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After Huge Q2, Health IT VC Funding Drops by Half to $956M

By Jennifer Bresnick

- Venture capitalists were significantly less generous to health IT companies during the third quarter of 2014, Mercom Capital reports, with a total investment of $956 million following a record-breaking $1.8 billion quarter in the middle of the year.  While a larger number of innovative companies received funding than during the previous quarter, the deals were smaller than earlier in the year.  Health information management and mobile health companies were the hottest properties, scooping up $220 million and $345 million respectively.

A total of 252 investors funded 212 deals in the third quarter, contributing to the $7.6 billion venture capital (VC) funding raised by health IT companies since 2010.  While VC wallets were harder to pry open, mergers and acquisition (M&A) activity was actually at its highest level ever, with $4.7 billion in disclosed transactions during Q3.  M&A deals only raked in $2.2 billion in Q2 with the same number of disclosed events.

“Healthcare IT saw another big fundraising quarter in Q3 with almost $1 billion raised. Companies from countries outside of the United States accounted for a record 21 percent share of the funding. While consumer-centric companies attracted the majority of the funding this quarter, M&A has been a different story with the majority of the deals involving practice-focused companies,” said Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.


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