2021 was another landmark year for digital health. We have seen more and more companies enter the public market, investors keep pouring money into this space, and consumers expect more out of diligence.
We sat down with Lee Shapiro, co-founder and managing partner at 7wireVentures as well as a Livongo vet to talk about this year’s biggest trends and next steps for 2022 in digital health finance.
The COVID-19 pandemic has ushered in two years of unprecedented funding in digital health.
“There was over $ 35 billion in digital health funding in 2021, more than the previous two years combined. So, significant investment, significantly increasing the number of rounds companies could raise. So the deal sizes got bigger, ”Shapiro said.
He found that the companies receiving Venture Dollars are becoming more diverse, both in terms of founders and areas of focus.
“I would also say that there have been some encouraging trends. We have seen more women and minority-supported businesses being funded. We have seen a number of mental health companies have funding too, and that is a very strong need, especially if you’ve read some of the recent press reports on mental health challenges.
“[A] Many of the companies we invest in address some of the challenges we face in accessing health care. “
While the past two years have been hot for investment, we may see a slowdown in the future.
“My personal view is that 2022 will slow down for a number of reasons. The first is more of a macro problem. We’ll likely see higher rates in 2022. Rumors have it that the Fed will start raising rates –could be three or four times in 2022 –and that will have some impact on the flow of capital that goes into investments, especially early stage investments.
“It is an election year and that will have an impact. Finally, we think some of the investors who have come into this sector may be new[…]in 2021 and will begin to realize that things are just taking a little longer in healthcare than other industries.
“And because of this, there is a need to better understand the healthcare landscape and the relationships with a number of strategic parties that are important to help companies scale. For all of these reasons, I think it will be “a slightly worse year in terms of the total amount invested in digital health.”
According to a. Last year we saw 79 digital health M & As and an increase in mergers for the purpose of acquisitions by digital health companies Report on the health of the rock. Lee said he anticipates many different exit opportunities for digital health startups, including SPACs and M & As, and is adding IPOs to the list as well.
“I think this year was great and a turning point in terms of the number of IPOs that really started with some of the work we did with Livongo in 2019. And then you saw more in 2020, but even more in 2021. I think companies are scaling. And with that, you will see the desire that they have access to public markets for additional capital. “
As for the next technology trends, Shapiro said he looks forward to technology that picks the patient where they are.
“We are very excited about this convergence of what we call the ‘load layer’ and are able to bring the consumer ever closer to care. So instead of building new facilities and having new tools that can offer treatments at ever higher costs, we think there has to be a way to make health care more accessible.
“And companies we’ve invested in this year: MedArrive, which works with emergency physicians to provide care at home. Companies like Brightline that provide services that really help meet the challenges of parents with special needs children. …
“WWe saw that Amazon just announced an interesting solution that would allow seniors to have the security of being able to ask for help with their smart speaker. These are things that will make more household services available. And we think that this is good for the overall supply. “