Venture capital is pouring into digital health

A midyear report from prominent healthcare startup accelerator Rock Health provides numbers to confirm the anecdotal impression: Digital health is the perhaps the hottest category to fund for venture capitalists.

So far, the sector has raised $2.3 billion this year—which already exceeds the $1.5 billion raised in all of 2013. And this isn't a matter of digital health simply being pulled along by the tide pouring into all startups: While first-quarter funding is up 57% year-over-year for all sectors, it's up 85% for digital health. (More traditional healthcare categories are not benefitting from the boom with only 22% year-over-year gain for biotech, and 5% for medical devices.)

Particularly strong subcategories in the digital sector are payer administration ($211 million), digital medical devices ($206 million), and analytics and big data ($196 million).

Some worrying signs are evident, however. The report notes that IPOs featuring digital health companies have been received rather poorly after the first day of trading. The accelerator's digital health index has retreated about 10% so far this year—underperforming drastically public markets as a whole, which have gained 10% in the same time frame.

Follow Darius Tahir on Twitter: @dariustahir