Digital Health Investments Dominated by Software Plays in July

Fenwick & West LLP

Healthcare software dominates the list of top digital health investments in July. Of the 10 digital health companies that received venture, private equity or angel investments of $10 million or more, six provide software solutions and/or services. In total, $328.66 million was invested in the sector in July, with the top 10 deals accounting for more than 70 percent of the total invested.

The largest digital health investment of the month was a Series B investment in New York-based Data Driven Delivery Systems. DDDS is a healthcare company that works with providers to deliver efficient care to patients with complex profiles. Bessemer and MTS participated in the $60.8 million round.

But the biggest digital health news in July was Proteus Digital Health, maker of an FDA approved ingestible sensor, announcing a second closing of its $120 million Series G round from June. The company added another $52 million, making the $172 million Series G the second largest digital health financing of the year. FierceMedicalDevices points out that it “blows out the biggest med tech financing for the quarter by a factor of four.” As I noted in an earlier post, Proteus closed one of the largest digital health investments of 2013 with a Series F round that at $45 million was only a quarter the size of this round. That’s incredible and shows the strength of the digital health sector in 2014. The investors were not disclosed.

The third largest investment announced in July was raised by Remedy Partners, which develops and manages episode payment programs for hospitals and healthcare systems, insurers and accountable care organizations (ACOs). The company received $35 million in an unattributed round from undisclosed investors.  While not strictly a software company, it is a financial services firm that provides IT infrastructure solutions.

Sophia Genetics, a Swiss SaaS company that provides solutions for the storage and analysis of patient genomic information and data, raised the fourth largest investment of the month. Sophia announced a $13.75 million Series B financing led by Endeavor Vision, SwissCom Ventures and Invoke Capital.

Another software company, LifeNexus, a San Francisco-based company, received the fifth largest investment of the month, a $12.7 million Series A financing. LifeNexus is the developer of iChip, a mobile platform that allows consumers to access and control their healthcare information and make it available to providers using cloud technology. Investors included Camden Partners, Cambia Health and Mosaic Health.

The sixth largest investment was in Emulate, which announced its launch with a $12 million Series A financing. The company focuses on the commercialization of “Organs-on-Chips” as an automated human bioemulation platform. Emulate develops microchips that can be used in preclinical trials in place of in vitro or animal studies. Investors included NanoDimension, Swiss entrepreneur and businessman Hansjorg Wyss and Cedars-Sinai Medical Center.

Valant Medical Solutions, which provides SaaS electronic medical records and e-billing software suites for behavioral healthcare practices, received the seventh largest investment of the month with $11 million in funding. Neither the series nor the investors were disclosed.

BetterDoctor, Edico Genome and Syapse round out the top 10 investments of July, each receiving $10 million. Safeguard Scientifics and The Social+Capital Partnership led a Series B financing for Syapse, a software company that develops applications enabling the generation and use of omics profiles in diagnosing and treating patients at the point of care.

BetterDoctor, a consumer healthcare tool that allows users to search for doctors and other medical professionals in the United States, received $10 million through a Series A led by NEA, SoftTech VC and Lifeline Ventures.

And Edico Genome, which is developing a next-generation bioinformatics application-specific integrated circuit (ASIC) designed to speed up the process of mapping the genome, also received $10 million in a Series A. The round was led by Qualcomm and included Axon Ventures and Greg Lucier.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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