VC funding in healthcare, IT sector plunges 35% in Q1 of 2015: Mercom Capital

Venture capital funding in the health-care information technology sector globally fell 35 per cent in the first quarter of 2015, according to a report by Mercom Capital Group LLC, a global communications and consulting firm.

The healthcare IT sector raised $784 million in 142 deals during January-March this year compared to $1.2 billion in 134 deals in the previous quarter globally.

"Funding fell across the board with the exception of Mobile Health (mHealth), which was the bright spot this quarter. There was also significant M&A activity in the first quarter for mHealth companies. We have already seen 10 M&A transactions in Q1 compared to 21 in all of last year, which bodes well for exits in Mobile Health," said Raj Prabhu, CEO and co-founder of Mercom Capital.

Among practice-centric vertical companies, data analytics companies got the most funding in this category, raising $92 million, followed by data warehousing companies with $70 million.

Health insurance exchange companies raised $38 million, electronic health record (EHR)/ electronic medical record (EMR) companies got $36 million, and practice management solutions companies got $34 million in Q1 2015. The consumer-centric companies category saw mHealth companies attracting the most VC funding, raising $282 million in Q1 2015, followed by tele-health companies at $65 million. Rating and comparison shopping companies raised $47 million.

Of 142 deals in Q1 2015, 65 were early-stage investments under $2 million and 16 seed-stage accelerator/incubator deals. The biggest deal in this space was by Health Catalyst, a healthcare data warehousing provider, that raised $70 million followed by $55 million by Ayasdi, a big data analytics company, in Q1 2015.

In India, Practo, a developer of a physician search engine to book appointments and rate providers, raising $30 million was the biggest funding in Q1 of 2015. Another notable VC deal in India was eKincare, an online and offline platform owned by Aayuv Technologies that enables users to monitor their critical medical information and access it anywhere anytime, raising $300,000 (Rs 1.86 crore) in seed funding from BitChemy Ventures and Adroitent. Gympik.com, an online search engine that allows users to search and rate fitness facilities and professionals, raised $135,000 (Rs 86 Lacks) in seed funding from Capvent's managing partners Tom Clausen and Rohan Ajila, as well as manufacturing firm Haldyn Glass.

A total of 288 investors and four accelerators/incubators participated in health-care IT deals this quarter. GE Ventures tops the chart with four deals, followed by Rock Health and Kaiser Permanente Ventures with three deals each. US companies got the highest amount of funding; they raised $716 million in 123 deals. Eleven other countries-India, Israel, Canada, Australia, Serbia, Spain, Finland, Singapore, Germany, Austria and the UK-recorded 19 deals this quarter.