Digital Health VC Funding Hits $2 Billion in Q1 2019 - Report

Mercom Capital Group, llc, a global communications and research firm, released its report on funding and merger and acquisition (M&A) activity for the Digital Health (Healthcare Information Technology) sector for the first quarter of 2019. Mercom’s comprehensive report covers deals of all sizes from across the globe.

Venture capital (VC) funding, including private equity and corporate venture capital into Digital Health (Healthcare IT) companies in Q1 2019, came to $2 billion in 149 deals compared to $1.4 billion in 142 deals in Q4 2018. VC funding in Q1 2019 was down 19% compared to the same quarter of last year (Q1 2018) when nearly $2.5 billion was raised in 187 deals.

Digital Health companies have brought in over $37 billion in disclosed VC funding since 2010.

Total corporate funding for Digital Health companies - including VC, debt, and public market financing - totaled $2.2 billion in Q1 2019.



“Funding levels were down compared to last year in Digital Health in the absence of larger deals. M&A activity was also flat. However, Digital Health public equities experienced a turnaround in Q1 with 66% of them beating the S&P 500 compared to Q4 2018 when 63% of the equities we tracked performed below the S&P 500. Favorable market conditions have prompted several companies to announce IPO plans,” said Raj Prabhu, CEO of Mercom Capital Group.



The top funded categories in Q1 2019 were: $557 million raised by Data Analytics companies, mHealth Apps with $392 million, Telemedicine with $220 million, Healthcare Booking with $177 million, Clinical Decision Support with $107 million, Mobile Wireless with $90 million and $80 million for Healthcare IT Service Providers.



There were 48 early-round deals in Q1 2019.

The top VC deals in Q1 2019 included: $170 million raised by Doctolib, $100 million from Health Catalyst, $88 million raised by Calm, and $80 million by Taimei Medical Technology.



A total of 371 investors participated in funding deals in Q1 2019 compared to 412 investors in Q1 2018. There were 16 FDA and CE approvals issued to Digital Health companies in Q1 2019.

Digital Health VC funding deals were distributed across 17 countries in Q1 2019.

In Q1 2019, there were 45 M&A transactions (seven disclosed) involving Digital Health companies compared to 48 M&A transactions (13 disclosed) in Q1 2018.

Practice Management Solutions companies led M&A activity with five transactions followed by Data Analytics companies with four transactions. Companies providing Clinical Decision Support, Electronic Medical Records, and Emergency Department Information Systems had two transactions each. There was one transaction each recorded by companies offering Asset Tracking, Document Management, Long-Term and Post-Acute Care, and Medical Imaging.

The top disclosed M&A transactions included the $195 million acquisition of Voalte by Hill-Rom Holdings, followed by BioTelemetry’s acquisition of Geneva Healthcare for $65 million. Alphabet's Google acquired Fossil Group’s intellectual property related to a smartwatch technology currently under development for $40 million, Netmeds acquisition of KiViHealth for $10 million and Livongo Health’s acquisition of myStrength for $10 million.

A total of 610 companies and investors were covered in this report.

Healthcare Firm Portea Medical To Raise $25 Mn From Sabre Capital, Accel

Portea Medical, a home healthcare company is in advanced talks to secure $25 million (Rs 160 crore) in its Series C round of funding. If sources to be believed, Sabre Capital, an India-focused mid-market private equity firm is leading the round. Accel Partners is also participating in the round, as per the sources.

Commenting on the development, Meena Ganesh, CEO, Portea Medical told ET, “Portea is in talks with three investors to raise $25 million. I can’t elaborate further at this point.”

As per the sources, Portea is reportedly raising the capital at a valuation lower than that during the previous investment round in 2015.

Founded in 2013, Portea Medical focuses on general primary health care, post-hospitalization care, chronic disease management and allied services. The company offers home visits from doctors, nurses, nursing attendants and physiotherapists. In addition, Portea also provides the collection of lab samples and medical equipment on hire, bringing the entire gamut of healthcare services to a patient’s doorstep.

Being a part of serial entrepreneurs K Ganesh and Meena Ganesh’s startup factory GrowthStory, Portea in 2015 had secured an investment of $37.5 million from Accel Partners, IFC, Qualcomm Ventures and Ventureast which had valued the company at Rs 628 crore. Prior to this, Portea had received $9 million Series A funding from Accel, Qualcomm Ventures and Ventureast in December 2013.

Not only this, In April 2016, Portea had acquired home medical equipment provider Health Mantra India for an undisclosed amount in cash and stock. I January 2016, the firm had picked up a majority stake in healthtech startup, PSTakeCare, whose platform seamlessly connects key stakeholders in the healthcare delivery ecosystem. The investment in PSTakeCare follows Portea’s acquisition of speciality pharmaceutical distributor, MedybizPharma in November 2015.

The firm claims to handles over 1,20k visits per month across 16 cities and has about 4,500 employees. An email sent to Portea Medical did not elicit any response at the time of publication.

Ventureast Announces First Closing of New Tech Fund, Targeting $150M

Ventureast, one of India’s longest standing early-stage Venture Capital firms, announced the first closing of their sixth fund- Ventureast Proactive Fund II (VPF2).The Fund received strong interest from existing and new investors, and targets a final closing in the next six months.

Ventureast Proactive Fund II will invest in seed and early stage businesses where ‘technology is a strong differentiator and not just an enabler’. The emphasis is on relatively unaddressed sectors such as rural and semi-urban markets, needs of the SME’s, and pure play technology ‘picks & shovels’. Ventureast expects these opportunities to emerge in fintech, enterprise applications, cloud, mobile internet, and IoT / consumer internet.

Ventureast has partnered with leading VC investors to build a ready pipeline of exciting early stage businesses over the last 12 months while fund raising activity was in full swing for VPF2. This active, collaborative approach has enabled VPF2 to hit the ground running, ie. invest in three deals concurrently with the first closing.

• Find me a Shoe offers a virtual shoe-fitting room for e-commerce businesses. The company uses cutting-edge, proprietary, computer vision technology to provide the world's first personalized virtual trial shopping experience. Customers get to create their digital foot profile on the app and find the right footwear via virtual trial shopping. Led by an ex-Intel technologist from IIMA; a serial entrepreneur and expert in Computer Vision; and, a product design major from Domus, Italy, the company graduated from the Target (USA) Accelerator Program in November 2015 and has already started working with brands and retailers in the US.

• A stealth-mode digital health company that provides personalised on-demand healthcare anytime, anywhere, via mobile devices, internet, video call and phone. The team is led by a serial entrepreneur from Silicon Valley and a US-trained Interventional Radiologist & entrepreneur. The need for confidential and easily accessible digi-healthcare is immense, and Stanford University is collaborating with the company to put global best practices into play.

• OS Labs provides a platform enabling leading handset makers and app developers to deliver a world class smartphone experience that meets the real needs of the consumers through innovation, simplification and localization. Its product offering already has a significant penetration in the Indian mobile phone market. The company is founded by IIT graduates and the senior management team includes top professionals and leading voices in the Indian smartphone industry.

Sarath Naru, Managing Partner of Ventureast said, “We continue to invest in businesses where capital is not the primary competitive advantage, but ‘technology’ is. While huge investments have been made in tech businesses over the last five years chasing the ‘firstest with the mostest’ strategy, the emphasis today is on the kind of startups where technology will be the primary differentiator. These businesses are leveraging the cloud, IOT, big data analytics/AI, mobile, etc to build unique and globally scalable solutions.”

About Ventureast

Ventureast is one of the longest standing Venture capital fund managers in India, investing since 1997 and managing close to $400+ million. The company has a diverse portfolio of more than 100 investments in Technology, Healthcare and Clean Environment. Ventureast is possibly the only Indian Fund Manager that has dedicated funds and teams for each sector- life sciences & healthcare, and separately for technology driven businesses. Ventureast’s investments include:

• Gland Pharma: Global leader in small volume parenterals & low molecular weight heparin; built from Rs 2.5 cr sales at the time of our investment, to $1.35 Billion acquisition by Chinese major.
• Moschip: Built from zero revenues to become India’s first listed, semiconductor product company; created patented new products for laptop accessory market.
• Sresta’s 24 Mantra: An Organic ‘farm to fork’ concept; built from Rs 50 lac sales at time of our investment to close to Rs 1000 crores market value now.
• Little Eye Labs: Tools for App developers; built from ground zero to rapidly being India’s first acquisition by Facebook.
• Atyati: Agent based rural banking tech platform; Built from ground zero in just 5 years to develop a business pipeline well ahead of competitors, and acquired by NYSE listed company.
• Loylty Rewardz: No.1 consumer loyalty company with 300 million+ unique customers. Beat well-funded competitors and acquired by India’s largest payment company.