Patient-focused start-ups attracted the most funding in digital health

Patient and consumer experience start-ups have topped the tables for venture capital funding in digital health for 2015, raising $1.3bn in total in a year that saw several large deals in the space, according to a new report from StartUp Health. Patient experience was closely followed by benefits and wellness-based companies, which received $1.2bn in funding, including Zenefits, which alone raised $500m. Medical devices had a quiet year, nearly halving year-on-year, with just $483m raised.

A look at digital health investment trends in 2015 revealed that entrepreneurs developing tools to support the patient experience attracted the most investment and accounted for the highest dealflow volume, according to a report by StartUp Health. The subsector had 111 deals valued at a total of $1.3 billion. That was a significant jump from last year when the category ranked fifth.

Benefits and wellness trailed patient experience. The category had half as many deals but these transactions were larger. Zenefits, for example topped the charts for biggest single deal at $500 million — a round in which Andreesen Horowitz participated. The company has recently come under scrutiny over claims that it failed to pay employees for unused paid-time off and for overtime required under California law.Insurance companies, according to The Wall Street Journal.

Oscar ($145 million) and Collective Health ($81 million) also closed large rounds.

The report noted that companies raising $10 million to $25 million had a 21 percent increase in deal volume. Early stage deals, particularly Series A accounted for 35 percent of investments. Collectively, Seed and Series A deals represented 65 percent of transactions.

Corporate ventures continued to dominate the digital health investor ranks, although Qualcomm Ventures took a tumble from its spot as lead digital health investor in favor of GE Ventures. Google Ventures, Khosla Ventures and New Enterprise Associates shared second with each participating in nine digital health deals.

Featured Photo: Flickr user Jason Eppink