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Digital Health Funding 2013 Year in Review by @Rock_Health


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A summary of the companies, investors and themes that drove digital health funding to a record $1.97B in 2013. Includes details on crowdfunding, exits, and digital health in the public markets. Purchase this report here:

Digital Health Funding 2013 Year in Review by @Rock_Health

  1. A R O C K R E P O R T B Y 2013A YEAR IN REVIEW DIGITAL HEALTH FUNDING 2014 JAN 02 Our third annual funding report
  2. S THE CALENDAR MOVES FORWARD FROM 2013 TO 2014, WE ARE proud to report on funding in digital health for the third straight year. Over that time period, funding has more than doubled, with an additional $1B pouring into our sector this past year versus 2011. Along the way, entrepreneurs have built up capital and discovered additional funding avenues. This is not an ephemeral trend. We are perpetually surprised by the ingenuity of the entrepreneurs who choose to work in healthcare. As digital health companies develop cash generating business models that can threaten (or entrench) incumbents, it seems venture investors, public markets and acquirers are beginning to agree. Here’s to a well-funded 2014! A R O C K R E P O R T B Y AUTHORED BY WITH HELP FROM MALAY GANDHI @mgxtro HALLE TECCO @halletecco DAN AXELSEN DAN O’CONNOR TOBIN PAXTON SHEILA SHAH ELISE XU 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 transforming healthcare. ROCK HEALTH partners include Alexandria Real Estate Equities, Boehringer Ingelheim, Fenwick & West, GE, Genentech, Harvard Medical School, Kaiser Permanente, Kleiner Perkins Caufield & Byers, Mayo Clinic, Mohr Davidow Ventures, Montreux Equity Partners, NEA, Ogilvy Public Relations, Qualcomm Life and UCSF. LEARN MORE AT A
  3. PRESENTATION © 2014 ROCK HEALTH 4 Dollars and deals Venture funding of digital health companies (2011-13) Year over year change in venture capital funding (2013 vs. 2012) Deals by financing round (2012-13) 10 Investors Distribution of investors by number of digital health deals (2013) 12 Demographics CEO educational background for funded companies (2013) CEO gender for funded companies (2013) Funding by geographic location of company (2013) 14 Alternative funding Campaigns and dollars raised on crowdfunding platforms (2013) 15 Exits and public markets Notable M&A transactions (2013) Market capitalization and 52-week share price change of notable publicly-traded digital health companies (2013) Aggregate fundraising by notable digital health companies (2011-13) 19 Summary Contents KEY FIGURESSECTION
  4. PRESENTATION © 2014 ROCK HEALTH Venture funding of digital health companies (2011-13) Digital health funding surpassed $1.9B in 2013, growing 39% over the previous year and more than doubling since 2011 Source: Rock Health funding database Note: Only includes deals >$2M SMASHING RECORDS 4 $0.0B $0.5B $1.0B $1.5B $2.0B JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC $0.22B $0.31B $0.37B $0.54B $0.68B $0.86B $0.98B $1.15B $1.50B $1.65B $1.79B $1.97B 2013 2012 2011 Deal volume was up 38% in 2013 versus 2012, and 134% versus 2011
  5. PRESENTATION © 2014 ROCK HEALTH Year over year change in venture capital funding (2013 versus 2012) Venture funding of digital health continues to significantly outpace traditional healthcare sectors DECLINING HEALTH 5 -17% 8% 39% 27% 7% Source: PWC MoneyTree; digital health data based on Rock Health analysis; Note: Digital health only includes deals >$2M ALL SECTORS SOFTWARE BIOTECH MED DEVICE TECHNOLOGY HEALTHCAREBENCHMARK DIGITAL HEALTH
  6. Gamgee 186 digital health companies each raised more than $ 2M IN 2013 including five Rock Health companies!
  7. PRESENTATION © 2014 ROCK HEALTH TITLE OF TEXT Slide title (two line version) Source, footnotes, etc. • Escape is not his plan. I must face him, alone. Red Five standing by. Alderaan? I'm not going to Alderaan. I've got to go home. It's late, I'm in for it as it is. I'm trying not to, kid. I have traced the Rebel spies to her. Now she is my only link to finding their secret base. What?! ‣ You mean it controls your actions? Hey, Luke! May the Force be with you. You mean it controls your actions? Obi-Wan is here. The Force is with him. • A tremor in the Force. The last time I felt it was in the presence of my old master. The plans you refer to will soon be back in our hands. All right. Well, take care of yourself, Han. I guess that's what you're best at, ain't it? I care. So, what do you think of her, Han? Your eyes can deceive you. Don't trust them. Look, I can take you as far as Anchorhead. You can get a transport there to Mos Eisley or wherever you're going. • You mean it controls your actions? I'm trying not to, kid. But with the blast shield down, I can't even see! How am I supposed to fight? The six major themes of 2013 comprise almost 50% of all funding for the entire year Source: Rock Health funding database Note: Rock Health categorizes companies into 24 categories PRESENTATION © 2014 ROCK HEALTH Electronic health records and surround applications, including clinical workflow support $ 245M EHR AND CLINICAL WORKFLOW Data aggregation and analysis to support a wide range of health- care use cases $ 161M ANALYTICS AND BIG DATA Hardware/software designed to treat a specific disease or condition $ 146M DIGITAL MEDICAL DEVICES Wearable consumer devices that measure specific biometrics $ 136M WEARABLES AND BIOSENSING Comprehensive platforms designed to manage the health of populations under the shift to risk-based payment models $ 126M POPULATION HEALTH MANAGEMENT Consumer tools for the purchasing of healthcare services or health insurance (B2B and B2C) $ 119M HEALTHCARE CONSUMER ENGAGEMENT ........................................................ 7
  8. PRESENTATION © 2014 ROCK HEALTH Nearly 20% of all funding in 2013 came from the six largest deals of the year Source: Rock Health funding database, company releases, SEC filings 8 $ 100M $ 85M $ 48M POPULATION HEALTH MANAGEMENT Technology-driven MSO for population health TPG Capital EHR AND CLINICAL WORKFLOW Cloud-based electronic health record for physicians KPCB, OrbiMed, Deerfield, Qualcomm Ventures, Longitude Capital, Artis, Industry Ventures, Band of Angels DIGITAL MEDICAL DEVICES Intelligent orthopedic devices that provide real-time, actionable information Dignity Health, Ziegler Meditech Equity Partners $ 45M $ 43M $ 42M DIGITAL MEDICAL DEVICES Ingestible biomedical sensor and companion biometric patch Novartis, Oracle, Otsuka, Sino Portfolio WEARABLES AND BIOSENSING Personal motion sensor and associated online service that tracks your physical activity Qualcomm Ventures, SAP Ventures, Softbank Capital, Foundry Group, True Ventures ANALYTICS AND BIG DATA Health care data warehousing provider Norwest Venture Partners, Sequoia Capital, Sorenson Capital, CHV Capital, Kaiser Permanente Ventures, Partners Healthcare
  9. PRESENTATION © 2014 ROCK HEALTH Deals by financing round (2012-13) The increased volume of early stage deals is the primary driver of year-over-year deal growth Source: Rock Health funding database Note: Only includes deals >$2M with explicit deal stage announced KNOW YOUR ABCS 9 2012 2013 SEED OR A 39% B 34% C 16% D+ 11% SEED OR A 51% B 27% C 14% D+ 8% 5 companies progressed from seed or A to B stage from 2012-13 7 companies progressed from B to C stage from 2012-13 4 companies progressed from C to D or D and beyond to further from 2012-13
  10. PRESENTATION © 2014 ROCK HEALTH While the long tail of VC dabblers in digital health continues to increase, serial investors tripled from 2012 Source: Rock Health funding database Note: Only includes deals >$2M; “serial” is considered as 3+ investments 10 HIGHLIGHTS OF VC ACTIVITY • 302 separate investment firms or notable angels completed digital health deals in 2013 • 27 venture firms did three or more deals in 2013, as compared to only 8 in 2012 • Dabblers (1 investment each) grew by over 70% versus 2012, and 75% of these investors completed zero deals in 2011 or 2012 • 32% of digital health dabblers from 2012 invested again in 2013, with 8 joining the ranks of the serial investors, closing 3+ deals each CAN I PLAY? Distribution of investors by number of digital health deals (2012-13) 0 10 20 30 40 50 1 2 3 4+ NUMBER OF DEALS NUMBEROFINVESTORS 250 240 140 35 29 20 3 7 5 2013 2012
  11. PRESENTATION © 2014 ROCK HEALTH Most active digital health investors by number of deals (2013) A diverse group of prolific digital health investors emerged in 2013, much to the joy of entrepreneurs Note: Only includes deals >$2M; multiple investments in the same company in 2013 are considered a single deal for purposes of deal count KING OF THE MOUNTAIN 11 7 6 4 3 BCBS VP DCM Excel Venture First Round Capital FirstMark Capital Google Ventures Heritage Group HLM Intel Capital KPCB Lemhi Ventures Lerer Ventures Mayfield Fund MemorialCare Milestone VP Noro-Moseley Safeguard Scientifics Sandbox Industries Sequoia Capital Venrock West Health
  12. PRESENTATION © 2014 ROCK HEALTH With entrepreneurs choosing to locate their companies in Silicon Valley, California has established itself as the digital health hub Note: Digital health companies based in California raised $686M in total funding, representing one-third of all funding in 2013 12 Funding by geographic location of company (2013) THE CENTER OF THE UNIVERSE 49 4 7 6 7 4 5 8 18 $200M+ $100-200M $50-100M $10-50M >$0-10M # of funded companies in metro area LEGEND
  13. PRESENTATION © 2014 ROCK HEALTH BACK TO SCHOOL The CEOs of funded digital health companies are overwhelmingly male and highly educated Source: Company websites, LinkedIn, Rock Health analysis WHERE THE LADIES AT? 13 CEO educational background for funded companies (2013) CEO gender for funded companies (2013) 54% OF CEOS HAVE A GRADUATE DEGREE MBA 25% PhD 10% MD 9% Other 9% ........................................................................................................................................................................................ 93% OF CEOS ARE MALE
  14. PRESENTATION © 2014 ROCK HEALTH Campaigns and dollars raised on crowdfunding platforms (2013) Indiegogo has established itself as the de facto platform for digital health crowdfunding Note: Only includes campaigns which concluded in 2013 Source: Crowdfunding platform websites WINNERS AND LOSERS 14 ........................................................................................... ................ ......... 31% 75% 67% CAMPAIGNS (SUCCESS RATE) $ RAISED CAMPAIGNS (SUCCESS RATE) $ RAISED CAMPAIGNS (SUCCESS RATE) $ RAISED $7.8M $438K $897K IN NUMBERS • 120 campaigns tracked • 67,644 individual backers contributing $9.2M across all campaigns • 40% success rate across all platforms • 50% of all crowdfunding dollars raised in 2013 came from only 5 blockbuster campaigns
  15. PRESENTATION © 2014 ROCK HEALTH EHR companies involved with M&A transactions (2013) Electronic health record companies were active in M&A, seeking platform extensions into consumer engagement and mobile Source: Company press releases 15 POWER PLAYS GETTING HITCHED Other notable acquisitions (2013) ACQUIRER TARGET DESCRIPTION Vitera athenahealth Allscripts Cerner Practice Fusion Greenway Medical ($644M) SuccessEHS (undisclosed) EHR roll-up Epocrates ($293M) Mobile app for physicians dbMotion ($235M) Jardogs ($24M) Population health management and consumer engagement Labotix Automation (undisclosed) PureWellness (undisclosed) Laboratory automation and population health management 100Plus (undisclosed) Consumer engagement and analytics DISCLOSED PRICE PRICE TARGET ACQUIRER $215M $200M+ $200M $150M $150M $100M $35M $20-30M Liaizon Towers Watson Humedica UnitedHealth Group Cardiocom Medtronic MapMyFitness Under Armour Appature IMS Health BodyMedia Jawbone Care Team Connect Advisory Board Company Avado WebMD TARGET ACQUIRER Consult a Doctor TelaDoc DestinationRx Connecture HealthyCircles Qualcomm IncentOne WellTok Intelimedix Blue Health Intelligence Physicians Interactive Merck WaveMark Cardinal Health WellnessFX Health Elements UNDISCLOSED PRICE
  16. PRESENTATION © 2014 ROCK HEALTH It was a big year for digital health IPOs, with more than $5B in market value created by two cloud-centric companies Note: Current share price as of 12/31/2013 Source: NASDAQ, S-1 filings, company websites Provides employers, insurance carriers, consumers and government entities with cloud-based technology to shop, enroll, manage and exchange benefits information 16 OFFERING: SEP 18 2013 $ 71M OFFERING PRICE $26.50 $53.55 $57.74 1ST DAY CLOSE CURRENT PRICE +102% +118% Investors: Oak Investment Partners, Goldman Sachs Delivers industry-specific cloud-based solutions—including data, software, and services—to the global life sciences industry OFFERING: OCT 16 2013 $ 261M OFFERING PRICE $20.00 $37.16 $32.10 1ST DAY CLOSE CURRENT PRICE +86% +61% Investor: Emergence Capital
  17. PRESENTATION © 2014 ROCK HEALTH CERN ATHN VEEV MDSO WBMD BNFT QSII MDAS HSTM VCRA $0.4B$0.9B$1.2B$1.3B$1.4B$1.6B $3.2B $4.0B $5.0B $19.1B Market capitalization and 52-week share price change of notable publicly-traded digital health companies (2013) Digital health companies fared well in the public markets, with most beating NASDAQ overall throughout a strong 2013 Note: Market cap as of 12/31/2013; 52-week share price change where available Source: NASDAQ TIME TO INVEST 17 44% 84% 61% 209% 175% 118% 21% 18% 34% -38% NASDAQ BASELINE
  18. PRESENTATION © 2014 ROCK HEALTH Aggregate funds raised for notable digital health companies (2011-13) Capital buildups in brand name digital health companies over the last three years will beg for someone to exit in 2014 Note: Companies are selected—chart does not show all companies that have raised > $50M in the last 3 years; ZocDoc funding includes $55M convertible note raised in 2013 PILING UP CASH 18 $50M $55M $58M $63M $64M $100M $130M $148M$668M TOTAL $668M Filed for an IPO Raising $80M Has raised $111M total from Matrix, Trinity, NEA and IVP
  19. PRESENTATION © 2014 ROCK HEALTH FUNDING AND DEAL VOLUME Total digital health funding in 2013 reached $1.97B, representing 39% growth versus 2012, and more than 100% growth versus 2011. There were 195 digital health deals above $2M, representing 186 distinct companies and reaching 38% annual growth, and 134% growth versus 2011. MAJOR THEMES OF THE YEAR The six themes (Rock Health tracks 24 categories) that emerged in 2013, representing nearly 50% of all 2013 funding included: EHR and clinical workflow, analytics and big data, digital medical devices, wearables and biosensing, population health management and healthcare consumer engagement. PROLIFIC INVESTORS EMERGE 27 separate investors made three or more digital health investments in 2013 (versus only 8 in 2012), and 75% of the 240 investors who closed a single deal in 2013 had no recorded deals in 2011 or 2012. ALTERNATIVE FUNDING FOR PRODUCTS The 120 campaigns we tracked raised $9.2M. 85% of the dollars raised were on Indiegogo, which has become the de facto crowdfunding platform for digital health. A little over 40% of all campaigns were successful. EXIT ACTIVITY 2013 had two major IPOs that have generated more than $5B in market value and 2014 holds the promise of eight name brand digital health companies that have collectively raised well over half a billion dollars. SUMMARY OF FINDINGS 19
  20. SOURCES The Rock Health Funding Database is updated continuously by the Rock Health team using a wide range of sources, including company announcements and press releases, SEC filings (and websites that report SEC filings) and CrunchBase. CapIQ is not a primary source, but is used to reconcile and check for missed entries. We are grateful to all the folks who write about funding and make our lives a bit easier. DATA Our Funding Database is available for a fee on our website. The dataset encompasses individual deals back to 2011, provides details on each of the funded companies, and profiles investors based on deal volume. Updates are provided quarterly through the end of the calendar year of your purchase. Please visit to learn more. @rock_health PRESENTATION © 2014 ROCK HEALTH
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