COVID-19 ‘Supercharged’ 2020 Digital Health Funding, Report Finds

Jan. 8, 2021

Global VC digital health funding increased 66 percent YoY

Global venture capital (VC) funding in digital health—including private equity and corporate venture capital—totaled $14.8 billion in 637 deals in 2020, representing a 66 percent increase compared to $8.9 billion in 615 deals in 2019.

A new report from Mercom Capital Group revealed that total corporate funding for digital health companies—including venture capital, debt, and public market financing—reached $21.6 billion in 2020. Last year, 77 percent of digital health funding went to U.S. companies in 2020, with $11.5 billion in 429 deals, compared to $5.9 billion in 426 deals in 2019. This signifies a 95 percent increase in year-over-year (YoY) funding. Interestingly, 38 countries recorded digital health VC funding activity in 2020.

What’s more, since 2010, digital health companies have received $59 billion in VC funding in over 5,000 deals and almost $21 billion in debt and public market financing (including IPOs), bringing cumulative investments into the sector to approximately $80 billion, the report’s data showed.

Also in 2020, there were 38 large funding deals of $100 million or more, accounting for 40 percent of the total funding. “COVID-19 supercharged funding activity in digital health in 2020. Ten digital health categories had their best year with record funding amounts. It was also the biggest year for IPOs with six digital health companies raising over $6 billion. We could see a lot more companies going public in 2021 if the current IPO and SPAC boom continues,” stated Raj Prabhu, CEO of Mercom Capital Group. “The pandemic has mainstreamed the consumer side of digital health technologies in less than a year. Digital health products that were a novelty a year or two ago are now a necessity.”

In the past year, telemedicine was unsurprisingly the top-funded category and led VC funding activity with $4.3 billion, a 139 percent YoY increase compared to $1.8 billion in 2019. Other top-funded categories in 2020 included: data analytics with $1.8 billion; mHealth apps with $1.4 billion, clinical decision support with $1.2 billion; practice management solutions with $837 million; wearable sensors with $815 million; wellness with $792 million; healthcare booking with $765 million; and social health networks with $500 million.

A total of 1,694 investors participated in digital health deals in 2020 compared to 1,288 investors in 2019. The top investors in 2020 were Optum Ventures with 15 deals, General Catalyst with 14 deals, and Oak HC/FT with 13 deals. GV (formerly Google Ventures) and Sequoia Capital made 11 investments each.

Additionally, 2020 was the biggest year to date for IPOs in digital Health. Six companies went public, raising a total of $6.2 billion: JD Health ($3.5 billion), GoodRx ($1.3 billion), Amwell ($922 million), Accolade ($220 million), NanoX ($165 million), and MindBeacon ($58 million).

Further, there were 184 M&A transactions in 2020 compared to 169 in 2019, a nine percent increase in deal activity. Eighteen companies participated in multiple transactions in 2020. The top-five disclosed M&A transactions in 2020 were: Teladoc’s acquisition of Livongo Health for $18.5 billion; Blackstone’s acquisition of a majority stake in Ancestry for $4.7 billion; Philips’ acquisition of BioTelemetry for $2.8 billion; Invitae’s acquisition of ArcherDX for $1.4 billion; and WellSky’s acquisition of Allscripts’s CarePort Health (CarePort) business, for $1.35 billion.