Summarising healthcare startup investing trends from the third quarter of 2020
Healthcare startups globally raised a record $21.8 billion in funding last quarter, led by a spike in digital healthcare 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 a report from CB Insights, a market intelligence platform.
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. This also indicates larger deal sizes, and leaders in a sector being able to raise large sums of money increasingly quickly.
There are currently 41 healthcare unicorns- private firms valued at over a billion dollars- with five added this quarter.
Among specific sub sectors, telehealth deals grew the fastest- 73 percent quarter-on-quarter, while healthcare artificial intelligence, drug research and development, medical devices, women’s health and mental health deals all soared.
By volume, China-based deals rose 50% from 166 to 259, while in the US it increased from 644 to 757. Deals in India fell marginally last quarter, from 34 to 30.
China-based JD Health- an online pharmacy and telemedicine service raised $830 million from Hillhouse Capital in August, valued at about $7 billion, the largest deal in the quarter. Other large deals include Bright Health- an online insurance marketplace which offers medicare plans- which raised $500 million led by Blackstone and others; and XtalPi, whose AI platform enables drug discovery- raised $319 million from Tencent, Sequoia, SoftBank and others.
In India, deals in research and development and pure-tech drug discovery etc are less common among venture capital firms, and online pharmacies have been an investor favourite. Online pharmacies are seeing consolidation as well.
While India’s largest conglomerate Reliance Industries Limited acquired Netmeds, Medlife was acquired by PharmEasy, the largest startup in the space.Although there are many more healthcare startups globally, data indicates that funding has risen because the largest players have raised more capital- and not necessarily because more players are getting funded.