]Startups in the digital health space are seeing increased venture capital funding to the tune of $ 14.7 billion in the first half of this year, following investments of $ 14.6 billion in 2020, The Wall Street Journal reported Thursday (July 15), citing data from Rock Health.
“COVID has exposed healthcare systems’ lack of investment in technology,” Sheila Talton, managing director of Gray Matter Analytics, told the WSJ. The Chicago-based software company helps medical insurers and vendors manage data. Startups in the digital health space raised $ 7.7 billion in venture capital throughout 2019.
The COVID-19 pandemic has helped fuel momentum for telemedicine services, which has attracted more investors to invest in digital health tools. In addition to telemedicine, investors have supported remote technology that has helped promote clinical trials in patients’ homes.
DrFirst.com provides software to facilitate electronic prescriptions; CFO David Samuels told the WSJ investors are rallying to help the effort. DrFirst.com has reported annual revenues exceeding $ 100 million and recently entered into a $ 50 million fundraising deal, bringing its total fundraising over the past 12 months to $ 135 million. Samuels said that “capital is chasing this opportunity,” according to the WSJ.
Larry Cheng, managing partner of venture capital firm Volition Capital, told the WSJ that the glut of investors could cause startups to seek more funding than they actually need. “This is a time when smart entrepreneurs will take advantage of dynamic finance markets to raise just the amount they need, but not overdo it,” he said.
Consumers are now the engine of demand for telemedicine services even when people return to see a doctor in person, as digital tools make it easier to manage healthcare experiences. In a PYMNTS collaboration with Rectangle Health – Connected Healthcare: What Patients Want from Their Healthcare Customer Experiences – digital health tools emerged as an important factor.
Almost 60% of digital health financing came from 372 investments of $ 100 million or more. Even as the pandemic subsides, healthcare consumers are still looking for digital health deals.