Get The Podcast

Engaging conversations with revolutionary healthcare leaders.

Listen Now

Ask Dave

Got a question about the issues we cover?

Contact

What Digital Health Technologies Investors Are Betting On

Blog | 
Economics | 
Innovation | 

As a business journalist, I hang out at the corner of “follow the money” and “actions speak louder than words.” It’s the same place I go when I want to bet on sports.

Earlier this week, Rock Health, the San Francisco-based digital health venture capital firm, released its annual report on venture capital funding of digital health technology companies. I, as do many, consider Rock Health and its data to be one of the most credible if not the most credible sources of digital health market information.

In its new report, Rock Health said digital health funding totaled $7.4 billion in 2019. That’s slightly off the record $8.2 billion in 2018. That $7.4 billion figure may change as the firm continually updates its data. That $8.2 billion started as $8.1 billion, crept up to $8.3 billion, then settled in at $8.2 billion.

The number of deals dipped to 374 last year from 380 in 2018. And the average size of each deal shrunk to $19.8 million last year from $21.6 million in 2018.

So what does that say if you follow the money and actions speak louder than words? It tells you that the digital health technology market may be starting to plateau as companies and their innovations mature and fresh money starts drying up for new companies and their innovations.  

(For another possible explanation on this topic, please read “Digital Disillusionment: Are We There Yet? on 4sighthealth.com.)

Even more interesting to me than the nearly 10 percent drop in funding over the past year is what type of innovations investors are betting on. With less money going around, you’d assume investors would spend it more wisely. 

The top six funded “value propositions” in 2019, according to Rock Health, (compared with 2018), in rank order were:

  1. Fitness and wellness (3rd in 2018) with $1.17 billion in funding
  2. On-demand health services (1st in 2018) with$1.13 billion in funding  
  3. Monitoring of disease (4th in 2018) with $820 million in funding
  4. Diagnosis of disease (2nd in 2018) with $757 million in funding
  5. Treatment of disease (not in top six in 2018) with $746 million in funding
  6. Clinical decision support/precision medicine (not in top six in 2018) with $710 million in funding

Dropping out of the top six last year were consumer health information and research/development.

You can find 2018’s top six in this Rock Health report.

So what does that tell you if you follow the money and actions speak louder than words? It tells me that investors think:

  • The market for people who are fastidious about their health will continue to grow
  • The market for people who want more convenient access to medical care will grow
  • The market for personalized treatments and therapies, likely driven by artificial intelligence and machine learning technologies, will grow   
  • But don’t waste money giving consumers more health information via digital health tools because most people aren’t going to use them

(For other takes on that topic, please read “Trying to Wake Up Patient Engagementand “Embracing the Digitally Disconnected Patient on 4sighthealth.com.)

What do the numbers tell you about where the market for digital health technologies is going in 2020?

Thanks for reading.

About the 4sight Health Author
David Burda News Editor & Columnist

Dave is 4sight Health’s biggest news junkie, resident journalist and healthcare historian. He began covering healthcare in 1983 and hasn’t stopped since. Dave writes his own column, “Burda on Health,” for us, contributes to our weekly blog and manages our weekly e-newsletter, 4sight Friday. Dave believes that healthcare is a business like any other business, and customers—patients—are king. If you do what’s right for patients, good business results will follow.Follow Burda on Twitter @DavidRBurda and on LinkedIn.