The health IT market is growing rapidly. Fueled by growing demand (90.6 percent of U.S. hospitals have recently acquired or installed health IT software), health IT companies raked in record venture capital and were acquired for record amounts in 2013.
However, veteran investor Anne DeGheest warned of a looming, dot-com-reminiscent burst in the health IT industry in a recent article in The Wall Street Journal.
There's a bubble forming in the health IT industry, she explained. "The country is re-shaping its largest industry, and it's the biggest experiment we've ever done with the American economy. It's opened the floodgates, and there is a sort of Gold Rush because there is massive opportunity," she told the Journal.
The large influx of startup and Series A funding health IT companies have received means they will have to answer tough questions from investors in the not-too-distant future about their business plans and continued growth opportunities — questions they might not be able to answer.
"There is tremendous opportunity," she said in the report. "But there is too much activity at the seed and Series A level, and too much a rush to build a product. To raise a Series B, these companies are going to need metrics. Without that, a significant number could fail. I'm hoping to see more emphasis on building solid businesses."
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