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A record year for digital health investment

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Figures from Rockhealth show that digital health investment grew by almost 50 per cent in the first three quarters of 2021 compared to the previous year. Here we report on some of the biggest deals of the year so far.  

It has been a record-breaking year for digital health investment. According to Rockhealth, 2021 has already surpassed 2020’s US$20bn mark.

Between Q1 and Q3, 2021’s total funding amounted to US$21.3bn across 541 deals, with an average size of US$39.4m.

However, it was Q2 that really made headlines, raising a massive US$8.2bn, which outpaced 2019’s entire annual funding figure.

While Q3 saw more modest gains of US$6.7bn – similar to Q1’s US$6.4bn figure – it was still the second-highest quarter of digital health funding ever, surpassed only by its immediate predecessor.

Qs 1 and 2 had their funding driven by around two dozen mega deals – each worth around US$100m.

Figures aside, digital health investors have been largely focused on the same fields as in previous years, meaning that the most-funded types of companies remained consistent.

Top of the list were companies using software to accelerate research and development, delivering on-demand healthcare services, and supporting treatment of disease – much the same as 2020.

In terms of specific clinical or disease areas, investors continue to look for opportunities in mental health, which was the top-funded therapeutic focus so far in 2021, with US$3.1bn raised.

As digital mental health companies compete in an increasingly crowded space, however, start-ups are looking to differentiate themselves by focusing on complex mental and behavioral health support, including serious mental illness and substance use disorders.

While the old favourites remain popular, 2021’s digital health funding spree has also focused on emerging areas within the marketplace, including women-led digital health teams, women+ digital health solutions and digital companies addressing gaps in health equity, making these fields the ones to watch as we head into 2022. Here are some of the biggest deals of 2021:

XtalPi and AI

In terms of mega deals, XtalPi’s US$400m funding round in Q3 certainly stands out.

In August, the China-based artificial intelligence (AI) specialist chalked up its second big financing in the space of 12 months, raising US$400m and taking its valuation to around US$2bn.

Founded by a team of MIT researchers and previously backed by Google, XtalPi uses AI for a range of drug discovery and development tasks, such as molecular structure generation and predicting drug properties, to discover new therapies.

Its fundraise was led by OrbiMed with participation from Sino Biopharma and existing investors Sequoia Capital China and 5Y Capital.

SonderMind

In one of the major digital mental health deals of Q3, behavioural health provider marketplace SonderMind raised US$150m to fund its expansion plans.

The firm connects people with therapists who can meet their specific needs by taking into consideration previous patient responses, geographic location and insurance provider. From there, users can schedule in-person or telehealth appointments with the provider through the SonderMind platform.

The Denver-based company completed a US$150m Series C funding round in July, bringing its total amount raised to date to US$183m.

New investors Drive Capital and Premji Invest co-led the round, with additional participation from General Catalyst, Partners Group, Smash Ventures, Kickstart Fund, F-Prime Capital, Founders Circle Capital, Zoma Foundation and FCA Venture Partners.

Quit Genius

In the addiction and substance misuse sphere, Quit Genius raised US$64m in a Series B funding round in July.

The firm is the world’s first digital clinic for treating nicotine, alcohol and opioid addictions and plans to use the funding to expand its operations in the US.

Quit Genius increased revenue ten-fold over the past 12 months, and now partners with 55 employer and health plan clients, covering 2.1 million people.

The funding round was co-led by Kinnevik and Atomico, with participation from Series A investors Octopus Ventures, Triple Point Ventures and Startup Health. The company will use the funds to fuel expansion of its platform in the U.S.

Women at the top

One of the biggest winners this year for female-led digital health companies was California-based Evidation Health.

The firm, led by CEO Deborah Kilpatrick, raised US$153m in a Series E round co-led by Omers Growth Equity and Kaiser Permanente Group Trust, along with McKesson Ventures and B Capital Group.

Evidation has developed a service to gather health data from everyday people for use in disease research, and already has a community of more than four million.

The funding will be used on launching a range of virtual health programmes to make it easier for individuals to manage their health.

 

 

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