Fully understand digital health with this chart.
 | | Digital Health Chart | | Digital health startups are burning through funding fast, raising concerns about a market bubble… Digital health funding skyrocketed 42% year-over-year from $5.7 billion in 2017 to $8.1 billion in 2018 — giving some venture capitalists (VCs) reason to pause and question: Is the digital health market in a bubble? During the Health 2.0 conference in Santa Clara, California in September 2018, a panel of VCs pointed to a number of signs that suggest the digital health market is overvalued — and in a bubble in danger of popping, per MedCity News. However, a closer look at the underlying market dynamics suggests otherwise…
 | | | * This chart was taken from Business Insider Intelligence's Digital Health Research coverage, which is exclusively available to all Premium subscribers. You can get full access to this chart and data set, over 250 reports, and other timely updates when you sign up today.
Here are the digital health market trends that have led some to sound the alarm that digital health is in a bubble: - Digital health startups are burning through cash faster than ever. Digital health startups are raising more funding, and at a much faster rate: The time between seed and Series A rounds was cut nearly in half between 2012 and 2016 — from 28 months to 16 months — and the amount raised by the median Series B round jumped from $10 million to $14 million over the same period.
- A lack of initial public offerings (IPOs) calls into question the long-term viability of digital health startups. There hasn't been a digital health IPO since 2016. Because successful IPOs typically require companies to generate significant revenues, the dearth of digital health IPOs could hint at overvalued startups.
But a closer look at the digital health market suggests it's stable, not in a bubble: - The IPO drought is consistent across industries. The volume of IPOs of VC-backed US tech companies has declined or held steady since 2014, when there were 33 IPOs. Only 19 US tech companies filed an IPO in 2018, suggesting the lack of digital health startups going public is part of a broader tech trend, rather than a symptom of an overvalued digital health market.
- Incumbent payers have signaled that they see value in digital health startups. With decades of experience in the industry, private insurers should have a good grasp on viable healthcare products. Private payers' VC funds participated in a new high of 18 digital health deals as of Q3 2018. Their endorsement of digital health startups is a good sign that startups' solutions and products are grounded in value.
- Fraudulent activity among digital health startups is scarce. Companies like Theranos — a former digital health darling once valued at $9 billion that dissolved amid indictments for fraud and realizations its tech was faulty — are an exception, not the norm. Instead, about half of digital health's unicorns are currently implemented by US health systems and hospitals, suggesting their high valuations are tied to improvements in clinical outcomes or operations.
We expect an uptick in 2019 IPO activity to further... |
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