Bad news, good news. It depends on where you and your company sit. Pricewaterhousecoopers and the National Venture Capital Association (NVCA) have been tracking VC activity for several years based on Thomson Reuters data. They found the total 2nd Quarter versus 1st Quarter startup funding picture uneven, with 2nd quarter funding increasing by
20 percent but with total number of deals down 5 percent, versus $12.7 billion and 1,011 deals in 1st quarter.
- Biotech was gloomy despite being the #2 VC funding category: $1.7 billion invested into 100 deals, representing a 14 percent decrease in dollars and a 19 percent decrease in deals
- Life Sciences, which combines biotech and medical devices and accounts for 15 percent of all VC funding to startups, rose to $2.2 billion going into 161 deals, but investment decreased 10 percent and 12 percent in deals.
- Healthcare Services notched a 65 percent increase to $218 million and 21 deals, but this category is only 1 percent of total investment
PwC website and interactive chart; press release (PDF) Also MedCityNews.
Betas, ‘moving fast and breaking things’ don’t work in our territory. That is the POV of Vic Gundotra, the CEO of AliveCor, which has successfully introduced and marketed its smartphone snap-on ECG globally. Witness the up vote from the NHS on technology (Daily Mirror), while the American Medical Association (AMA) in the US wants better vetting of both clinical and DTC health tech and refers to much of it as ‘quackery’ (Forbes). According to Mr Gundotra, who was in engineering at Google and Microsoft prior to AliveCor, “Healthcare is not a market that can be hacked.” and “When a product directly relates to human health, following regulatory requirements needs to be a core part of the strategy from day one. What has been seen as a burden needs to be seen as a benefit. It’s time that we stop viewing regulatory bodies as obstacles and start viewing them as valuable partners. This is a mindset that should be adopted across a company’s entire team — from board to CEO to VC to developer.” And the incompatible expectation of Silicon Valley VCs, “18 months tapping our feet, then exit” as well. Recode
Mercom Capital Group, a research and communications group, tracks global VC funding, mergers and acquisitions in the digital health area and notes a distinct slowing of activity, except for mobile health. They tracked $784 million in 142 deals in Q1 2015 compared to $1.2 billion in 134 deals in Q4 2014. Leading are consumer health companies with $437 million in 98 deals, then healthcare practice-centric companies, with $347 million in 44 deals–both dropping over $200 million each versus the previous quarter. Mobile health companies had $282 million in 56 deals; app companies accounted for $220 million. In transactions, mobile health led with $578 million, with UnderArmour’s acquisitions of MyFitnessPal and Endomondo. Since 2010, digital health companies have raised almost $10 billion. Mercom Capital release (the full study will run about $300-500). mHealthIntelligence notes that M&A activity is steadily rising in the healthcare sector. Also iHealthBeat.