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This Is Y Combinator's Next Hot Area of Investment

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Until now, Y Combinator -- the prestigious accelerator program that vaulted some of Silicon Valley's most buzzed about companies, including Drobox, Airbnb and Reddit - was primarily a tech incubator.

But the accelerator is expanding its horizons. This year, for the very first time, it is pursuing health-tech startups, Reuters reported. "It's the right time for us to try health care," Sam Altman, Y Combinator's president, said, noting that there's been a recent and significant decrease in both "cost and cycle time."

Related: Google Wants to Build a Model of Perfect Human Health

While Altman conceded the move may unsettle venture capitalists, at least initially ("When we move into a new area, [they] usually don't like it," he said), it's not that big of a surprise. Venture capitalists across the country are suddenly pouring money into health technology companies. In 2013, according to the National Venture Capital Association, the biotechnology industry received 15.6 percent of all venture funding. Only the software industry, at 30.2 percent, took in a larger slice.

In addition, 2013 saw digital health startups, which include companies developing wearable tech and software/hardware solutions for specific diseases and conditions, take in almost $2 billion in funding, according to the venture fund Rock Health.

Related: 5 Startups to Watch at Y Combinator's Demo Day

While it was a record year for funding in the space, this year's funding total is going to blow last year's away: According Rock Health's 2014 mid-year report, the first half of 2014 saw digital health companies take in a whopping $2.2 billion.

Altman took over as president of Y Combinator when the accelerator's co-founder, Paul Graham, stepped down in February. On Tuesday, the first class of Y Combinator startups under Altman's tenure graduated from the program. They included a high percentage of health and biotech startups including The Immunity Project (a startup attempting to develop an HIV vaccine), Glowing Plant (which develops genetically engineered plants that function as air purifiers), UBiome (a startup that analyzes bacteria) and Ginko BioWorks (which is currently working to treat antibiotic resistant germs).

Related: 5 Questions Every Startup Should Ask Before Choosing an Incubator

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