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Global HealthTech mid-year funding reaches unprecedented heights!

After an remarkable Q1 for HealthTech, which we reported as an “Impressive First Quarter of 2017”, global funding in the second quarter has pushed to an even higher gear. Our global HealthTech funding summary H1 2017, based on funding analysis from GGA complimented by the reports from Rock Health, Mercom Capital, Startup Health, estimates that total global venture funding in HealthTech companies in H1 2017 exceeded $4.7B:

  • 188 US based deals in H1 2017, worth $3.5+B and with an average deal size of $18.62M up from $2+M over 151 deals, with an average deal size of $13.25M in H1 2016
    • Excluding the two largest deals, the average deal size reduces to $14.5, only $1.25M above H1 2016
  • 11 mega deals over $100M (not counting the $914M mega deal in GRAIL) in companies in the US and China.
  • 129 deals reported in Asia, worth $1.2+B and with an average deal size of $9.3M.

Record-shattering H1 for US funding

According to Rock Health, US venture funding increased by about $2.1B in the second quarter, totaling $3.5B – the biggest half-year ever – with the number of deals reaching 188 (from 151 in H1 2016). With 47 deals counted, the majority of US deals occurred in the San Francisco Bay area, followed by New York City with 21 deals. 10 US mega-deals over $100M were announced in H1 2017:

  1. Outcome Health
  2. Peloton
  3. Modernizing Medicine
  4. SomaLogic
  5. bright Health
  6. Patient Point
  7. Clover
  8. Alignment Healthcare
  9. patientslikeme
  10. sharecare

Despite all the uncertainties and caution regarding the Affordable Care Act overhaul, funding continues to grow to an all-time high (75% higher compared to H1 2016 and 60% higher compared to H1 2015). After the most-funded first half-year ever, experts are looking forward to a new record breaking year 2017 for HealthTech.

The list of Top 5 most funded HealthTech categories accounts for 55% of all HealthTech funding. The list however is heavily distorted by the previously mentioned mega-deals:

  1. Education/Training (includes the $500M Outcome Health deal)
  2. Personalized Health (includes the $325M Peloton Interactive deal)
  3. Patient Engagement
  4. EHR/EMR (includes the $205M Modernizing Medicine deal)
  5. Digital Therapies

Excluding the >$100M mega deals the Top 5 HealthTech category list would look as follows:

  1. Patient Engagement
  2. Digital Therapies
  3. Analytics & Big Data
  4. Digital Diagnostics
  5. Personal Health Tools

Asia funding status: More deals than ever!

According to Galen Growth Asia: The Asia HealthTech Connector, H1 2017 saw 129 deals, worth $1.2+B (with 20% of rounds undisclosed) and an average deal size of $9.3M. The share of early stage deals remains stable at 40% since H1 2016, while the share of Series B deals in Q2 2017 continues to grow for a third quarter in a row.

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Hao Daifu’s pre-IPO round of $200M from the first quarter remains top of the table for H1 2017, whilst 4 out of 7 deals were above $50M, closed in the second three months. Noteworthy deals in Asia as follows:

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HealthTech funding in Asia diversifies across 5 HealthTech categories, accounting for 55% of all funding by volume. Three categories, Health Services Search, Telehealth and Medical Big Data, were previously identified as leading categories in our last report.

  1. Health Services Search
  2. Mobile Fitness / Health App
  3. Telehealth
  4. Medical Big Data
  5. IOT Health/Wellness

This distribution is not entirely unexpected when Health Services Search, Mobile Fitness / Health Apps, Telehealth and IOT Health & Wellness account for more than 45% of all recorded HealthTech startups in Asia.

Early stage and growth stage median deal sizes remain level for a third half in a row, while the growth stage median deal size is expected to increase in line with larger Series B deals in future.

Midyear-funding-2017_2

The full comprehensive analysis of the Asia HealthTech Investment Landscape is available to download  for free here.

 

M&A

Mercom reported 41 M&A transactions in the second quarter of 2017, down from 49 in Q1 2017. In line with Q1 2017, Practice Management Solutions and Data Analytics were again involved in the most M&A transactions (5 each), followed by three transactions in Medical Imaging companies. The most prominent M&A transactions include Teladoc’s $440M acquisition of Best Doctors, the acquisition of Sycle for $78M by Cochlear and the acquisition of Praxify Technologies for $63M by athenahealth. Not disclosed but of interest is the acquisition of the B2C sleep monitoring company Beddit by Apple.

Looking forward

We expect that the second half of 2017 will see the HealthTech funding momentum continue to build to the end of the year. Globally, we predict another record-breaking year, both in volume and value of the deals. Since we have not yet seen any HT IPOs this year, we are expecting to record a few in the second half of 2017. We also expect the Asia HealthTech ecosystem to continue maturing, in particular the Growth stage investments which will likely continue to gain share during the second half of the year.

Despite a few clouds on the horizon such as the potential bursting of a debt bubble in China, investors and entrepreneurs remain optimistic and are continuing to focus on innovation and growth in HT.

Save The Date!

In November 2017, Galen Growth Asia will be launching the HealthTech Hub as the home of HealthTech in Asia. After the successful staging of our inaugural HealthTech CEO Summit last year, we will be staging the 2017 HT Asia CEO Summit with 50 of the most promising HealthTech CEOs in the region. If you are an HT Innovator, buy your pass here.

If you are an investor in Asia HealthTech, you should join our HealthTech Investor Summit on 16 November 2017, a summit which brings together leading HealthTech entrepreneurs and investors from across the value chain of investment in a dialogue around how to successfully raise capital at each stage of the health startup’s lifecycle. Buy your pass here.

 


Authored by: Dario Heymann

Edited by: Julien de Salaberry

Copyright © 2017 Galen Growth Asia

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