]Startups in the digital healthcare space are benefiting from increased venture capital funding to the tune of $14.7 billion in the first half of this year following 2020’s $14.6 billion in investments, The Wall Street Journal reported on Thursday (July 15), citing data from Rock Health.
“COVID exposed the lack of investment that health systems have made in technology,” Sheila Talton, chief executive of Gray Matter Analytics, told WSJ. The Chicago-headquartered software firm assists medical insurers and providers with managing data. Startups in the digital healthcare space raised $7.7 billion in venture capital in all of 2019.
The COVID-19 pandemic helped fuel the drive for telemedicine services, which attracted more investors to put money into digital healthcare tools. Aside from telemedicine, investors have supported remote technology that helped promote clinical trials in patients’ homes.
DrFirst.com supplies software to facilitate electronic prescriptions; Chief Financial Officer David Samuels told WSJ that investors are stepping up to assist in the effort. DrFirst.com has posted annual revenue topping $100 million and recently closed a $50 million funding deal, bringing its total fundraise in the past 12 months to $135 million. Samuels said that “capital is chasing that opportunity,” per WSJ.
Larry Cheng, a managing partner with venture firm Volition Capital, told WSJ that the glut of investors could prompt startups to seek more funding than they actually need. “This is a time when the smart entrepreneurs will leverage the buoyant financing markets to raise just the amount they need, but not overdo it,” he said.
Consumers are now driving the demand for telemed services even as people return to seeing a doctor in person because digital tools ease the management of healthcare experiences. In a PYMNTS collaboration with Rectangle Health — Connected Healthcare: What Patients Want From Their Healthcare Customer Experiences — digital healthcare tools surfaced as an important factor.
Close to 60 percent of digital healthcare funding came from 372 investments for $100 million or more. Even as the pandemic wanes, healthcare consumers are still looking for digital health offerings.