Rock Health opens new HQ to wonder, sums up 2013

click to enlargeAs seems to be the way in the West Coast Digital Health scene, the opening of accelerator/funder Rock Health’s new HQ in the Mission Bay district of San Francisco gained more heavy-breathing hype than its mostly positive 2013 digital health investment report. The soireé during last week’s JP Morgan Healthcare Conference, glowingly reported in Xconomy with plenty of pics of the achingly trendy interior design and Health Digerati/D3Hers (Digital Health Hypester/Hipster Horde) at play also was a demo of a different type–how insular interests interlock and circle in Fog City. Star guest San Francisco Mayor Ed Lee spearheaded the remaking of the district into a life sciences/tech center; the Xconomy-moderated panel discussion paired him with Rock Health founder/CEO Halle Tecco and Alexandria Real Estate CEO Joel Marcus;  Alexandria underwrites Xconomy and has a huge investment in life sciences real estate; the new Rock Health HQ is on the ground floor of an Alexandria-owned building. Of course Mission Bay is now hyped as the ‘US Digital Health Hub’ for all those Rock Health-accelerated, funded startups. It does give one pause: how much of this is substance, or is it the peak of style before tipping into The Trough of Disillusionment? The tartest takedown on this is courtesy of Neil Versel’s Meaningful HIT News column. Pointed pokes abound: at Silicon Valley for its health tech failures (Google Health among them), the odd duplications (Google-funded telemedicine provider Doctor On Demand sounds like American Well, Ameridoc, etc.) and the even odder lack of considering integration with payer/provider systems and workflows.  Keep wasting your money, Silicon Valley venture capitalists (Note to Neil: the circular swings seem to be a feature of Alexandria’s properties–they’re present at Alexandria Center NYC too. Image © Bruce Damonte/Studios Architecture)

With that aside, the highlights of the Rock Health Digital Health Funding Year In Review were generally positive, but some of them, looked at critically, weren’t, even when depicted in attractive charts and graphs:

  • In 2013, digital health funding grew to nearly $2 billion, up 38 percent from 2012 and 134 percent from 2011
  • Digital health grew, versus other health sectors, 34 percent through 3rd Quarter, beating software at 29 percent and a loss of 14 percent in medical devices
  • 186 companies in digital health raised $2 million or more
  • Concentration continues #1: Major funders are still a small group (slide 11) and only six deals accounted for nearly 20 percent of the total funding. Dabblers (1 deal) grew by 70 percent.
  • Funding is skewing more towards startups, not a trend you’d expect at this point. Deals are ever more concentrated in seed and Series A–51 percent, versus 39 percent in 2012. Single digits move from Series A to B, Series B to C, and D onward. Series B rounds dropped to 27 percent from 34 percent.
  • Crowdfunding (not included above) migrated to Indiegogo this year once they opened the door to healthcare, with $7.8 million in raised funding versus category pioneer MedStartr’s $438,000. An average of 40 percent of companies successfully used this funding channel (75 percent on MedStartr, only 31 percent on Indiegogo).
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