Venture Investment In Health IT: A Bright Spot

By: Zina Moukheiber | April 20, 2012 (Featured on Forbes)

In sharp contrast to an 18 percent drop in overall venture investment in the first quarter of 2012, health IT companies raised $102 million — a 75 percent increase over the same period last year, according to Dow Jones VentureSource. The main drivers continue to be government subsidy of electronic health records, and the move toward so-called accountable care organizations, which reward hospitals and doctors based on patient outcomes.

The number of deals remained flat at 18, however, as more money flowed into existing portfolio companies, which included clinical decision support software, bioinformatics, and health care administration software. The latter represented the largest number of deals (9), followed by 4 in clinical decision support software. “We’re seeing a dramatic shift from biopharmaceuticals to these sectors,” says Jessica Canning, global research director for Dow Jones VentureSource. Investments in biopharma were down 46% during the same period.

Here’s the Dow Jones VentureSource top 4 health IT ranking:

1- Kinnser Software, Austin, Tex. Sells management software to home health agencies. Founded in 2003, it raised $40 million in March in a first-round from Insight Venture Partners.

2- PerfectServe, Knoxville, Tenn. Sells tools to facilitate clinical communication among health care providers. Clients include Catholic Healthcare West and St. Jude Medical Center. Founded in 1997, it raised $10.9 million in February in a Series C round, led by Piper Jaffray; investors included National Healthcare Services (the investment arm of MemorialCare Health System), and CHV Capital (the investment arm of Indiana University Health System). Existing investors River Cities Capital Funds, Spring Mill Venture Partners and Village Ventures also participated.

3- Truveris, New York, NY. Manages pharmacy benefit plans and tracks claim payments for prescription drugs. Founded in 2009, it raised $10 million in a second-round in February, led by New Leaf Venture Partners; investors also included First Round Capital, New Atlantic Ventures, and Tribeca Venture Partners.

4- TigerConnect Clinical Collaboration Platform – Standard, Santa Monica, Calif. Provides secure mobile messaging for health care providers. In February, it raised $8.2 million in the second round of financing, led by Easton Capital and New Science Venture.
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