It’s a great time for health startups to raise money, according to some of the biggest names in health investing.
Funding for digital health grew dramatically in 2012 and is continuing to climb. The health market is pegged at $6 trillion worldwide, and there are far-reaching opportunities for entrepreneurs to transform how we practice health care. At the same time, funding for life sciences and medial devices is drying up. Health IT is the darling of investors, and venture capital firms are all trying to get in on the action.
“There are so many carrots and sticks to take advantage of here and venture capitalists like to invest in big trends,” said Stephen Kraus, a partner and Bessemer Venture Partners. “You can’t get in on a bigger trend than 20 percent of the GDP. This is a sector with massive problems, and the government throwing money at it. You would have to be missing a brain not to pick up on this fact.”
Krause participated in a panel discussion about venture capital and growth equity in health IT at VentureBeat’s HealthBeat conference today. The panel discussed trends in health IT/digital health as well as what investors look for in portfolio companies and success stories. Also on the panel was Dana Mead, a partner at Kleiner Perkins Caufield & Byers who focuses in life sciences investments. He said despite the fact that interest and funding is moving away from life sciences at the moment, this is a period of transition and evolution, and like digital health, there are plenty of opportunities for innovation.
“With digital health, you see traditional life sciences investors and traditional IT investors looking at the same space,” Mead said.”There are a number of companies that could be successful in this second wave of digital health, and everyone is experimenting with business models and finding out who will pay for these products and services. It all goes in cycles. Frankly life sciences got too big and will grow back in a big way.”