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Healthcare startup funding could fall globally in Q4: Report

After two strong quarters, healthcare startups are expected to raise less money this quarter and also see fewer deals, a report by market intelligence platform CB Insights says.

December 03, 2020 / 12:35 PM IST

Healthcare startups are likely to see a drop in fund-raising in the last quarter of 2020, indicating a slowdown globally after the previous two quarters saw strong funding as the coronavirus pandemic raged a report has said.

As of November 17, 2020, healthcare startups across the world had raised $10.2 billion this quarter, market intelligence platform CB Insights says. Though the quarter, is only halfway through, it is unlikely that startups will equal or best the record $22.3 billion they raised in the previous quarter. The report took into account the January-December calendar year.

The number of deals, too, could drop below 1,300 for the first time in eight quarters, an indication that funds are being cornered by bigger players and the early-stage activity may be slowing down.

The report projected 1,267 deals for this quarter, 20 percent less than the 1,575 deals in the September quarter.

The possible funding slowdown could be led by slowing deal-making in all major regions, with no area seeing an uptick quarter-on-quarter, the report says.

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North American startups are projects to raise $11.8 billion, compared to $13.3 billion in the last quarter. Asian startups are projected to raise $5.5 billion compared to $6.6 billion in the last quarter and European firms may raise $2 billion compared to $2.3 billion.

Africa, South America and Australia could be an exception, together seeing $78 million in healthcare funding, up from $45 million in the previous quarter.

Digital health funding is also expected to fall by volume and value. The report projects that digital health startups will raise $5.5 billion this quarter across 372 deals, less than the $8.4 billion across 505 deals last quarter. While $5.5 billion will be the lowest digital health funding in six quarters, 372 deals will be the lowest in at least 12 quarters.

Last quarter, healthcare startups globally raised a record $21.8 billion in funding led by a spike in digital solutions, which have become more important during the pandemic as people stay at home.

Healthcare investments grew 18 percent quarter-on-quarter from $18.4 billion, while the number of deals also rose from 1,299 to 1,539, according to CB Insights report.

Digital health startups raised $8.4 billion in the September quarter, 73 percent more than the previous quarter, across 508 deals, only 8 percent more than the previous quarter.
M. Sriram
first published: Dec 3, 2020 12:35 pm

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