Yinka Makinde, Programme Director, DigitalHealth.London, assesses the financial landscape for health start-ups and offers help
Earlier this year Dr Bayju Thakar, Co-founder of Doctor Care Anywhere and CEO of Synergix Health, wrote on MedTech Engine that the UK market for digital health is expected to have grown to £43 billion in 2018 from £23 billion in 2014. The appetite amongst the investor community is growing, and shows no signs of slowing. According to Startup Health Insights’ 2016 Year End Funding Report, 2016 saw a record global investment in the sector.
The US has traditionally been dominant in funding levels in the digital health market. But in 2015 and 2016, there were signs that global digital health investment (and innovation activity) is increasing. StartUp Health, which monitors global investment activity (and deals less than $2 million), reported a record year for digital health investment in 2016, at a total of $7.9 billion, with a rise in the number of significant non-US investments in digital health. The top three largest deals closed in 2016 were:
2) Ping An Good Doctor (China) – an app providing free diagnosis, treatment and online appointment booking, enabling users to consult doctors through text, pictures, and video, and
3) Babytree (China) – providing online parenting diaries, parenting knowledge, early-education kits/products.
Closer to home, we celebrated several of our DigitaHealth.London Accelerator companies successfully raising significant rounds this year, at £500K for OurPath; £7.0 million for Echo; $8.0 million for Sense.ly; $12.0 million for Oviva and $60 million for Babylon.
Tough times for innovators
However, despite these positive signs of liquidity in the market, in his article for LinkedIn John Spindler, CEO of Capital Enterprise, reported that there had been a big decline in Seed and Series A funding of start-ups since 2016 and that the fall continues to accelerate. He gave the example that the total funding invested by European VCs in the first rounds of start-ups had declined by 50 per cent. In the first two quarters of 2017 only approximately £700m was invested across the continent.
From hearing the insights of 2,500+ innovators across the DigitalHealth.London ecosystem, we know that access to funding continues to be a challenge for over half of them. At the launch of our exciting new venture between DigitalHealth.London and RYSE Asset Management LLP at the end of November, Sarah Haywood, CEO of MedCity said that, ‘Access to finance is a critical issue for the success of all companies, particularly for health, care and life sciences companies. We want to see innovative products and services being delivered for patients and this can only happen with the support of the investment community. Partnerships like this between DigitalHealth.London and RYSE help to bring exciting companies to potential investment, and play an important role in creating a vibrant ecosystem for entrepreneurialism and a knowledge economy.’
Eight greats required
The RYSE Early Stage Opportunity Fund has been created to help bring exciting digital health companies to potential investment. Together, digital health experts and fund managers are working to support the growth and development of a number of promising early stage digital health businesses that have shown potential in addressing identified health and care needs within the NHS. The collaboration between DigitalHealth.London and RYSE Asset Management LLP signals an opportunity for digital health businesses that are considering raising. The partnership will also enable the creation and funding of digital tools and applications that improve patient experiences, drive operational efficiency in the NHS and build long term value for investors.
The deadline for applications is the 18 January. RYSE are looking to meet eight great teams developing and commercialising digital health innovations across a variety of areas, including Telehealth; Digitised health systems; mHealth; Health analytics and more. For further information about eligibility and how to apply visit DigitalHealth.London. Don’t delay!
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