Health IT Venture Capital Report: Consumer-Focused Tech Is Capturing More Early-Stage Deals

April 16, 2014
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healthcare IT Q1 2014First published on MedCityNews.com. As early as February, analysts were saying that it would be a good year for healthcare IT companies looking for venture capital.

healthcare IT Q1 2014First published on MedCityNews.com. As early as February, analysts were saying that it would be a good year for healthcare IT companies looking for venture capital.

Communications and consulting firm Mercom Capital echoed that today with results from its first-quarter investment analysis which found that healthcare IT companies raised more VC money last quarter than in any quarter before.

Almost 190 venture capital and private equity investors pumped $858 million into companies in the sector, according to Mercom’s analysis. That’s almost double the $439 million they invested in the first quarter of last year.

Dollar-wise, enterprise technology companies edged out those making products for consumers, with practice management and health information exchange companies garnering the most capital. But there were more deals in consumer health –103, to be exact, versus just 60 for enterprise-focused companies.

That’s because early-stage investments (less than $2 million) swayed more toward the consumer side, including 29 accelerator and incubator deals, Mercom said. Mobile health companies accounted for a majority of the $398 million in funding for the consumer health sector, including First Opinion, MedWhat and Opternative.

Meanwhile, practice-focused companies saw the majority of the bigger deals, like an $89 million round for Italy-based Dedalus Group and a $77.5 million investment for MedHOK.

M&A activity was also at its highest level, totaling 53 transactions. Last year, health IT M&A remained relatively flat from 2012, according to Mercom.

Most of the deal activity occurred in the U.S., but Mercom noted that 15 other countries recorded at least one funding deal.