Healthcare IT venture capital funding breaks records in Q1

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The number of healthcare IT projects receiving funding from venture capital firms broke all previous records in the first quarter of this year, reports Healthcare IT News.

A report published by Austin, Texas-based consulting firm Mercom Capital Group indicates that venture capital funding in the healthcare IT sector exceeded $184 million in 27 separate deals, surpassing all previous records of healthcare IT investment.

Economic stimulus

A total of 46 investment firms were involved in the transactions outlined in the report, and researchers believe the introduction of the Health Information Technology for Economic and Clinical Health (HITECH) Act is partly responsible for the significant growth in healthcare IT investment capital.

“We are seeing significant momentum in terms of private venture capital funding flowing into the [healthcare IT] sector, and a robust [mergers and acquisitions] environment is providing investors and the industry with liquidity and viable exit options,”  Raj Prabhu, managing partner of Mercom Capital Group, told the news source. “Since the first quarter of 2010, M&A transactions have outpaced VC funding transactions by almost two to one, a positive sign for the industry.”

New technologies, new opportunities

The results of Marcom Capital’s survey have been echoed across the healthcare IT industry. According to Information Week, a recent study published by Dow Jones VentureSource revealed that venture capitalists invested more than $439 million in web-based healthcare IT startup businesses in 2011, representing a 44 percent increase in funding.

Jessica Canning, global research director for Dow Jones, told the news source that development in the healthcare IT landscape was effectively shaping the democratization of the medical technology industry, and that investors see smaller, agile software development companies as viable investment opportunities.