Unicorns are Everywhere in Healthcare
Unless you lived under a rock in 2021 (which strangely may have been what it actually felt like to live through 2021), you may have seen that venture capital continued to grow in unprecedented ways, pandemic or not. Global VC investment hit all time highs in 2021 — with a 92% increase in dollars invested over 2020 from $335B to $643B — with 700 VC-backed companies poised to IPO in 2022 alone. Not to mention there were over 10 new unicorns celebrated every week!
And of those new US unicorns, more are being minted in healthcare than any other sector, making up over 20% of all of the next anticipated wave of unicorns (including healthcare, biotech, and life sciences). Nearly $30B was invested in digital health companies in 2021, more than 2x the amount in 2020, across 700+ deals. Mid- and late- stage investment firms are increasingly getting closer to the “source” and getting into seed investing as a way to get a bigger bite of the proverbial apple (an apple a day keeps… the investors in play). Not to mention the 272 M&A deals (nearly doubling 2020’s) and 23 public exits (nearly tripling 2020’s) have shown a strong appetite for the market and venture capital dollars seeing very solid returns.
Healthcare continues to see a rapid influx of investor dollars year over year, with 2021 being another record breaker. One reason for this may be the defensive nature of healthcare as a sector. When many are expecting a broader market pullback, an industry that is more secular can be seen as a bit of a safe haven (we subscribe to this defensive philosophy at Early Light, but also see healthcare as primed for innovation). Another reason may be the incredible inefficiencies that we have endured over the last 20 years are finally seeing real change thanks to advances in AI/ML, biotech, and even blockchain technology, along with investment from the federal government.
For example, AI is getting an injection of VC dollars thanks not only to the proliferation of data (in case you didn’t know, your Apple Watch is watching you), but also thanks to greater access to data across systems, a classical problem in healthcare. APIs and data aggregators like Innovaccer and Truveta are making it easier to acquire the massive data sets needed for accurate analysis, while newer startups like Rhino Health are using fresh approaches like federated learning to share algorithms instead of patient data directly.
Biotech also continues to see massive amounts of funding, and with emerging companies that can help with clinical trial recruitment and real-time market feedback — like portfolio company Thrivable and companies like Atomwise (that use AI to make it easier and faster to produce new drugs) — it continues to be a hot space.
And on the forefront of blockchain’s emergence in healthcare, companies like Patientory are providing real portability of patient data. Others like Pokidoc are using blockchain to create APIs for claims and pharmacy and identity management, currently all siloed data fields in today’s healthcare ecosystem.
Additionally, the proposed Build Back Better Bill has about $145B earmarked for expanding healthcare infrastructure and provides broader access to the internet with vouchers and other Medicaid development, which should open the doors to continued expansion of telehealth and remote patient monitoring. At the moment, the bill is still very much up in the air, however federal investment into the healthcare space will only continue as we shift from a fee-for-service world to a more value-based healthcare system.
So why are we excited about these advancements at Early Light? Well, as if the above advancements weren’t exciting enough, it’s because healthcare is a staple of the Mid-Atlantic and because early-stage investors are needed now more than ever. With Johns Hopkins in our backyard and other leading organizations with nationally recognized talent (hello, NIH), we have built relationships with portfolio companies like Vita Therapeutics to treat muscular dystrophy and Citus Health to get better access to home care. Using our own strong foundation of investors, we help bridge the gaps, including capital needed to get these technologies to a market that desperately needs them. Our angel network is full of investors that have often helped similar companies grow themselves and/or are ready to “pay-it-forward” to the next generation of entrepreneurs as they meet head-on tomorrow’s healthcare challenges.
With so much of the VC industry trying to get closer and closer to the “source” (i.e. the first stages of traction for these budding startups), we are lucky enough to already sit there with existing relationships in the community and a proud track record of success. We continue to be enthusiastic about healthcare, enabling the next-generation of founders and introducing new investors to the opportunity to make a difference.
The Early Light Syndicate is a national angel group that invests in the best companies across a variety of industries and stages. Apply here if you’d like to join.
If you are a founder, related to health-tech or otherwise, please click here to submit a pitch deck for review.
Matt is a Fellow at Early Light Ventures, completing due diligence, market research, and facilitating the growth of its Syndicate community. He is graduating from Georgetown’s McDonough School of Business this year, focusing on finance, entrepreneurship, and venture capital. As if that is not enough, he is also the VP of Corporate Development at Protenus, a VC-backed AI health-tech startup focused on Privacy, Compliance, and workforce behavior analytics. Ever the jack-of-all-trades, he is also diving headlong into crypto and its murky waters and wants to pick your brain about it.
