This blog post examines the different components of the health technology ecosystem. We will illustrate what the categories of innovation are and which categories have the most companies. We will also compare the categories in terms of their funding and maturity.
Digital Medical Devices is The Largest Health Technology Category
Let’s start off by looking at the Sector Map. We have classified 2,334 health technology startups into 22 categories. They have raised $88B from 3,843 investors. The Sector Map highlights the number of companies in each category. It also shows a random sampling of companies in each category.
We see that Digital Medical Devices is the largest category with 324 companies. These companies build IT-enabled medical and diagnostic devices for doctors. These devices include detection equipment, monitoring equipment, and surgical tools. Some example companies include Signostics, MediBeacon, Stimwave, and AliveCor.
Let’s now look at our Innovation Quadrant to find out the funding and maturity of these categories in relation to one another.
The Pioneers Quadrant Has the Most Health Technology Categories
Our Innovation Quadrant divides the health technology categories into four different quadrants.
We see that the Pioneers quadrant has the most number of health technology categories at 13, accounting for 59% of all health technology categories. The EHR/EMR category has the highest average age, and the Genomics category has the highest average funding. On the other hand, the Fitness Apps and the Gamification categories are low on both average funding and age.
As we make our way through Q1 of 2019, let’s look back on 2018 and analyze how exit activity for health technology compares to previous years. The graphic below shows total annual health technology exit events over time.
As the graphic demonstrates, 2018 saw a drop in health technology exit activity compared to the previous year. The 67 exit events in 2018 represent a 9% decrease from the 74 exit events in 2017, which was the highest year on record for exit activity. However, health technology exits are still on a general upward trend, with a 5-year CAGR of 25% from 2013 to 2018. Some of the exit events in 2018 include AveXis’s acquisition by Novartis for $8.7B, Flatiron Health’s acquisition by Roche for $1.9B, and PillPack’s acquisition by Amazon for $1B.
Funding amount percentages showed a slight shift to later stages
Funding count percentages showed a clear shift to later stages
We’ll explain these key observations with some graphics and discussions below.
To help set the stage, the graphic below highlights health technology funding amounts over time. As you can see, the sector’s overall funding demonstrated consistent growth.
Health Technology Funding Amount Percentages Shifting Slightly to Later Stages
Let’s examine the health technology funding amounts by round as a percentage of the total funding amount by year.
The above graph indicates that there has been a slight shift to later-stage funding. In 2012, Seed and Series A funding amounts accounted for around 25% of total funding. By 2017, that total had dropped to under 20%. Consequently, the funding amounts from Series B onward grew from around 75% of total funding to over 80%.
Would the funding count percentages confirm this trend? Let’s examine in the the next section to find out.
Health Technology Funding Count Percentages Clearly Shifting to Later-Stage Events
The below graph shows the health technology funding event counts by round as a percentage of total events.
This graph paints a clearer picture of the funding shift than the previous funding amount graph. In particular, Seed funding count percentage decreased by more than half its size from 53% to 23%. The funding count percentages in all other rounds increased by various magnitudes from 2012 to 2017.
Conclusion: Health Technology Sector Matures As Funding Shifts to Later Stages
In summary, we have seen health technology funding amounts and funding event counts shift from the early-stage rounds to mid and late-stage rounds. These observations led us to conclude that the health technology sector is starting to mature.
The following graphs highlight recent trends in Health Technology startup funding activity. The graphics include data through August 2017.
The above graph summarizes the total funding raised by Health Technology startups for each year. 2015 has the most funding to date at around $8.9B.
The above graph summarizes the total amount of funding raised by Health Technology companies founded in a certain year. Companies founded in 2013 have raised the most funding at around $5.2B.
We are currently tracking 2053 Health Technology companies in 22 categories across 57 countries, with a total of $52.9 Billion in funding. Click here to learn more about the full Health Technology market report.
The following graph summarizes investor activity in the Health Technology space. Please note these graphics are made using data through August 2017.
The above analysis summarizes the total number of investment rounds Health Technology investors participated in, and the number of unique companies funded by selected investors. Major investors into the space include NEA, GE Ventures, Khosla Ventures, Sequoia Capital, and Y Combinator.
We are currently tracking 2028 Health Technology companies in 22 categories across 57 countries, with a total of $52.2 Billion in funding. Click here to learn more about the full Health Technology market report.