Global VC funding for digital health companies from January-September 2020 broke all previous 9M funding records, bringing in $10.3 billion but as telehealth visits slow down, markets may need to self-correct in the not too distant future
Eight Indian digital health companies received VC funding in Q3 2020 totaling $40 million while global VC funding for digital health companies in the first nine months (9M, January-September) of 2020 broke all previous 9M funding records, bringing in $10.3 billion.
There were five IPOs in digital health, which is also unprecedented, according to a report from Mercom Capital Group.
The eight digital health companies from India hich bagged VC funding in Q3 2020 DH are:
Practo, an online platform for booking and rating healthcare providers, raised $32 million in a funding round led by Chinese life insurance company A1A Company. Other existing investors participating in the round include – Tencent, Sequoia Capital, Sofina Ventures, Matrix Partners, G Capital, and RTP Global.
Muse Wearables, maker of AI-powered hybrid smartwatch tracking health vitals, raised $3 million in funding led by Bhaskar Rao Bollineni (Managing Director of Kims Hospitals), with participation from existing investors Lead Angels, Keiretsu Forum, and SS Rajamouli.
BestDoc, an intelligent patient relationship management system that helps hospitals save staffing costs and improve operational efficiency raised $2.1 million in a Pre-Series A round from Accel Partners and Arkam Ventures. Bengaluru-based SEA Fund, an existing investor, also participated in this round.
Dozee, a developer of contactless vitals monitoring device for chronic disorder management, parent care, and critical patient monitoring, raised $1.7 million in a funding round led by Prime Venture Partners, YourNest Venture Capital, and 3one4 Capital.
PlumHQ, an online health insurance price comparison platform, raised $1 million in Seed funding. Incubate Fund led the round with participation from Gemba Capital and Tracxn Labs along with angel investors, including Abhijit Gupta and Ram Sahasranam of Praxify Health, Sudheendra Chilappagari of Belong.co, Nitin Jayakrishnan of Pando and Alvin Tse of Xiaomi.
Wellcure, an online health and natural wellness information platform, raised a Seed funding of $200,000 from Inflection Point Ventures (IPV).
ConnectedH, a cloud-based patient engagement platform, raised an undisclosed amount of seed funding from venture capital firm – First Cheque, Rohit MA (Founder of Cloudnine Hospitals), PointOne Capital, and other investors.
Oga Fit, a home workout app that gives boutique digital fitness studio experience for users, raised an undisclosed amount of pre-Series A funding from Joyance Partners.
As per the report, funding activity was up by 43 per cent during 9M 2020 compared to $7.2 billion raised in 9M 2019. Digital health companies raised $4 billion in VC funding in 195 deals during Q3 2020 compared to $2.8 billion in 161 deals in Q2 2020, also a 43 per cent increase quarter-over-quarter (QoQ). Year-over-year (YoY), VC funding was up by 100 per cent compared to $2 billion in 155 deals in Q3 2019.
Almost half of the funding went into only 20 digital health companies during Q3 2020.
“Digital health and especially telehealth, has taken off amid COVID-19 and VC funding has already surpassed funding raised in any full year to date. There were five IPOs in digital health, which is unprecedented and we also had one of the biggest M&A deals in digital health history in the third quarter,” said Raj Prabhu, CEO, Mercom Capital Group.
Digital health consumer-centric companies raised over $2.7 billion, accounting for 67 per cent of the sector’s total ($4 billion) in VC investments during Q3 2020. Practice-focused companies accounted for 33 per cent, with $1.3 billion in funding.
The top-funded categories in 9M 2020 were: telemedicine with $3.2 billion, followed by data analytics with $1.3 billion, mHealth apps with $970 million, wearable sensors with $703 million, clinical decision support with $660 million, healthcare service booking with $572 million, practice management solutions with $553 million, and ellness with $523 million.
Telehealth companies received a record $1.4 billion in 41 deals in Q3 2020 compared to $962 million raised in 50 deals in Q2 2020, a 50 per cent increase QoQ. Funding increased 118 per cent YoY in Q3 2020 compared to $653 million in 14 deals in Q3 2019.
“Investors do not want to be left out and do not seem worried about investing at the peak of the market with sky-high valuations. This level of activity may not be sustainable as we come out of the pandemic. We are already beginning to see a slowdown in telehealth visits and the markets will need to self-correct in the not too distant future,” added Prabhu.
Early round venture capital funding (Seed, Series A) came to $1.2 billion. Most of the early round VC funding in 9M 2020 went to telemedicine, mHealth apps, data analytics, wellness, and clinical decision support companies.
A total of 601 investors participated in funding deals in Q3 2020, compared to 488 investors in Q2 2020.
General Catalyst, Initialized Capital, Oak HC/FT, Techstars Ventures, and YCombinator led Digital Health financing activity during Q3 2020, with each investing in four rounds.
A record 1,522 investors participated in 9M 2020 compared to 1,171 investors in 9M 2019.
The Top VC deals in 9M 2020 included: $285 million raised by ClassPass, $250 million raised by Alto Pharmacy, $200 million raised by Ro (formerly Roman), $194 million raised by Amwell (formerly American Well), $175 million raised by Grand Rounds, $155 million raised by KRY, and $150 million raised by Concerto HealthAI.
Twenty-one different countries recorded digital health VC funding deals in Q3 2020. Companies in the US recorded the highest number of VC funding deals with 129.
FDA/CE approvals doubled YoY with 26 digital health products receiving (FDA/CE) approvals in Q3 2020.
In 9M 2020, a total of 132 digital health M&A transactions were announced compared to 125 in 9M 2019. In Q3 2020, there were 49 M&A transactions compared to 34 in Q3 2019.
Practice management solution companies were involved in the most M&A deals in 9M 2020 with 15 transactions. Data analytics, mHealth apps, and telemedicine companies each recorded 14 transactions.
Notable M&A transactions in 9M 2020: Teladoc Health acquired Livongo Health for $18.5 billion, Blackstone acquired Ancestry for $4.7 billion, Invitae acquired ArcherDX for $1.4 billion, Healthcare Merger Corporation acquired Specialists On Call (dba SOC Telemed) for $720 million, and Teladoc Health acquired InTouch Health for $600 million.