Venture capital (VC) is playing an increasing role in health care as companies are desperate for the resources, expertise and funding that VC firms provide.
According to SVB Financial Group’s annual Healthcare Investments and Exits Report, healthcare venture capital funding totaled nearly $22 billion in 2022, and over the last 24 months, there has been more than $50 billion in newly raised health care funds. This falls short of the $28 billion raised in 2021, which was a record. SVB’s report also noted that while there was a dip in funding in 2022, VC fundraising and investment remained strong throughout the year as there were more healthcare investments than in 2020. Due to public market cap erosion, there were fewer IPO exits and less M&A activity than expected in 2022.
VC investment and funding has been, in part, fueled by investors jumping on opportunities to serve traditionally underserved communities, notably through digital health/eHealth as well as women’s health. According to a 2022 report by Rock Health, funding for digital health startups totaled $15.3 billion across 572 deals, averaging $27 million per deal in 2021. Most of the activity occurred in the first half of the year, with more than $6.8 billion invested between January and March 2022.
In November 2022, The University of California at Davis Health announced a partnership with General Catalyst, a VC firm that makes early-stage investments in several industries. The partnership is aimed at enhancing UC Davis Health’s virtual health and digital health offerings to address the inequalities and systematic challenges in health care.
For fertility and women’s health, funding reached more than $854.5 million in 2022 as demand for fertility treatments soared. This is up from $345 million in 2021, according to Rock Health. The high demand is shown by the 111% increase in fertility M&A deal activity from 2021 to 2022, according to data captured in the LevinPro HC database. While demand for fertility care has increased, access has not kept up with demand, and tech-forward companies are aiming to fill that void with help from VC firms.
One example of the impact fertility startups have had on venture capital is Gaia. The company uses personalized insurance and payment plans to increase access to IVF through predictive technology. It closed a $20 million round of funding in February 2022. The round was led by the VC firm Atomico and previous investors include Kindred Capital, Seedcamp and Clocktower Technology Ventures. Gaia was born out of the need to make IVF and other fertility treatments more affordable.
The following VC firms, and their portfolio companies, are among the most active in the healthcare space.
Innova Memphis
Innova Memphis was founded in 2007 by Memphis Bioworks Foundation and is one of the largest VC firms in the country. It is a pre-seed, seed and early-stage investor focused on starting and funding high-growth companies in the biosciences, technology and agriculture technology fields.
Innova has invested more than $32 million in 119 startups, attracting more than $90 million of outside capital, for a total annual impact greater than $90 million and supporting more than 250 direct jobs. Innova’s healthcare companies include Advanced Catheter Therapies (ACT), Hera Health Solutions (HHS) and Inspire Living.
ACT, an early-stage research and development medical device company, has a portfolio of catheter technologies targeting vascular disease including thrombosis, inflammation, occlusions and restenosis. ACT was established in 2008 and is based in Chattanooga, Tennessee.
HHS is a pharmaceutical company specializing in the research, development and commercialization of long-term treatments through proprietary biodegradable contraceptive implants. The company was founded in 2017.
Inspire Living provides a portable health monitor that conducts automated respiratory and rapid vitals exams on children. By focusing on children’s respiratory conditions, Inspire Living is providing greater access to a demographic that doesn’t typically receive the care they need as respiratory conditions aren’t as common in children as they are in adults.
New Enterprise Associates, Inc.
New Enterprise Associates, Inc. (NEA) focuses on helping entrepreneurs build businesses across multiple stages, sectors and geographies. With more than $25 billion in cumulative committed capital since the firm’s founding in 1977, NEA invests in technology and healthcare companies at all stages in a company’s lifecycle, from seed stage through IPO. The firm’s accomplishments include more than 210 IPOs and more than 360 acquisitions.
On January 26, 2023 NEA announced that it closed on two funding rounds totaling more than $6.2 billion. The new pair of funds marks a first for NEA, with one dedicated to early-stage investing and the other to venture growth-stage opportunities. Both funds will be invested across a range of technology and healthcare sectors, including enterprise and consumer technology, digital health and life sciences.
Strive Health delivers a turnkey kidney care service line for health systems and payors, powered by specialized analytics and nephrology caregivers. Strive is changing the lives of kidney disease patients through early engagement, comprehensive coordinated care and expanded treatment options. NEA invested in Strive Health in 2018.
In 2019, NEA invested in Black Diamond Therapeutics (NASDAQ: BDTX), which discovers and develops next-wave precision cancer medicines to treat patients with genetically defined cancers driven by oncogenes activated by allosteric mutations. The company was founded in 2017 and has an estimated $20 million in annual revenue.
MPM Capital
Cambridge, Massachusetts-based MPM Capital invests in early-stage companies that are developing therapeutic oncology technologies. Founded in 1996, the company’s total funding amounts to more than $3.9 billion. It invests in healthcare, biotechnology and pharmaceuticals. In late 2021, MPM Capital announced that it had raised $850 million for its second Oncology Impact Fund, making it the world’s largest biotech impact investment fund.
MPM Capital’s companies include Redona Therapeutics (formally known as 28-7), Aktis Oncology and Harpoon Therapeutics. Redona Therapeutics is focused on the modulation of functional non-coding RNA (ncRNA) to treat cancer and other diseases. The company was founded in 2016 and MPM invested in Redona shortly after.
Aktis Oncology is a biotechnology company pioneering the discovery and development of a new class of targeted radiopharmaceuticals to treat a range of solid tumor cancers.
Harpoon Therapeutics is a clinical stage biotechnology company founded by MPM that is developing a portfolio of T cell redirection antibodies against validated hematologic and solid tumor targets.
MPM’s previous investments include 23andMe, Inc., a leading personal genetics company, Aires Pharmaceuticals, Inc., a clinical stage pharmaceutical company that develops therapies to treat pulmonary disorders, and Helicos Biosciences Corporation, a formally publicly traded company focused on genetic analysis technologies for the research, drug discovery and diagnostic markets.
