Asia HealthTech Investment Landscape Q3 YTD 2017 Update
Since the beginning of 2016, $4.3B has been invested in Asia HealthTech across 296 deals up to and including Q3 2017!
When Galen Growth Asia launched its inaugural analysis of the HealthTech investment trends in Asia last July, which revealed that the first half of 2017 counted more deals in Asia HealthTech than any of the preceding years, our H1 Asia HealthTech Investment landscape report (free to download) drew the world’s attention to the region’s vibrant ecosystem.
Whilst HealthTech investing continues to grow worldwide, our H1 Asia HealthTech Investment landscape report projection was that, by year end, more than 270 deals will be closed, representing a 300% increase compared to 2016. But is this projection still accurate? Here is what Q3 Asia HealthTech funding reveals.
Fewer deals, bigger bets
More money invested in Q3 compared to Q2 but less than Q1! The HealthTech scene in Asia is still relatively nascent but, nevertheless, witnessed significant growth in HealthTech investments with $1.2B invested across 127 deals for the first half of 2017 ($2.3B invested in 2016 alone). The third quarter of 2017 may be demonstrating the early signs of a maturing ecosystem with fewer deals and bigger bets.
Quarter on Quarter (QoQ), Early stage funding remains constant at 40% share of total funding compared to Q2. Growth stage funding slowed by 3% to 40% with Late stage funding doubling to 13%. As such, the number of deals closed fell back in Q3 with a 45% decline (73 deals in Q2 vs 40 deals in Q3) with early-stage deals remaining stable and growth-stage deals decreasing. Funding in Q3 however grew 47% compared to Q2 which may reflect investors’ appetite for more established startups looking for later fundraising rounds.
Others include bridge funding rounds and undisclosed stages. Early stage includes Seed, Angel and Pre-A stages. Growth stage includes Series A and Series B stages. Late-stage all rounds are above Series B.
Q3 funding closed $83M below our H1 2017 report analysis with 31 deals less than projected. With Q3 deals counted, we maintain our year end projection for 2017 to a value projection of $2.6B.
The QoQ deal flow remains stable at 60+ deals per quarter. Generally, startups which closed late-stage funding rounds were on average 6 years old, while startups raising early and growth stage funding rounds were, on average incorporated, between 2014 and 2016.
“Mega-Made in China”
With two companies raising more than $100M in the first half year, Q3 was strong with three more companies announcing mega-rounds, including a $150M (RMB1.01B) Series D round by Gu Sheng Tang Zhong Yi (固生堂中医), a Health Services Search platform for Chinese medicine, and a $100M Strategic Investment in Ankon Technologies, a Digital Med Device company that develops a magnetically controlled capsule endoscope system.
We previously announced a $75M Series B investment round by Temasek Holdings and YF Capital in WuXi NextCODE in May 2017, but in September, the round was extended by an additional $165M from Sequoia Capital China, closing WuXi Nextcodes Series B raise at $240M, the biggest round recorded in Asia in 2017.
Whilst Q3 saw a robust performance in terms of mega-deals, the projected number of transactions by year end will likely be less than 2016.
Asia mega-deals >$100M Q1-Q3 2017
Health Services Search, Medical Data, Telehealth & Remote Monitoring and Online Marketplaces reflect the biggest share of all funding rounds by the end of Q3 representing 51% of all funding by volume.
Top categories of Asia HT funding by quarter 2017
M&A and IPO in Asia
M&A activity in 2017 saw 7 acquisitions in Asia HealthTech, with two happening between July and September. In August, India-based Click2clinic, a company offering Telehealth, home consultation, and drug delivery, raised $850k to acquire Wellness Home Healthcare for $650k. In July, CureFit, an Indian Mobile Fitness & Health App that offers an all-in-one solution for nutrition, fitness, and meditation training acquired a1000yoga (funding details undisclosed). It is also CureFit’s third acquisition in 2017, after acquiring The Tribe Fitness Club and Kristys Kitchen in February and March of this year.
The first global IPO in 2017 was announced by China-based Genomics company BGI Genomics. Founded in the late 90s, BGI Genomics has grown to be one of the biggest genomic sequencing companies in the world. BGI placed its initial public offer of 40.1 million shares at $ 2.06 (RMB 13.64) on the Shenzhen Chi-Next exchange in July.
The projected level of 2017 M&A activity is on its way to at least match the 11 acquisitions in 2016.
A record-breaking year on its way for the US-based HealthTech funding?
Global investment in HealthTech remains robust, with several significant deals occurring in the USA and Europe.
According to Rock Health, after a record-breaking H1 for US-based funding, investments in the third quarter have ebbed to $1.2B, pushing the 2017 YTD total to $4.7B. This comes after 7 mega-deals over $100M were announced in H1 2017, and only one $250M round by 23andMe in September reached the mega status in Q3.
According to Startup Health, in Europe, the most noteworthy deals include Babylon in the UK with a $60M series B and Sophia Genetics in Switzerland with a $30M raise.
Asia HealthTech funding: Final 2017 sprint to beat last year’s performance?
Revisiting our projection in the H1 Asia HealthTech Investment landscape report that by year end more than 270 deals will be closed, representing a 300% increase on 2016, the Q3 Asia HealthTech funding is showing no signs of slowing.
In our view, this is telling us that the last sprint to finish the year ahead of 2016’s performance may be well underway, likely to make 2017 a standout year for Asia HealthTech investment.
ABOUT GALEN GROWTH ASIA
Asia’s only connector devoted to HealthTech
We connect and catalyze at the edge of healthcare and technology. Our mandate is to foster a sustainable and developed HealthTech ecosystem across Asia.
In partnership with corporations, government organizations, startups and key stakeholder groups, Galen Growth Asia is building an integrated innovation network focused on HealthTech startups to innovate, disrupt and solve our healthcare systems pain points.
For further information, access to our reports, events and thought leadership, please visit us at www.galengrowth.asia.
Edited by: Julien de Salaberry
Copyright © 2017 Galen Growth Asia