Corporate funding for digital health companies hit a new high in 2020, driven by the technology boom during the COVID-19 pandemic.
Total corporate digital health finance, including venture capital, debt, and public market finance, reached $ 21.6 billion in 2020, up 103% from $ 10.6 billion a year, according to an annual report from research firm Mercom Capital Group 2019.
It marks record-breaking investments in digital health worldwide as the sector raised $ 13 billion in 2018, $ 8.2 billion in 2017, and $ 5.6 billion in 2016, according to data from Mercom Capital.
Venture capital financing, including private equity and corporate venture capital, totaled $ 14.8 billion in 637 transactions. That’s a 66% increase from $ 8.9 billion invested in 615 deals in 2019.
As of 2010, digital healthcare companies have raised $ 59 billion in VC funding in over 5,000 transactions and nearly $ 21 billion in debt and public market funding (including IPOs), bringing the cumulative investment in the sector to approximately $ 80 billion increased, the company reported.
RELATED: Global healthcare funding hit a record in the third quarter. That’s how much digital health companies have raised
Looking at the fourth quarter, global digital health VC funding was $ 4.5 billion in 139 deals, up 13% from the year-ago quarter compared to $ 4 billion in 195 deals in the third quarter of 2020.
Year-over-year funding increased 165% in the fourth quarter of 2020 from $ 1.7 billion for the same period last year.
“COVID-19 accelerated digital health funding activities 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, “Raj Prabhu, CEO of Mercom Capital Group, said in a statement.
The industry could see a lot more companies going public in 2021 if the current boom in IPOs and special purpose vehicles continues, he said.
“The pandemic has pervaded 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, ”said Prabhu.
RELATED: List: The Most Interesting Health Tech M&A Deals In 2020
Further details on VC funding in 2020:
Top financed deals: Investors have poured massive cash into digital health companies in a number of mega deals. The biggest deal in 2020 was $ 500 million raised by DXY, a Chinese company that provides an online platform for vendors, health organizations and health consumers. Trustbridge Partners led the round, which included support from Tencent Investment and GL Ventures.
ClassPass raised $ 285 million in funding led by L Catterton and Apax Digital, and SoftBank’s second Vision Fund made a $ 250 million investment in drug delivery startup Alto Pharmacy.
Artificial intelligence startup Olive grabbed a $ 225.5 million financing round led by Tiger Global and backed by General Catalyst, Drive Capital and Silicon Valley Bank. SomaLogic, a software company that measures human blood proteins, raised $ 214 million in Series A funding.
RELATED: Snapshot of Health Technology Funding – Everlywell Invests $ 175 Million to Expand Home Testing; 23andMe Raises $ 82 million and up
Hot Categories: Consumer-centric businesses generated $ 9.6 billion in 2020, up 81% year over year. Hands-on businesses raised $ 5.3 billion, up 47% from 2019.
Telemedicine broke funding records at $ 4.3 billion in 2020, the highest-funded category. That’s a 139% year-over-year increase from $ 1.8 billion in 2019.
Data analytics firms raised $ 1.8 billion in venture capital funding, while mHealth apps raised a total of $ 1.4 billion, Mercom Capital reported.
VC-backed companies providing clinical decision support solutions raised $ 1.2 billion, while practice management solutions companies raised $ 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. Mental health funding has also increased significantly, 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 rose in 2020, with 184 transactions from 169 in 2019, representing a 9% increase in transaction activity.
Teladoc’s massive $ 18.5 billion acquisition of Livongo Health 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 billion , $ 4 billion.
Allscripts also recently completed the sale of CarePort Health to WellSky for $ 1.35 billion.