Digital health funding is on the decline, according to yet another funding report, this time from Mercom Capital Group. According to the company’s latest report, in 2019 digital health funding came in at $8.9 billion with 615 deals — a drop from the $9.5 billion and 698 deals recorded in 2018.
“After three consecutive years of growth, venture deals, and dollars for digital health companies declined in 2019,” Raj Prabhu, CEO of Mercom Capital Group, said in a statement. “After a long dry spell, there were four US IPOs, but their performance so far has been underwhelming. M&A activity also declined in 2019. The big winners were telemedicine companies, with a 55% percent increase in funding YoY while digital health products that were powered by AI, brought in over $2 billion.”
However, the report’s executive summary notes that the average funding deal size in 2019 was up to $14.4 million, whereas in 2018 it was $13.6 million. Consumer-centric companies brought in the most cash with $5.3 million in 2019, followed by practice-centric companies, which brought in $3.6 billion.
WHY IT MATTERS
Mercom isn’t the only investor report pointing to lower funding numbers in 2019. Last week Rock Health released its annual tally, which recorded $7.4 billion in digital health deals in 2019. This was also down from 2018, when they recorded $8.2 billion in deals. MobiHealthNews’ own year-end accounting held to these trend as well.
While each report varies in calculations, due to the scoop and definition of digital health, both are reporting a dip in numbers this year.
THE LARGER TREND
2019 may have slid back in terms of funding totals, but over the last decade digital health funding deals are trending up. When Mercom first started the reports in 2010, it recorded $211 million in funding. While some years like 2015, dropped slightly from the previous year, overall they are increasing.