DIGITAL HEALTHSTARTUP + VC ACTIVITY
A R O C K R E P O R T B Y
Rock Health is powering the future of the digital health ecosystem, bringing
together the brightest minds across disciplines to build better solutions. Rock
Health funds and supports startups building the next generation of technologies
About this report
We wanted to know more about VC funding and entrepreneur perspectives
of the digital health space. This report sources data from Capital IQ, CrunchBase,
NVCA and a survey we conducted with 110 digital health entrepreneurs.
Caveat: we are not professional white-paperistas, just curious advocates who like to
share knowledge and further the discussion around the evolving digital health space.
VC-funded digital health
companies in 2011
Sourced from Capital IQ, NVCA + CrunchBase
VC funding of healthcare technology segment
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
% of # of VC deals % all VC funding ($)
Source: Capital IQ
77% of VCs think healthcare IT
investment dollars will
increase in 2011
Source: 2011 Venture View Predictions Survey by NVCA and Dow Jones VentureSource
35 digital health companies
have received $2M+ in 2011
Digital Health companies receiving $2M+ in ﬁnancing in 2011
Source: Capital IQ + CrunchBase
The majority of these companies
are building B2B businesses
Businesses/Health Orgs (B2B)
Medical Professionals (B2Dr)
What are they building?
Consumer Web Sites
Personal Health Monitoring
Physician Social Networks
0 1 2 3 4 5
Themes of the 35 digital health companies receiving $2M+ in ﬁnancing in 2011
Common theme #1
“Health Guru is the web's leading destination site for health
“Personalized, engaging health information, from leading medical
experts and similar community members, that’s easy to understand
and all about you.”
“Play games to train your brain.”
“Your child's health and development anytime, anywhere you want.”
“An interactive platform that provides expert health information
and allows you to ask questions and get answers from trusted
personal health monitoring
Common theme #2
“The most accurate heart rate monitor for smartphones.”
“Daily health monitoring service to help reduce falls, monitor heart rate
and breathing rate, reduce the risk of bedsores and help manage chronic
diseases without attaching anything to the monitored person.”
“Track your caloric burn, activity levels, and sleep habits
to make every day your best day.”
“Healthrageous delivers on the promise of improved, sustainable health
by analyzing data collected from biometric measurement devices with
our expert system in order to provide you with the personalized support
and inspiration necessary for a lifelong journey of wellness.”
Common theme #3
“Explorys enables the discovery of critical correlations,
trends, and outcomes across millions of patients, clinical
records, and diverse environments”
“Humedica is a next-generation clinical informatics
company that provides novel business intelligence
solutions to the health care industry.”
“Kyruus's data-driven products arm users with curated,
comprehensive, up-to-date information and intuitive analytics.
We help organizations assess and predict the risk, value, and
opportunities that characterize their ubiquitous interactions with
physicians across the entire healthcare value chain.”
Common theme #4
“Axial solutions provide clinical data sharing to save time and
money across the healthcare delivery network -- for hospitals,
physicians, research organizations, and health plans.”
“Resilient Network Systems' new class of Internet servers extends
the reach of the Internet to protected data and application content
by introducing new methods of establishing trust and giving
owners customized control over how their content is used.”
physician social networks
Common theme #5
“Sermo is an online physician-only network for discussion
about clinical issues, health care reform, practice
management and more.”
“Doximity is a professional networking tool exclusively
for Physicians and health care professionals.”
Locations of 2011 VC-backed
digital health companies
California - 11
Massachusetts - 5
New York - 3
Companies receiving $2M+ in ﬁnancing in 2011
Which VCs funded them?*
Largest Deals of 2011
software for healthcare and insurance delivery
$61M from Camden Partners and Kleiner Perkins Cauﬁeld & Byers
software for cognitive enhancement
$32.5M from Menlo Ventures, FirstMark Capital, Harrison Metal Capital, Norwest
connecting providers and Medicare
$27M from Bain Capital Ventures and Lemhi Ventures
$23M from Founders Fund, Artis Capital Management, Glynn Capital, Morgenthaler, Felicis
Survey of 110 early-stage
digital health entrepreneurs
We surveyed 110 early stage
digital health entrepreneurs
• 84% said they were
bootstrapping their venture
• 13% have angel funding,
and only 2% had VC funding
• 60% have had less than
$50K in funding
funding stage of respondents
< 6 months
6 months - 1 year
1 -2 years
0% 10% 20% 30% 40%
age of company
What is your background?
What motivated you to start your venture?
“I want to make the world a healthier place.”
“Just a consumer who saw a very broken system and wanted to ﬁx it.”
“From what I’ve seen, very few people in health tech are innovators.
It’s boring out there.”
“We saw ﬁrst-hand some of the care that patients were getting at top
medical facilities. The lack of focus on the patient was appalling, so
we decided to grab the bull by the horns.”
How challenging are these barriers for
entrepreneurs in the digital health space?
Establishing Sustainable Revenue Model
Navigating Government Regulation
Access to Medical Expertise
Access to Technical Expertise
0% 2,000% 4,000% 6,000% 8,000% 10,000%
Almost 100% of respondents identiﬁed funding as a
somewhat or very challenging barrier.
20% 40% 60% 80% 100%
Somewhat Challenging Very Challenging
How will your venture make money?
Charging Consumers Directly
Charging Medical Professionals
0% 9% 17% 26% 34% 43% 51% 60%
Respondents were able to select more than one checkbox, so percentages add to more than 100%.
Who pays for your product or service?
0% 10% 20% 30% 40% 50% 60% 70%
The majority of digital health entrepreneurs surveyed think consumers will
pay for their product or service. Less than a third think insurers will pay.
From Capital IQ + CrunchBase:
VC interest in digital health is skyrocketing, and 2010 was a record year
for health technology as a percentage of all VC funding.
The number of healthcare technology deals more than doubled from
2005 (52) to 2010 (138).
35 digital health startups have received $2M+ in 2011 so far.
Rock Health survey ﬁndings:
The #1 challenge for digital health entrepreneurs is fundraising.
Early stage digital health entrepreneurs are building B2C companies...
despite the majority of VC dollars going to B2B ventures.
Entrepreneurs identiﬁed subscriptions as the most popular revenue model.
The majority of digital health entrepreneurs think consumers will pay
for their product or service. Less than a third think insurers will pay.
List and details of the 35 digital health companies funded in 2011:
List of 200+ digital health startups:
Entrepreneur? We still want to hear from you! Take our survey: