Venture Capital Fundraising in healthcare reached $15.8 billion at the midpoint of 2022, already translating into the third highest year on record, according to SVB’s new semi-annual report on investments and exits in health care, Sarah writes.
Why is this important: In a market marked by public market volatility and a slowdown in trading, investors have no problem raising new vehicles with dedicated healthcare allocations.
- This validates the industry’s longer-term tailwinds and resilience as market (and macro) headwinds continue to dominate the headlines.
Enlarge: Venture capital investment in health technology, in particular, can be characterized by a record level of seed and Series A funding in 1H 2022, which includes a higher frequency of Series A rounds of more than $50 million, according to SVB.
- Fueled by clinical trial activation agreements, the median valuation of seed and Series A funding rose to $13 million, from $10 million in the previous two years, according to the report.
Reality check: Overall, investment in the second quarter fell 40% from the first quarter, the report said. More…
- There were no public VC-backed healthtech debuts in the first half of the year after the 2021 IPO party.
- While early-stage funding flourished, late-stage activity plummeted as the IPO window closed.
Between the lines: If you look at the market from a historical perspective, things still look pretty good.
- Across health care, second-quarter investment totaled $15.5 billion, which is lower than every quarter in 2021 but higher than every period in 2020, per SVB.
- In health technologies, volume and capital invested were down significantly from 2021, but at $10.2 billion in investments already on track to top 2020.
Yes and: Health technology, relative to other sub-sectors, saw the strongest upswing multiples, both in early and later stage funding, according to SVB.
- Patient12 (17.9x) and Homeward Health (10x), Atlas Health (13.7x) and AcuityMD (12.3x) stood out in the early stage.
- CareBridge Health (10x) and Health Gorilla (5.5x) stood out in the late stage.
The most active: Taking into account venture capital activity as a whole, Gaingels has been the most active investor in health technologies since 2021, landing 33 investments in total, according to SVB.
- General Catalyst, Alumni Ventures Group, Andreessen Horowitz and Insight Partners have followed suit.
What’s next in health tech: SVB predicts…
- Investments in health technology in the third quarter will fall to 2020 levels, but will rebound in the fourth quarter to around $7 billion.
- Activity will be characterized by lower valuations and fewer mega-deals as public market chaos weighs on private markets.
- Larger companies will see more insider rounds and bridges, but more downside rounds are likely.
- Non-traditional investors will participate in fewer new venture capital-backed deals compared to 2021.