StartUp Health Q3 2018 Global Digital Health Investment Report Highlights China's Dominance with 70% of Top 10 Non-U.S. Funding Rounds
StartUp Health released its Global Digital Health Funding Report for Q3 2018 (data as of September 30, 2018), noting that the digital health market reached a new high in 2018, with cumulative funding and investment transactions totaling $11.1 billion. Funding and investment transactions in the third quarter amounted to $4.5 billion, nearly $2 billion higher than in the third quarter of 2017.
By analyzing publicly available data on seed, venture capital, and private equity investments, this report reveals six major trends in global digital health financing—such as the continued rise in both transaction value and volume, with China leading the international market. The report also presents a top-ranking list of digital health investment and financing deals, providing analysis across different regions and sub-sectors.
VCBeat (WeChat: vcbeat) promptly compiled this report. Among the findings, several highlights stand out:
1. Of the top 10 largest deals outside the United States in 2018, seven took place in China;
2. Investment and financing transaction volume in the third quarter reached $4.5 billion, hitting a record high;
3. New York remains the most active region for investment and financing in the United States, while London is far ahead in Europe.
In 2018, the digital health market reached a new high, with cumulative investment and financing transactions totaling $11.1 billion. Investment and financing transactions in the third quarter reached $4.5 billion, nearly $2 billion higher than in the third quarter of 2017, setting a record for the highest Q3 investment and financing amount ever.
Record-breaking transaction volumes in the mid-to-late stages have driven fund growth and market maturation. A surge in international investments saw five of the top ten cross-border deals take place in China, while European cities provided substantial early-stage financing. As the pace of investment and financing outstripped the overall growth rate recorded in 2017, the digital health market remains one of the fastest-growing segments within the healthcare industry.
1. Record-Breaking Investment and Financing Volume in Q3
In the third quarter of 2018, digital health financing and investment transactions totaled $4.5 billion, marking the cumulative value of the 2018 digital healthcare market surpassing the $10 billion threshold to reach $11.1 billion. Even excluding Peloton’s heavyweight $550 million investment in the health sector, this quarter recorded the highest financing and investment transaction volume since StartUp Health began tracking such data in 2010.
2. Digital Health Market Poised to Hit New Highs
The financing and investment volume in the third quarter of 2018 was nearly $2 billion higher than that in the third quarter of 2017, with 70 additional transactions. As investment activity is generally more robust in the fourth quarter, the total financing and investment transaction value in the digital health market is expected to set a new record this year.
3. Beijing Leads the International Market
Among the top ten international deals in the third quarter, five involved Beijing-based companies. In 2018, a total of six such transactions were recorded, with the total investment and financing volume reaching $863 million. As hubs for early-stage financing, London and Stockholm have also seen their deal sizes continue to grow.
4. The market is gradually maturing
The market continues to mature, with an increase in the number of mid-to-late stage financing rounds, indicating increased follow-on investment and the sustained development of startups. By the third quarter, Series B–F financings accounted for 43% of transactions in 2018, marking the highest proportion since 2010.
5. The number of investors is steadily increasing
In 2017, the number of investors in the digital health market reached a record high of 1,247. The number of investors in this market is expected to remain on par with 2017 levels in 2018. Notably, the total investment amount from most top-tier investors exceeded their respective totals in 2017.
6. Transaction Volume Continues to Increase
The average transaction size has continued to expand since the beginning of the year, experiencing exponential growth in the third quarter. To date, six of the top 10 largest transactions occurred in the third quarter, with the smallest investment among the top ten reaching $149 million.
1. Annual Investment and Financing Transaction Volume: Poised to Hit a New High in 2018
In 2018, the total value of digital health financing and investment transactions is expected to exceed that of 2017 by nearly $1 billion. The third quarter also marked the highest quarterly transaction volume since StartUp Health began tracking investment activities in 2010.
Global Investment and Financing Transaction Value and Volume, 2010–2018
(Image source: Startup Health)
2. Monthly Investment and Financing Transaction Volume: The “Summer Slump” Is a Thing of the Past
July 2018 was the month with the highest digital health investment and financing transaction volume, reaching $1.88 billion, which is $10 million higher than the previous record-holding month and surpassing the peak of 2017. With financing scales nearly quadrupling in July and August of this year, the “summer slump” has become a thing of the past.
Monthly Trends in Investment and Financing Transaction Volume (2014–2018)
(Image source: Startup Health)
3. Financing by Round: Increased Proportion of Mid- to Late-Stage Rounds
The third quarter showed positive signs of industry maturation, with mid-to-late-stage financing rounds accounting for the largest proportion of all transactions, continuing the year-on-year trend observed since 2010. As the share of mid-to-late-stage deals increases, digital health transaction volume is projected to surpass 2017 levels.
Financing Round Structure, 2010–2018
(Image source: Startup Health)
1. Top 10 Global Financing Deals of 2018
In the digital health sector, diversification of investment and financing has gradually become a trend. Among the top 10 global deals in 2018, seven occurred in the third quarter. Oscar appeared on the list twice with a total funding amount of $540 million, yet its financing in the digital health space was still $10 million less than Peloton’s $550 million.
(Data compiled by VCBeat based on the Startup Health report)
2. Top 10 Non-U.S. Investment and Financing Deals in 2018
Of the top ten deals outside the United States in 2018, six occurred in the third quarter, with five companies based in Beijing and two in Zhejiang. Beijing-headquartered companies such as LinkDoc and Medlinker completed nearly $150 million in transactions during this quarter.
(Data compiled by VCBeat based on the Startup Health report)
3. Top 10 Global Regions for Investment and Financing in 2018
In the third quarter, Beijing completed seven deals, with total investment and financing reaching $721 million. Although Beijing maintained an upward trend, metropolitan areas such as London and Stockholm generated more early-stage financing rounds, keeping them at the forefront of the rankings.
Top 10 Global Regions by Transaction Value and Volume
(Image source: Startup Health)
(Data compiled by VCBeat based on the Startup Health report)
4. Top 10 Financing Deals in the United States in 2018
In the third quarter, New York City completed 25 deals with nearly $1.6 billion in financing and investment, surpassing other regions including the San Francisco Bay Area ($865 million across 29 deals). More than 50% of both deal volume and value flowed to the “Big Three”: the San Francisco Bay Area, Boston, and New York City.
Top 10 U.S. Regions by Transaction Volume and Value
(Image source: Startup Health)
(Data compiled by VCBeat based on the Startup Health report)
5. Top 10 Investment and Financing Deals in Europe in 2018
London and Paris were the European cities with the highest total investment and financing volumes in the third quarter of 2018, but smaller cities such as Ljubljana and Nijmegen also saw an increase in their financing scales.
Top 10 European Regions by Transaction Value and Volume
(Image source: Startup Health)
(Data compiled by VCBeat based on the Startup Health report)
6. Most Active Investors in 2018
Kleiner Perkins and GV made their debut on the list of most active investors this quarter, with five investments in Q3 alone. F-Prime surged from sixth to second place. As of Q3 2018, the listed investors had already matched or exceeded their total deal volume from the previous year.
(Data compiled by VCBeat based on the Startup Health report)
7. Number of Investors in 2018
The number of investors in 2018 has already surpassed the total from 2010 to 2016, and is nearly double that of the third quarter of 2017. This upward trend is expected to continue into the fourth quarter, with the full-year 2018 investor count projected to exceed that of 2017.
(Image source: Startup Health)
8. The Most Active Fields in 2018
“Patient Empowerment” continues to maintain its leading position in the digital health sector, with investment and financing transactions totaling $2.1 billion across 149 deals. The insurance sector recorded the highest average transaction value, with a median deal size of $31.2 million.
(Unit: USD; data compiled by VCBeat based on the Startup Health report)
9. Most Active Apps in 2018
(Unit: USD; data compiled by VCBeat based on the Startup Health report)
Typical Cases
1. Telemedicine—Cloudbreak
Cloudbreak, a telemedicine platform, delivers a range of specialized services via its proprietary broadband network, addressing clinical treatment challenges for more than 800 U.S. hospitals each month.
2. Diagnosis/Screening—Oxitone
Oxitone has launched the first FDA-cleared wrist-worn pulse oximeter. Leveraging an AI-driven early disease detection and warning system, the device provides hospital-grade digital continuous care for high-risk patients prone to complications.
10. Most Active End Users
(Unit: USD; data compiled by VCBeat based on the Startup Health report)
Typical Cases
1. Employee – FitBliss
FitBliss helps sales-driven organizations optimize performance by integrating CRM (Customer Relationship Management) data with consumer health device data, thereby enhancing output, improving individual well-being, and mitigating health risks.
2. Patient—Curatio
Curatio is a digital application designed to assist with medication therapy. It leverages social therapy to enhance patients’ self-management while collecting data on medication adherence and efficacy, thereby helping pharmaceutical companies improve operational efficiency.
11. Most Active Specialties
(Unit: USD; data compiled by VCBeat based on the Startup Health report)
Typical Cases
1. Oncology—Savor Health
Savor Health Launches Personalized Platform for Nutrition Management and Patient Engagement Targeting Healthcare Enterprises, Cancer Patients, and Their Caregivers. Leveraging artificial intelligence, the platform effectively reduces healthcare costs, improves medication adherence, and enhances treatment outcomes.
2. Administrative Management – Sift MD
Sift MD’s medical analytics platform analyzes patient data to increase claim payment rates, reduce claim denials, and provide actionable recommendations. The platform helps revenue cycle managers and healthcare providers standardize billing data, leveraging fewer human resources to drive more effective and cost-efficient payment outcomes.
12. Most Active Technologies
(Unit: USD; data compiled by VCBeat based on the Startup Health report)
Typical Cases
1. Analysis Tool—Biome
Biome provides machine-driven solutions to hospital clinical, quality improvement, finance, marketing, and supply chain teams by integrating customers’ clinical and financial data with clinically relevant benchmarks, risk stratification algorithms, and performance assessment repositories.
2. IoT—Veloce
Veloce’s remote control system, SmartTab, enables effective and targeted drug delivery. Veloce is dedicated to improving drug delivery and monitoring while optimizing patient care, helping pharmaceutical companies deliver the right medication to patients at the right time and place.
Founded in 2011, StartUp Health is one of the most influential digital health startup accelerators globally. Its goal is to improve human health and well-being by completing ten major “Health Moonshots” within 25 years through participation in venture investments worldwide.
Currently, with the support of numerous top global enterprises and individual investors, StartUp Health has built the world’s largest digital health investment portfolio, comprising more than 250 companies across 21 countries on six continents.
StartUp Health brings together a new generation of entrepreneurs, investors, industry leaders, and government organizations, dedicated to improving human health from all aspects. Below are StartUp Health’s top 10 “Health Moonshots.”
The completion of each initiative can improve the health status of at least 1 billion people.
1. Nursing Channel Expansion Plan
Providing High-Quality Healthcare Services to Everyone, Regardless of Income Level or Geographic Location
2. Zero-Cost Nursing Plan
Fundamentally Reduce Medical Costs
3. Disease Cure Plan
Leveraging Data, Technology, and Customized Medications to Treat Diseases
4. Cancer Termination Initiative
Cancer Treatment
5. Women's Health Program
Prioritizing Women's Health: Preventive Care and New Research Initiatives
6. Children's Health Program
Regardless of economic conditions, ensure that every child has access to high-quality care.
7. Nutrition and Fitness Plan
Provide a Healthy Environment to Support an Active Lifestyle
8. Brain Health Program
Unlocking the Secrets of the Brain, Improving Mental Health, and Enhancing Well-being
9. Mental Health and Well-being Program
Connecting Mind, Body, and Spirit in Pursuit of Well-being
10. Life Extension Program
Extending Human Lifespan by 50 Years