4 Health Tech Trends in 2022 After Almost Halving Funding

  • VCs poured $13.5 billion into health tech startups in 2022 – down nearly 50% from 2021.
  • Personalized treatments and long-term care were cited by investors as key priorities this year.
  • Insider spoke with investors and founders who reflected on the state of health tech in 2022.

“People will always need healthcare,” Dr. Keith Latham, co-founder and CEO of healthcare automation startup Credentially, told Insider.

It’s a sentiment that has proven true during the COVID-19 pandemic, which has brought health-tech startups to the forefront as healthcare providers struggle under the pressure of large wait lists and staff shortages. Healthtech founders raised $25 billion from investors more sensitive to healthcare issues, and 2022 looked to be similar.

But the global recession and tech downturn changed all that, and funding for healthcare startups fell nearly 50% to $13.5 billion this year.

Every sub-sector in health tech saw a drop in funding, with emerging women’s health and clinical trials companies experiencing the biggest drop in capital.

“I think the decline in telehealth investment illustrates how personal health care is,” said Julia Hawkins, general partner at LocalGlobe. “Virtual care has been extremely important to offer during COVID, but we know many people will continue to want in-person care. Telehealth is a tool and a tool, but it cannot completely replace in-person care.”

AI-driven drug development and mental health start-ups have also thrived during COVID-19, but saw funding fall in 2022. “With the absolute £ invested in health tech falling year-on-year, I don’t think we can point to the maturing of the ecosystem,” she added. “We have a long way to go.”

Despite the delay, investors and founders are still describing 2022 — which sees health tech startups engage in more collaboration with health care systems — as a transformative year.

These are their main takeaways from the year.

1. Technology that served underrepresented groups was brought into focus

From menopause to mental health, health conditions that were considered “taboo” before the pandemic have come to the fore this year.

Digital health platforms have provided patients with an increased degree of privacy and have become a good way to serve “certain underserved target groups, such as mental health and femtech” — which “continued to have a strong investment theme,” said Gordon Oyler. general partner of APEX Ventures Medical Fund.

Startups offering personalized treatments for niche problems or demographics, such as menopause app Vira Health, mental health platform MyMynd and men’s health platform Numan, have all raised capital this year.

In Europe, conditions such as those “that are typically underserved by limited healthcare systems” have begun to be “supported by employee benefit providers,” added Dr. Molly Gilmartin, an investor at AlbionVC.

2. The telehealth market has matured significantly

The prominence of the long Covid, which affects around 17 million people in Europe, has highlighted the need for better solutions to chronic health problems. As pressure on healthcare providers across Europe mounted, viable long-term treatments became a greater priority for investors.

Telehealth startups have sprung up in the wake of Covid-19 as they fill gaps in healthcare systems worldwide. By 2021, startups like Kry and Alan hit unicorn valuations as venture capital poured $1.1 billion into the sector.

Although that fell to $851 million in 2022, telemedicine startups are still “poised to grow worldwide,” according to Euler. “The technology in this area is quite mature,” he added.

Chris Bischoff, managing director of venture capital firm General Catalyst, added that the firm takes a “long-term view” when assessing how the ecosystem matures, but billed telehealth startups Alan, Kry and Doctolib as “the first generation of winners” this year.

Eyal Rabinowicz, an investor at Eight Roads, also considers the introduction of DiGA (Digital Health Application) in Germany as an important indicator for the telehealth sector. The law allows a “smoother path” for patients to be reimbursed for using digital health platforms, demonstrating how start-ups and public health services are increasingly starting to work together.

3. M&A activity increased

Amid a slowdown in global IPOs, an M&A frenzy has hit the continent – ​​especially in the last quarter of 2022 – with healthcare tech acquisitions worth $39 billion in Europe in 2022, according to Dealroom. And this is a trend that is expected to continue in 2023.

Some solid deals include AstraZeneca’s acquisition of Neogene Therapeutics for $320 million and Arcutis acquiring Ducentis Biotherapeutics for $400 million.

Latham “expects continued M&A growth” in the year ahead – adding that he “would not be surprised to see more US acquisitions of UK and European health tech if the dollar remains strong”.

4. General VCs started investing in healthcare

Healthcare startups often deliver clinical-grade treatments, so verifying the science is an important aspect of conducting due diligence — an achievement that health-focused funds may find easier. But this year, we’ve seen more versatile VCs enter the playing field.

“A lot of versatile investors are now making a long-term bet on health tech in general,” Gilmartin told Insider.

Founders have noticed this trend. Henry Majed, co-founder of mental health startup MyMynd, noted an influx of versatile VCs entering the mental health sector after many health techs invested in the first generation of startups.

“General VCs are targeting mental health and wellbeing now,” he said. “They’ve been waiting for this shake-up to happen to look for the best players in the sector.”

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