Health funding shatters records in Q1, hits all-time high of $31.6B

Dive Brief:

  • Healthcare equity funding smashed previous records in the first quarter of this year, hitting an all-time global high of $31.6 billion, according to a new report from CB Insights.
  • Funding in the digital health sector specifically, which has seen unprecedented investor interest during COVID-19, also hit a new high of $9 billion, according to the report released Tuesday.
  • Telehealth companies raised a record $4.2 billion across 32 countries, the most ever recorded. Deal count increased by 10% sequentially at 139 overall, but didn’t surpass a record set in the third quarter last year, which saw 166 deals. Healthcare artificial intelligence players also set a new record, raising about $2.5 billion, with back-office automation and pharmaceutical R&D applications attracting major funding.

Dive Insight:

Despite the pandemic’s deleterious public health and economic effects, COVID-19 has been a major catalyst for funding in the healthcare space. Global healthcare investment hit a record high last year with $80.6 billion in equity funding across more than 5,500 deals, according to previous CB Insights research.

A pivotal question for the industry is how much investor interest will remain as the pandemic begins to abate. As coronavirus vaccines continue to roll out in the U.S., tamping down on new COVID-19 cases in some areas, industry is now shifting to look to the long-term effects, especially around digital health and the continued role of telemedicine in care delivery, experts say.

But worries about winnowing funding are unlikely to come to fruition anytime soon, if the first quarter is any indication.

In the first three months of 2021, global health funding smashed records for both funding amounts and number of deals. Overall, the deal count grew by 9% to more than 1,500 deals in the first quarter, the second-highest total in the past 12 financial periods, CB Insights found.

Rebecca Pifer/Healthcare Dive, data from CB Insights


Other market forces contributed to the unrivaled funding levels, with a growing focus on managing the high-needs, high-cost Medicare and Medicaid populations resulting in a growing number of population health efforts and the ongoing shift toward consumerism creating traction in patient engagement and flexible billing products.

Data analytics and health services also remain key priorities, especially among incumbent payers and providers, the report noted, pointing at UnitedHealth Group’s proposed $13 billion acquisition of analytics firm Change Healthcare and Cigna’s snap-up of telehealth provider MDLive.

Previously niche spaces like mental and women’s health saw particularly acute growth in the first quarter. Funding in the mental health sector jumped 54% sequentially to $852 million, buoyed by a number of megarounds of $100 million or more raised by late-stage mental health and wellness benefits platforms in the employer market. Digital therapeutics targeted at mental health conditions also drove traction, researchers said.

Similarly, funding for women’s health companies almost doubled compared to the prior quarter, jumping to $964 million. The growth was helped by a $500 million series D round in late March for two-year-old telehealth startup Ro, which operates a digital clinic for women called Rory.

It’s a nascent space: Nearly 70% of the women’s health deals in the quarter were for early-stage companies, and “regulatory updates and new product launches indicate burgeoning interest,” CB Insights said.

The health IT sector also saw growth, with funding up slightly sequentially to $1.8 billion — almost double the volume a year ago — illustrating increased investment in IT software from providers, especially in the health data, billing and social determinants of health arenas.

However, not all sectors saw rising cash levels.

Medical device companies raised $4.6 billion in the first quarter, down 23% from a peak in the fourth quarter last year, while the number of deals declined by almost 11%. Similarly, funding and deals in the genomics space declined on a quarter-over-quarter basis, with startups raising $1.8 billion in the first quarter compared to $2.2 billion in the fourth.

Also in the first quarter, a number of healthcare companies underwent traditional IPOs, or went public via the increasingly popular route of merging with a special purpose acquisition company.

A number of consumer-focused digital health companies entered the markets via a SPAC, including telebehavioral health provider Talkspace in January; genomics giant 23andMe, virtual health platform ShareCare and health monitor developer Owlet in February; and medical transport company DocGo in March.

Funding in North America and Europe increased compared to the fourth quarter of last year, with North America’s total spurred by double the number of megarounds than the previous quarter. Bucking the trend, funding in Asia actually declined slightly compared to the fourth quarter of last year, dropping 12% to $7.6 billion.

Overall, the quarter boasted a record 96 megarounds, including a $535 million funding round for Denmark-based Leo Pharma, a developer of medical dermatology products; a $525 million funding round for cell and gene therapy company ElevateBio; and $500 million apiece for Ro and biotech startup EQRx.

Leave a Comment

Your email address will not be published. Required fields are marked *