Venture Capital’s New Favorite Industry
The Covid-19 pandemic has brought digital health and wellness into the mainstream – and it has made the retail health and wellness tech sector an increasingly attractive target for investors in capital risk.
Investing activity in digitized health and wellness peaked in 2020, generating $ 7.3 billion in venture capital value across 449 deals, according to PitchBook. The industry has also started the new year on a strong note: In the first quarter of 2021, the industry’s transaction value hit a quarterly record of $ 4.2 billion out of 153 transactions, PitchBook said in a report from the Premier. quarter on investments in emerging technologies.
PitchBook researchers attributed the conclusion of a strong deal in 2020 to the pandemic and the increased development and use of telemedicine products. By 2025, the research firm expects the mobile and digital segment of the health and wellness technology market to reach between $ 350 billion and $ 400 billion, a meteoric projection from a market of less than $ 50 billion in 2019.
“Virtual health companies have benefited from the pandemic as rules preventing the use of telemedicine have been repealed, payers have increased telehealth coverage, and laws preventing ‘non-critical’ in-person appointments have forced providers to make remote appointments, ”PitchBook said in the report.
In the first quarter of 2021, PitchBook said the major segments of the industry – virtual health and medicine and personalized testing – had led their record-breaking VC business with “five mega-VC agreements each and a total of 1.7 billion. of dollars and 1.4 billion dollars invested, respectively. “Aside from mobile and digital health companies, late-stage venture capital activity has exceeded the number of early-stage deals in all segments under the umbrella of health and welfare technologies. -be retail.
At the end of the first quarter of 2021, which ended on March 31, Ro, a US-based telehealth company, was the leading retail health and wellness technology company backed by VC, having raised approximately $ 876.1 million to date. Just behind was 23andMe, a US-based genomic testing company with a total of $ 873.2 million in venture capital investments, according to the report. Other major investments included fitness apps, smart device companies, digital therapy and bioinformatics companies.
Home health and fitness are here to stay
When it comes to the future of health and wellness technology, analysts at PitchBook see opportunities in fitness technology and remote patient monitoring devices, or RPMs, technology that enables patients to take their vital signs at home and send the information virtually to a doctor. Either way, the pandemic is credited with rising venture capital interest. With RPM, digital diagnostics entered the mainstream as people practiced social distancing and tried to avoid infection in public spaces. Fitness technology, meanwhile, “hit an all-time high in 2020 with around $ 2 billion raised” as the pandemic pushed people away from public facilities and home gyms. PitchBook expects the fitness tech market to reach $ 1.1 trillion by 2023.
“As the pandemic abates, vaccination rates rise and consumers return to physical retail, we believe it is unlikely that they will completely abandon home fitness practices, which include often expensive workout equipment and subscription plans, as well as digital fitness communities, ”PitchBook said in the report. “We expect that omnichannel fitness experiences that combine in-home and in-person experiences are likely to see sustained demand. “
But venture capitalists and businesses may face challenges leveraging RPM technology: Regulatory hurdles, like the biometric privacy law in Illinois, can hamper immediate monetization.
“The RPM market is moderately fragmented and very competitive. We expect a growing trend of partnerships between RPM providers and other healthcare management providers, ”PitchBook said in the report. “We also anticipate that the growth of remote patient monitoring devices will overtake that of consumer biometric devices. ”