Israel's booming digital health sector is a cash magnet

Israel is becoming a hotbed of digital health activity: There were a total of 537 digital health companies in 2018, up from 327 in 2014 and its intensifying success could pose a threat to US competitors, per a Start-Up Nation Central report.

Israel's Healthcare AI Sector Is Booming Business Insider Intelligence

Investors poured over $500 million into Israeli digital health startups in 2018, up 32% year-over-year (YoY) propelling Israel onto the international digital health stage.

Here's what it means: Israeli digital health startups are already seeping into the US market.

Aidoc has made inroads in the US radiology industry.Aidoc which uses AI to analyze medical scans partnered with the American College of Radiology Data Science Institute in November 2018. And the company just picked up $27 million in Series B funding on Wednesday.
And TytoCare announced a partnership with major US retailer Best Buy.The telehealth startup raised $25 million in January 2018 to expand in the US and took a big leap forward on Wednesday: TytoCare announced its TytoHome examination device is sold exclusively on Best Buy's website and in select stores.

The bigger picture: Several trends suggest Israel will emerge as a major player in the international digital health scene and may pull capital away from the US.

US investors are flocking to Israeli digital health startups.Forty-seven US investors 67% of Israel's foreign investors gave funding to Israeli digital health companies in 2018. And Israel's digital health industry relies heavily on foreign investment, with 69 of 124 investors coming from across country lines.
But US digital health startups might struggle to attract foreign investment following the government's recent regulatory crackdown.Israel's government revealed its dedication to advancing the country's development of AI solutions and has pushed for efforts to drive and incentivize investments in the emerging field, which will likely continue to catapult the country's AI innovation forward. But US startups might have a harder time turning to international investors when hunting for cash: The Trump administration ordered a US digital health company to ditch its China-based owner over national security concerns, which could make US investees wary of looking abroad for fresh capital.
And AI healthcare startups are attracting the lion's share of digital funding in Israel but the same's not true in the US.AI-based digital health companies far outshined other digital health startups in funding in 2018, but AI healthcare companies in the US brought in only 25% of the capital in the sector, compared with Israel's 85%. Though this is a significant leap from last year in the US a 160% YoY growth the smaller chunk could reveal that the US digital health industry isn't as concerned about sharpening focus to AI as Israel.

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