Corporate funding for digital health companies hit a new high-water mark in 2020 propelled by the technology boom during the COVID-19 pandemic.
Total corporate funding for digital health including venture capital, debt and public market financing reached $21.6 billion in 2020, up 103% compared to $10.6 billion in 2019, according to a year-end report by research firm Mercom Capital Group.
It marks record-breaking investments in digital health globally as the sector raised $13 billion in 2018, $8.2 billion in 2017 and $5.6 billion in 2016, according to Mercom Capital’s data.
Venture capital funding, including private equity and corporate venture capital, came to $14.8 billion in 637 deals. That’s an increase of 66% compared to $8.9 billion invested in 615 deals in 2019.
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 initial public offerings), bringing cumulative investments into the sector to approximately $80 billion, the company reported.
Looking at the fourth quarter, global VC funding for digital health came to $4.5 billion in 139 deals, up 13% quarter over year compared to $4 billion raised in 195 deals in the third quarter of 2020.
Year-over-year funding increased by 165% in the fourth quarter of 2020 compared to $1.7 billion during the same time a year ago.
“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,” said Raj Prabhu, CEO of Mercom Capital Group, in a statement.
The industry could see a lot more companies going public in 2021 if the current IPO and special purpose acquisition company boom continues, he said.
“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,” Prabhu said.
Here are other details about VC funding in 2020:
Top funded deals: Investors poured massive cash into digital health companies in a number of mega-deals. The largest deal in 2020 was $500 million raised by DXY, a Chinese company offering an online platform for providers, healthcare organizations and health consumers. Trustbridge Partners led the round that also included support from Tencent Investment and GL Ventures.
ClassPass scored a $285 million series E funding round led by L Catterton and Apax Digital, and SoftBank’s second Vision Fund led a $250 million investment in drug delivery startup Alto Pharmacy.
Artificial intelligence startup Olive nabbed a $225.5 million funding round led by Tiger Global and joined by General Catalyst, Drive Capital and Silicon Valley Bank. SomaLogic, a human blood proteins measurement software company, brought in $214 million in series A funding.
Hot categories: Consumer-centric companies brought in $9.6 billion in 2020, up 81% year over year. Practice-centric companies raised $5.3 billion, a 47% increase compared to 2019.
Telemedicine shattered funding records with $4.3 billion in 2020, the top-funded category. That marks a 139% year-over-year increase compared to $1.8 billion in 2019.
Data analytics companies brought in $1.8 billion in venture capital funding while mHealth apps raised a total of $1.4 billion, Mercom Capital reported.
VC-backed companies that offer clinical decision support solutions raised $1.2 billion, while practice management solutions companies banked $837 million.
Investment firm StartUp Health also reported Wednesday that total corporate funding for remote monitoring companies doubled from $417 million to $941 million in 2020. There also was a significant increase in funding in mental health, with investment in the sector more than doubling from $599 million in 2019 to $1.4 million in 2020.
M&A on the rise: Mergers and acquisitions also were up in 2020, with 184 transactions compared to 169 in 2019, a 9% increase in deal activity.
Teladoc’s massive acquisition of Livongo Health for $18.5 billion tops the list of M&A deals in 2020.
Other top deals in 2020 include Blackstone’s acquisition of a majority stake in Ancestry for $4.7 billion, Philips’ acquisition of BioTelemetry for $2.8 billion and Invitae’s acquisition of ArcherDX for $1.4 billion.
Allscripts also recently closed its sale of CarePort Health to WellSky for $1.35 billion.