Healthcare startups raise $15B across 779 deals in first half of year

Meg Bryant

July 10, 2018

Dive Brief:

• Venture capitalists poured $15 billion into healthcare startups during the first half of 2018, 70% more than the $8.9 billion from the first half of last year, Forbes reports.
• But fewer companies reaped the cash rewards — 779 this year versus 855 in the first six months of 2017. The dealmaking analysis was conducted for Forbes by Pitchbook.
• Deals for June slowed a tad with companies raising $1.86 billion, down 3% from the same month a year ago. More noteworthy was the number of firms funded last month — just 85, or a full 50% fewer than the 2015 peak of 171.

Dive Insight:

In the rush to find the next cure or workflow solution, plenty of startups won’t make it, but those that do can spur real advancements in healthcare. The fervor of funding so far this year suggests investors see real promise in a number of them and are willing to bet their money and reputations on the odds of success.

The analysis echoes the funding momentum seen in other recent reports. In its half-year roundup of venture capital activity, Rock Health counted 193 digital health deals worth $3.4 billion. The volume set a new six-month high for the sector.

Biotechnology firms bucked drug pricing concerns and enthusiasm for digital health startups to lead June funding. Big winners included blood vessel implant developer Humacyte, with $150 million, and Kaleido Biosciences, a clinical-stage company developing microbiome-focused drugs, with $101 million. Organ-on-a-chip startup Emulate raised $36 million in a round led by Founders Fund and SciFi VC.

The top deals went to Grail, which raised $300 million toward its cancer blood test diagnostic, and cardiac imaging startup HeartFlow, which reeled in $240 million.

The analysis also notes companies that didn’t live up to expectations, as a cautionary tale to investors. In-office drug ad awareness firm Outcome Health pulled in $510 million last June, but later sued investors, costing it some large pharma clients. And drug implant maker Intarcia Therapeutics, which raised $615 million in August 2017, got a no-go on its diabetes drug from the FDA. The rejection resulted in layoffs and a halt to its programs.

Four companies scored $100 million-plus deals: HeartFlow ($240 million), DNA-personalized product store Helix ($200 million), health benefits tool Collective Health ($110 million) and chronic disease management app Livongo ($105 million).

https://www.healthcaredive.com/news/healthcare-startups-raise-15b-across-779-deals-in-first-half-of-year/527412/