Women digital health CEOs big winners in 3rd-quarter funding

23andMe is led by CEO Anne Wojcicki.

In what is digital health's biggest funding year, women CEOs are quickly becoming Q3 2017's leaders, according to a new report from Rock Health.

In fact, 16 percent of the 74 companies funded this quarter are led by female CEOs, which is up from the 11 percent of Q2. Further, the average deal size for companies with a woman CEO this quarter was $31.4 million -- compared to $11.3 million for those with men CEOs.

While the average is so high due to the only mega deal this quarter -- a $250 million round of funding for 23andMe, led by CEO Anne Wojcicki -- even when removed, the average is still $12.2 million.

Further, women and reproductive health companies are continuing to gain traction in the sector this year.

Digital health funding topped about $1.2 billion for the quarter, bringing 2017's investments to $4.7 billion and making 2017 the biggest funding year yet. The previous annual high was in 2015 with $4.6 billion in digital health investments.

2017 is on pace to have the most digital health deals ever record with about 268 funding deals with 261 companies, up from 240 deals made in Q3 2016. However, funding is beginning to slow this quarter with only about $1.2 billion in investments, as investors are keeping an eye on exit activity.

There's also been a push in the sector into funding personal health tools and tracking companies this quarter, which makes it one of the top six funded categories to-date this year. Other top divisions include consumer health information and healthcare consumer engagement, due to some mega deals in the first half of 2017.

And much like the early part of 2017, there's been a slowing trend of digital health mergers and acquisition. To date, there have only been 67 deals, down from 2016 (109 deals) and 2015 (135 deals).

Notably, a few enterprise-focused categories are not funded but are the most acquired: payer administration, physician practice management, enterprise wellness and hospital administration. 
But EHR and clinical workflow is both a top-funded and most acquired category in 2017, which has remained steady since 2015.

"Investors (particularly those newer to the digital health space) may be anxious about the waning exit activity, but others are viewing this as an expected side effect of investing in healthcare with its long sales cycles, high levels of regulation and complexity, and relative immaturity in technology adoption," the report authors wrote.

"Our data backs up the notion that taking the long-view in healthcare (as both an entrepreneur and an investor) is a good idea," they added.

Twitter: @JessieFDavis
Email the writer: jessica.davis@himssmedia.com