Increasing venture-capital investment in digital health is helping startups accelerate their growth while also raising concerns that the market is overheating.
Venture Funding
Venture investors pumped $14.7 billion into digital-health startups in the first half, topping the 2020 full-year total of $14.6 billion, according to Rock Health, a digital-health venture fund. Digital-health companies raised $7.7 billion in venture capital in all of 2019.
Startups have cashed in as the pandemic has steered more investors to healthcare and spurred the medical system to invest in digital-health tools, which include telemedicine, remote monitoring and technology to enable clinical trials to take place in patients’ homes.
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“Covid exposed the lack of investment that health systems have made in technology,” said Sheila Talton, chief executive of Gray Matter Analytics Inc., a Chicago-based software company that helps healthcare insurers and providers manage quality metrics.
Recent successes, such as Doximity Inc., a San Francisco-based provider of a digital platform for doctors that went public in June and now has a market capitalization around $8.87 billion, have encouraged investment. Maturing companies with strong revenue growth are also rounding up large financing rounds, boosting the investment total.
