Friday, April 19, 2024

Health & MedTech Startup Funding Report 2019

$45 billion

Startup Funding


Number of deals (total deals)

$13 million

Avg Deal Size

Health & Medtech Startup Funding report 2019 by HexGn

At a time when COVID-19 is the only topic of conversation, be it our health response, impact on business, livelihoods and our very way of life, it is worth noting that in 2019 overall funding in Health & MedTech fell by almost $5 billion, according to research by HexGn.

However, the current situation is something that none of us had foreseen, not only in terms of the complete stop to all travel, restriction in the movement of goods and immense business disruption. While 2019 will be a year in which the sector is searching for the next big thing, 2020 may be the year for the sector to save mankind.

Everyone now understands terms like in mRNA, strains, Gene mutation and is thirsting for a vaccine or a miracle drug. Trusting human ingenuity, we hope the sector delivers.

In 2019 the Health & MedTech sector attracted around $45 billion in start-up funding. With this scale of funding Health & MedTech emerged as the sector with the second largest funding.

Commensurate with the drop in the overall funding across sectors, funding in Health & MedTech also fell by $5.4 billion. In 2018 the sector had attracted $50 billion which fell by about 10% to reach the figure in 2019. The number of deals too registered an equivalent fall, while 2019 saw a total of 3870 deals 2018 saw the number of deals falling to 3486. The number of deals fell by 11% over this period.

Health & MedTech Startup Funding Across Regions In 2019

According to Health & MedTech 2019 Startup funding report by HexGn, the region which saw the most funding in 2019 was North America, which garnered a total of $28 billion compared to $34 billion in 2018, a fall of 17%.

While overall funding in Asia dropped by almost 56%, Health & MedTech held its own, by dropping only 14%, compared to the steep fall in other sectors. The funding in the sector in 2019 was $9 billion which is down from about $10.5 billion in 2018.

In Europe Health & MedTech startups attracted $7.5 billion in 2019 compared to $6.2 billion a year ago. Thereby registering a 21% increase in funding and the number of deals also increased by 7%.

The grouping comprising Oceania, South America and Africa saw a funding of $541 million in 2019 compared to $166 million in 2018. This is an increase of 228% over the previous year. However, the number of deals in this grouping increased by 7%.

The funding patterns show the clear dominance of North America in the Health & MedTech sector. The funding in North America was more than three times that in Asia and almost 4 times that in Europe the region attracted 62% of the total funding in this sector, which was slightly down from 67% in 2018.

With a similar fall in funding as well as number of deals, saw average deal size in the US hold steady at $15 million, the average deal size in Asia fell marginally from $15.6 million US dollars to $14.3 million, a 9% decrease. Europe had a relatively lower average deal size of $8 million which rose 13% from $7.2 million a year ago. The grouping comprising Oceania, South America and Africa saw deal size increase by 208% to reach $6.8 million compared to $2.2 million in the previous year.

2019 Startup Funding Size and Stages For Health & MedTech Startups

In the global Health & MedTech startup funding report for 2019, for simplicity we have categorized deals with average size less than $3 million as going into startup formation and validation of business ideas or Seed/Angel funding.  Categories falling between $3 million and $30 million are categorized as early stage funding and we have surmised goes into growth and customer acquisition. Any category above where the average deal size exceeds $30 million is categorized as late stage and is for market expansion or Pre-IPO preparations. While there are exceptions in each category, the purpose is to provide trends rather than hard numbers for reporting.

According to Hexgn research, Health & MedTech is one of the few sectors where we have seen a disparity in the number of deals across stages of funding. In other sectors we have noticed the largest number of deals in the angel/seed stage with a number of deals decreasing as one progress to the later stages. However, in the case of Health & MedTech, in 2018 as well as 2019 the largest number of deals happened in the early stage. The reason could be the focus on research. A substantial amount of investment is required to get the company started due to the presence of many regulatory bodies and oversight.

Funding into the angel/seed stage increased in 2019 and garnered a total of $2.2 billion compared to $1.9 billion US$ in 2018, an increase of 17%. Early Stage funding attracted $26 billion in 2019 compared to $31 billion in 2018 a fall of 14%. Late stage funding dropped to US$16 billion from almost US$18 billion in 2018 a fall of 7%. The other disparity in the funding stages is that funding was more in the early stages then the later stages.

According to Health & Medtech startup funding report for 2019 by HexGn, there were a total of four deals above five hundred million US dollars in twenty eighteen, this increased to five deals and the funding increased from $2.7 billion to $3.8 billion a 41% increase. At the other end of the spectrum if you consider deals above $50 million the total funding was $23.5 billion in 2019 compared to $27 billion in 2018, a drop of 13%. Deals below $50 million attracted a total funding of US$17.6 billion in 2019 compared to US$21 billion in 2018 a drop of 14%. In other sectors the huge increase in percentage terms of deals above US$500 million would have meant an increase in the overall funding for the sector however this did not play out in the Health & MedTech sector due to early stage funding attracting more funding than the late stage.

According to Health & Medtech startup funding report for 2019 by HexGn, the biggest casualty in early-stage funding came from venture stage deals which fell from $7.1 billion to $4 billion. The next big change was in the corporate round where funding fell from $2 billion to $373 million.

The data clearly points to a defining stage in Health & MedTech where current innovation and new drug discovery is not groundbreaking enough, has increasing competition and Government regulation uncertainty leading to a dampening of the sentiment.

Despite the domination of the United States in terms of funding for the Health & MedTech sector, 5 countries have raised funding of more than a billion US dollars in 2019 compared to just 3 in 2018.

A total of 22 countries attracted a funding of more than hundred million US dollars in 2019 and this constituted 99.3% of all the pending for the sector.

This list is completely dominated by North American and European countries, with 14 of the 22 countries hailing from these two regions alone.

In our list of the top 10 countries for the Health & MedTech sector, a total of 5 countries increased their funding by over 50%, three countries saw a dip in their funding while 7 should positive growth. The biggest drop in funding was in the United States where total startup funding in the sector dropped by 6 billion US dollars, a change of 18 % compared to 2018.

China too saw a drop of 17% compared to last year, attracting a total of 7 billion US dollars in 2019 compared to 8.3 billion US dollars in 2018. Germany was the other country which saw funding fall marginal by 3%.

Germany attracted 775 million US dollars in finding in 2019. Switzerland gained massively from 2018, with funding shooting up by 159%.

According to Health & Medtech startup funding report for 2019 by HexGn, Switzerland attracted $1.4 billion in 2019 compared to 544 million in 2018. Brazil saw its funding to increase astronomically to reach $331 million in 2019, an increase of 1209%.

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