Record Setting Trends Continue
The global health funding has reached its highest in the three quarters of 2021 with a record of $31 B. This is greater than all of the year round records since 2011.
The funding in the Q3’20 was $6.6 B versus $9.7 B in Q3’21 . The growth percentage is 39% when compared with 2020. It is also worth noticing that the growth in 2020 was 56% higher than the previous year. Based on the trends, funding for the healthcare space is expected to reach $40 B by the year end.
Unicorn Births
In Q3’21, America scores ten new unicorn births. It remains the highest in overall unicorn count.
Another interesting statistic to look at is that all the major unicorns by valuation are also from the U.S.
Deal Size
The total number of deals is on the stunt while the size of the deals has taken an upward trajectory, resulting in an increased average deal size. In Q3’21 the median deal size was $41 M which is a three folds increment when compared to 2017.
Investment Types
There are different types of investment types. Starting from Venture Capital and moving towards Corp & CVC and so on. VC's account for the largest percentage at 30% in Q3’21.
The second notable category is corporate VC space, which is 15% followed by Asset Management with 10% of funding. All of the funds have nearly the same functionality when compared with the four quarters of 2020 with the exception of Private Equity which remained 8% on median score while 10% in all quarters of 2021.
Innovation Giants – A Global View
Globally, the three major states of U.S: San Francisco, New York and Boston sets the highest record in health innovation investment. The combined investment from these three states rack up to $100B, which is more than the combined funding from all the major countries and other states listed in the table.
Health Care Funding World-wide
As we already know, the collective investments have already surpassed 2020 by 21%. The deals have also increased by 15%, reaching up to 1,904 deals in Q3’21 as compared to 1,627 deals from Q3’20.
· Starting from the highest funding in health deals, U.S still dominates the market in Q3’21 with a market share of 42%.
· U.S, although having the biggest share, drops from its 44% share from Q2’21.
· Asia seems to perform well, with a record high of 38% in Q3’21, up from 30% in Q2’21.
· Europe is another notable performer in deal share with a contribution of 13%.
To sum up the Q3’21 deals, Asia has seen the highest increment in deals while Europe had its record low in Q3’21.
Deals inside the U.S & Asia
Due to COVID’19 and the rapidly advancing technology, healthcare was due for a huge change. In the previous decade, there has been more focus on fitness gears and fashion clothing. Since 2020, there has been a sharp upward spike in funding in healthcare. Commure, which is a healthcare software development company , raised $500M in Q3 at a $3 billion valuation. In another deal of interest, XtalPi, raised $400M on a $1.6B valuation to expand their research on AI and computing to accelerate the development of new drugs.
The deals in Asia accounted for 38% of the deals in Q3’21. It is also the only region that experienced growth in Q3’21 with an increase of 18% YoY.
Median Deal Size
The median deal size for '21 YTD kept on growing for U.S, Asia, Europe, Canada and all other regions with the exception of Latin America. YTD '21, Asia stood at $14M , the US at $6M, Europe at $3M, followed by Canada and LatAm with a descending order of $2M and $1M. All other regions remained the same in terms of comparison with the year 2020.
Mega Rounds
If we take a look at the statistics for Mega rounds since 2015, the investment was $8.5B per annum. This trajectory, continued in an upward fashion (with a slight dip in 2018) with a sharp spike in 2019. From 2019, the investment sky rocketed from $31.8B to $46.5B in 2021 with a record of 260 deals YTD.
Despite this upward trend we see in 2021, when we talk about QoQ report, the results shows a negative trend. Q1 investment equaled $17.2B while Q3 experienced a steep turn, falling to $13.2B in Q3’2021.
Top Equity Deals
Following is a list of the most prominent companies in equity funding:
1. Abogen
2. Laronde
3. Cityblock Health
4. Xtalpi
5. Olive
6. Carbon Health
7. Zhiyuan Zhongan
8. MediTrust Health
9. Netskope
10. Cybereason
Out of these global organizations, seven are U.S based while three are Chinese based. It is worth noting that although a majority companies are U.S based, Abogen, a Chinese company, ranks at the top with a raise of $700M. The runner ups are Laronde and Cityblock Health, both hailing from U.S with a funding of $400M. The lowest deal stood at $275 by Cybereason from U.S.
Exit Trends
M&A, IPO and SPAC
The exits in 2021 have seen a sharp increase which is mainly due to M&A activity. Initial Public Offerings have also spiked. In the graph below, we can see that M&A rose to an all time high of 621 in Q2’21 while IPO’s also took a slow upward pace, reaching up to 89 in Q2’21.
In Q3’21 everything changed, M&A and IPOs dipped, reaching 584 and 83 respectively. Special Purpose Acquisition Companies tend to keep a very stable and slow upward trend since Q3’20, reaching 7 in Q2’21 and moving slightly upwards in Q3’21.
Digital Health
The digital health rose to an all time high in 2021, reaching $15.7B in Q2’21. Although, this trend witnessed a decline in Q3’21 with a record of $12.8B. It is also worth noticing that the investment trends in digital health witnessed an unusual spike back in 2018 with a record of $7.5B in Q3’18, which is greater than the funding in Q1 and Q2 of 2020.
Medical Devices
Just as in Digital Health services, Medical Devices also took an up and down path in 2021. Q1 to Q2 investment rose from $4,577M to $7,675M, while declining in Q3 to $5,600M. The number of deals in 2021, however, continued to increase from 404 in Q1 to 474 in Q3.
Biopharmaceuticals
Biopharmaceuticals investments were flat more or less in 2021, remaining at $36.2B. Previously the year round funding reached $36.7B. However, Q3’21 witnessed the record low, dropping to $9.0B from $16.3B.
Digital Therapeutics
Digital Therapeutics witnessed the highest on record, reaching $2,136 M. This is almost double that of 2020. Like almost any other trend in the healthcare sector funding, this one also witnessed a low in the third quarter with a record of $523M.
Health IT
There were 39% fewer deals in this sector but the investment rose by 11% in YTD. Although, the funding in Q3’21 trails that of Q1’21, it rose from $1.5B in Q2 to $1.9B in Q3.
Conclusion
The Healthcare industry witnessed an all time high of 1,904 deals made in Q3’21. New Unicorns however have been on a dip in Q3 when compared to previous quarters. As opposed to U.S, Asia was the only region to see an upward growth till Q3’21 and also the biggest contributor in healthcare deals in 2021. Mega rounds have also been on a high in 2021 but witnessed a low in Q3. Overall, the sector has witnessed the highest record in deals while the funding dipped QoQ. We look forward to the Q4 data and will update the trends.