As COVID-19 Rocks Markets, Digital Health Start-Ups Rake In Cash
As the stock market experiences a collective shudder in the wake of the coronavirus pandemic, investors are actively seeking out new opportunities for healthy long-term gains and higher upside potential. Start-up investing is not a new phenomenon in the financial world, but one sector, in particular, has seen a veritable boom in investors since the beginning of the COVID-19 pandemic. While many industries plummeted in the first quarter of the year, digital health companies closed the first quarter of 2020 with unprecedented levels of funding.
Private equity and venture capital financing of digital health start-ups reached an all-time high of just over $3 billion in Q1 2020. One leading sector of the digital health space, telemedicine companies, generated three times the amount of financing they received in Q1 2019, raising $788 million in venture capital backing, compared to $220 million in the first quarter of 2019. Start-ups in the mental health arena also saw landmark levels of funding in Q1 2020, reaching an astounding total of $576 million.
Rock Health is a venture capital fund dedicated to digital health start-ups. The firm recently released a report examining the digital health sector's record Q1 and the anticipated market impact of the COVID-19 pandemic later in 2020:
Though a broad pullback in venture investing was likely under way at the start of 2020, US digital health companies nonetheless raised a whopping $3.1B across 107 deals—more than 1.5X the total funding in Q1 of any previous year...This caps off the largest ever twelve-month funding period (TTM) for digital health, with $9.3B invested across Q2 2019-Q1 2020...The size and speed of the public markets' sell-off has been breathtaking. Private markets will likely not experience as dramatic of a downturn because private equity, of which venture capital is a subset, comes from capital committed by limited partners.
On that note, here are three top digital health start-ups to watch in the months to come.
1. Zocdoc
Founded in 2007, Zocdoc is a medical appointment booking service that helps millions of patients find healthcare providers each month through a vast online marketplace. Patients can find doctors in their network in a matter of clicks, read provider reviews, schedule appointments, and fill out paperwork in advance through the Zocdoc portal. With the advent of COVID-19, Zocdoc stepped up to the plate with new virtual appointments as an increasing number of patients seek telehealth solutions amid the pandemic. These patients will probably continue to rely on telehealth more than before when the current crisis has subsided. Telehealth has experienced broad political tailwinds that should keep spurring the niche forward by solidifying its place in society and widening adoption.
Zocdoc currently has nearly $226 million of total funding and its backers include Goldman Sachs, Bezos Expeditions, and Marc...
