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The increase was by driven by a slew of $100M-plus deals
We already knew that 2021 was going to be a record year for digital health funding, as it surpassed $20 billion for the first time by the end of the third quarter. The only question was how big the year would end up being.
Now we have the answer, as Rock Health reported the Q4 numbers on Monday.
In all, there was $29.1 billion invested in digital health companies in the US, nearly doubling the $14.9 billion invested in 2020, which also happened to be the previous record. number was invested across 729 deals, leading to an average deal size of $39.9 million.
In Q4 alone, there was $7.8 billion invested across 188 deals, up 16% and 11% from Q3, respectively.
One thing that separated 2021 from previous years is that the majority of its funding came in the form of mega deals, or those of at least $100 million; in 2021, there were 88 of them totaling $16.6 billion, or 57% of all the money raised. For comparison, 2020 saw 44 mega deals, or 44% of its investments, and there were only 12, for 24% of funding, in 2019.
Some of those mega deals in 2021 included $540 million for Noom; $500 million for Ro; $500 million for Mindbody; $500 million for Commure; $400 million for XtalPi; $220 million for Reify Health; $110 million for TrialSpark; $110 million for Maven; and $102 million for InBrace.
The big winners of 2021
Once again, the largest space for digital healthcare was mental health, which surged in 2021, growing 88% percent from $2.7 billion in 2020 to $5.1 billion.
What drove that huge influx were a couple of trends, outlined by Rock Health: first there was "the integration of mental health services into broader virtual care platforms." This was exemplified by K Health, which uses AI to help people understand how doctors diagnose and treat those with similar symptoms and conditions acquisition, acquiring Trusst, a messaging-only platform that connects people with a licensed therapist in their state.
The other trend is "the rise of virtual options for intensive mental and behavioral health needs," which has been implemented by companies like Lyra Health, NOCD, and Equip Health.
Mental health was far and away the largest subspecialty; the next two largest were diabetes care and cardiovascular, both of which raised $1.8 billion. Of the two, diabetes saw the bigger increase, growing 125% year-to-year, while funding to cardiovascular startups grew 64%.
That was followed by primary care with $1.6 billion, musculoskeletal with $1.4 billion, and oncology with $1.4 billion.
It was no surprise that 2021 was a big year for healthcare M&A as well; in fact, Rock Health had already written about how Q3 2021, with 79 deals, was the largest quarter to date and how August 2021, which saw 33 deals, was the biggest digital health M&A month ever.
But it was SPACs that truly sent things into the stratosphere: while there were 8 healthtech IPOs, still the most ever, there were 15 SPACs, making it so that 23 healthcare companies entered the public market in 2021.In the end, there were nearly 23 digital health exits, either via merger or acquisition, each month in 2021, which is almost double the monthly average of 12 that the space saw in 2020.
(Image source: istockphoto.com)
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