Drop in Early-Stage Health Tech Funding Creating a Buyer’s Market Says Inova Personalized Health Accelerator Report
Launch of IPHA Quarterly Early-Stage Health Funding Snapshot Report Provides Investor Insight
FAIRFAX, VA — A booming technology market, uncertainty around healthcare policy, the emergence of other innovative technology sectors, are driving a flight of early-stage capital away from the health technology sector, according to the new report “Early-Stage Health Tech Funding Snapshot” released by Inova Personalized Health Accelerator (IPHA). Announced Thursday, at the Inova Discovery Series on Early-Stage Investing in Health Technology, this report is the first in what will be a quarterly analysis of early-stage health tech investing in the U.S.
In contrast to the historic Q1 2018 global venture capital deal and dollar volume, which set new quarterly records for post Dot Com era investment, the report based on Pitchbook® derived data reveals a different narrative. While capital invested appeared reasonably steady, deal volumes between Q1 2017 and Q1 2018 dropped materially (31%), revealing both deal and dollar volume are contracting. The trends in early-stage health technology deal volumes revealed an even more significant drop (39%), which has not been seen in the last 8 years.
“It seems clear that venture deals in health technology are shifting to the right — that is, health tech investors seem to be favoring larger and later rounds while seed investors are sitting on the sidelines” said Rick Gordon, IPHA director, and co-author of the report. “As a result, early-stage investing in health technology is getting squeezed.”
According to the report, although early-stage health tech deals have declined for each of the past four quarters between Q1 2017 and Q1 2018, there is a growing backlog of quality early-stage health tech deals waiting to be funded. In this environment, entrepreneurs must be more capital efficient, relying on bootstraps and government grants to get through the funding drought. The report outlines 12 deals, which closed in 2017 and early 2018, which include several AI, software and device investments.
“It makes us increasingly confident that we are on the right track to create a center of mass of health technology innovation here at Inova,” said Gordon. “Our expectation is that prices for early-stage deals will remain at favorable levels and generate attractive risk-adjusted returns.”
IPHA has invested in high-potential innovations such as the software investment, CoverMyTest and device investments in HeMemics and KinometriX. To learn more about Inova Personalized Health Accelerator visit inovapha.org.
Media contact: Kelly Schlageter, email@example.com
About Inova Personalized Health Accelerator
The Inova Personalized Health Accelerator is a unique program that provides healthcare technology and services entrepreneurs with C-suite coaches, customized plans, early-stage capital, connections to strategic partners and later stage capital, and connections to customers. This bespoke approach to accelerating new companies through the early stages of product design, capital formation and commercialization will serve as the foundation for a stronger healthcare ecosystem in the mid-Atlantic region. Read more at www.inovapha.org.
Inova is a global leader in personalized health, which leverages precision medicine to predict, prevent and treat disease, enabling individuals to live longer, healthier lives. At Inova, we serve more than 2 million people each year from throughout the Washington, DC, metro area and beyond. We are shaping the future of health through our integrated network of hospitals, primary and specialty care practices, emergency and urgent care centers, outpatient services and destination institutes. Inova is home to world-class researchers, expert medical specialists and renowned scientists who are driving innovation to improve patient care, prevent disease and promote wellness. Our commitment to health and wellness is further reflected in our sustainable practices. For more information, visit www.inova.org, or find Inova on Facebook, Twitter and LinkedIn.
[…] recent report that their team developed showed that most HealthTech funds are targeting later stage deals, […]