Digital health funding deals dipped in 2019 to $7.4B, per Rock Health

2019 closed out the decade with $7.4 billion in digital health deals and a spike of six health tech IPOs, according to Rock Health’s latest funding report.

Over the last decade the amount of yearly funding in digital health deals has generally been on the rise; however, 2019 saw a slight decrease in funding from 2018 ($8.2 billion). This wasn’t surprising to Rock Health, which predicted this turn of events last year.

“As we anticipated at the close of 2018, a record-breaking year, the growth trajectory of venture investment in digital health slowed in 2019. Total venture funding was 10% below 2018’s record-setting high of $8.2 billion,” the authors of the report wrote. “This drop was arguably driven by a small change in the number of late-stage deals year over year — just two late-stage deals in 2018 accounted for the $0.8 billion (year-over-year) change in total funding.”

The average size of the deal also shrunk slightly from 2018’s $21.6 million average to $19.8 million in 2019. The report notes that a majority of this year’s investors are return investors (60%).

The other major news story this year was the six digital health IPOs after a multi-year lull. Those companies include Livongo, Health Catalyst, Phreesia, Change Healthcare, Peloton and Progyny.

“As of January 1, 2020, the combined market cap of the six IPOs is $17 billion,” authors of the report wrote. “The flurry of IPOs in 2019 is validating for the venture model of long-tail investing — a small number of companies generating a large share of the returns — in digital health.”