Healthcare innovation, digital health rake in big investment dollars in Q3

Linda Rider

Now that the third quarter of 2021 has finished and the enterprise reviews are coming in, one matter is sure: Buyers are continuing to wager significant on healthcare innovation.

In reality, buyers have poured a lot more into health care this yr – $97.1 billion – than any other marketplace, according to CB Insights’ Point out of Enterprise Q3’21 Report. It has collected 22% of the overall volume raised so much in 2021.

For Q3 alone, healthcare raked in $30.5 billion, which is a slight minimize from the $33.9 billion elevated in Q2 this calendar year, in accordance to the CB Insights report. Nevertheless, this quarter’s funding was much more than any other quarter prior to this calendar year.

Inspite of the dip in the sum raised, health care completed the most funding rounds this quarter to day. The business closed 1,901 promotions in Q3, up from 1,649 previous quarter.

The CB Insights report also mentioned that there have now been far more health care mergers and acquisitions this calendar year than all of 2020 (1,822 in comparison to 1,713).

Whilst the CB Insights report took a look at the total scope of health care, Rock Wellbeing posted its quarterly investigation of electronic overall health.

What’s THE Effects?

The report highlights that 2021 electronic health and fitness funding has currently arrived at $21.3 billion across 541 bargains, with an typical deal dimensions of $39.4 million.

In Q3 alone, electronic wellness scored $6.7 billion across 169 promotions, in accordance to Rock Health. This quarter expert a dip, in contrast to Q2’s history-breaking $8.2 billion in funding throughout 223 discounts.

The report says the decline can be attributed to much less deals completed as perfectly as less mega discounts (rounds really worth $100 million or more). The preceding two quarters had 22 and 25 respective mega deals in comparison to just 15 in Q3.

Across the board, electronic wellness offer dimensions so considerably this year are the biggest they’ve ever been, according to the report. Average funding has more than doubled given that 2017 for Series A, B and C+ rounds in 2021.

“To place this in viewpoint, this year’s normal digital wellbeing company’s Sequence A raise ($18M) exceeds the normal Series B raise in 2017 ($17M),” the authors explained in the report. “In other words and phrases, A is the new B.”

As for where buyers are putting their funds, some things remained the exact same in Q3 2021, but there are also some emerging tendencies, according to Rock Health and fitness.

Digital wellness organizations that have been centered on research and advancement, on-demand from customers healthcare or sickness treatment method ongoing to guide the listing of top rated-funded value propositions. Equally, mental wellbeing ongoing to be the foremost scientific-indicator place for trader dollars, racking up $3.1 billion so significantly in 2021.

In the meantime, femtech is finally obtaining far more investor attention. Past quarter was the 2nd-highest-funded quarter for women’s well being ever, with $443 million elevated, next Q1 2021’s $631 million, in accordance to Rock Wellbeing.

Girls-led businesses have also gotten a boost this yr as they closed 19% of 2021’s electronic health and fitness promotions via Q3, the optimum proportion ever recorded by Rock Wellness. Still, even so, ladies-led providers continue to lag guiding these led by adult men.

“Despite boosting 19% of rounds, women-led providers accounted for just 14% of 2021’s electronic health overall funding pot to day, with a $29M normal look at measurement for girls-led rounds, compared to $42M for adult men-led rounds,” the authors mentioned.

Electronic health organizations targeted on equity have also obtained momentum a short while ago, spurred by the disparities highlighted by COVID-19. The report pointed to raises accomplished by Soda Wellbeing, Mi Salud and Cayaba Care to illustrate the increased focus to wellbeing equity.

Further than venture funding, Rock Well being also analyzed digital well being M&A exercise and public exits. Q3 was the most significant quarter to day for digital well being M&A action with 79 offers in full, according to Rock Overall health.

“One key driver of electronic health’s acquisition wave is the need to have to deliver extra streamlined choices and ordeals for prospects,” the authors stated. “Customers – patients, suppliers, and employers alike – are all sensation overcome by diverse electronic wellness alternatives in the market place and are pushing for additional unified choices.

“In reaction, digital overall health corporations are making use of M&A to travel tactics this kind of as vertical integration, horizontal integration, and competitive acquisitions.”

Contrasting the surge in M&A action is a slowdown of electronic overall health exits. In Q3 2021, there were being three done SPAC mergers (Sharecare, Owlet and Sema4) and two IPOs (Definitive Health care and Cue Health), as properly as a single declared SPAC and two declared IPOs.

This is a drop from the earlier quarter, which noticed 4 finished SPACs, four IPOs, and seven announced SPACs.

THE Larger Development

This yr has been a person for the history textbooks, as electronic wellness had already surpassed 2020’s whole-year volume final quarter.

Rock Health and fitness says it will preserve a watchful eye out for the remainder of the calendar year because Q4 tends to be lesser than the relaxation of the yr. But if Q4 2020 indicates anything at all, it is that unparalleled funding is possible at any time of the year.


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