2014 Health IT Venture Funds Fly High

Six companies attracted millions from top venture investors

Venture capital funding in the healthcare IT sector more than doubled in 2014, coming in at $4.7 billion across 670 deals, according to Mercom Capital Group. The number compares to $2.2 billion across 571 deals in 2013.  VC funding increased in the fourth quarter of 2014, with $1.2 billion in 134 deals, compared to $956 million in 212 deals for the third quarter of 2014.

The sector also brought in $2.1 billion in debt and public market financing, including six IPOs, bringing the total corporate funding raised in the sector in 2014 to almost $7 billion.  "The healthcare IT sector, in the five years since we started tracking funding data, raised $8.8 billion in VC funding and another $3.6 billion in public market and debt financings bringing the total to $12.4 billion – largely driven by the HITECH and Affordable Care Act," said Raj Prabhu, CEO and co-founder of Mercom Capital Group, in a news release that detailed the findings. "However, the enthusiasm in the sector shown by the VC community was not quite matched by the public markets when you look at market performance of companies that went the IPO route in 2014."

Practice-centric companies raised $2.4 billion in 234 deals for 2014, including clinical decision support companies with $517 million, followed by data analytics companies with $367 million and population health management companies with $247 million.  Consumer-centric companies raised $2.3 billion in 436 deals. Mobile health companies were the largest recipient of venture cash, bringing in $1.2 billion. And within mHealth, the lion's share of funding, or $526 million, went to wearables and mHealth apps, with $507 million. Telehealth companies received $369 million. Rating and comparison shopping companies brought in $288 million...