Fundraising efforts by the city's digital health companies suffered in the first quarter amid continuing uncertainty about the future of President Donald Trump's health care policies, said Unity Stoakes, co-founder and president of StartUp Health.
The Manhattan-based accelerator's data arm, StartUp Health Insights, said companies in the metropolitan area raised $57 million in nine funding rounds during the first quarter of the year, less than 10% of the amount raised during the same period in 2016.
Last year's numbers were inflated by large financing rounds from Oscar and Flatiron Health—which raised a combined $575 million in the first three months of 2016. The entire city sector raised $713 milllion that quarter. But even compared with the first quarter of 2015, when city startups raised $90 million in nine deals, 2017 is off to a sluggish start.
"There has been so much uncertainty in the last 70 days, because of politics and the media, that investors are recalibrating," Stoakes said, citing anecdotal conversations with venture capitalists. "Some investors are sitting on the sidelines trying to determine their strategy. We'll start to see deal flow pick up, given clarity that Obamacare is staying in effect for the time being."
The city health technology sectors financing from investors increased tenfold from 2010 to 2016, according to CB Insights. A recent report from the Center for an Urban Future identified nearly 100 such companies, with at least eight employing 50 people or more.
The largest local winners of Q1 included Aetion, which raised $11 million to support its software that evaluates the effectiveness of medical treatments. HealthReveal raised $10.8 million for its chronic disease management solution. CareDox, a care coordination platform for school nurses, raised $6.4 million.
Worldwide, digital health funding was up 25%, to $2.5 billion, but that number was driven largely by the $914 million raised by Grail, an oncology data company in the San Francisco area.
"Investors in New York digital health 'recalibrating' amid uncertainty over Trump policies" originally appeared in Crain's New York Business.