venture capital funding was raised by just 18 companies, each bringing in over $100 million in 2018.
“Venture capital funding in digital health hit another high with almost $10 billion raised. Venture capitalists’ love of digital health companies is evident, but Wall Street is not yet convinced as more than 60 per cent of publicly-traded digital health stocks traded below the S&P 500 in 2018,” said Raj Prabhu, CEO and Co-Founder of the Mercom Capital Group.
“Funding deals every year have significantly outpaced M&A and IPO activity and exits continue to be a big challenge for digital health companies,” he added.
On a category wise the consumer-centric companies brought in $5.2 billion in 447 deals in 2018, while practice-centric companies raised close to $4.3 billion in 251 deals in 2018, a 43 percent increase compared to 2017.