Globally, venture capital firms (VCs) increased their activity significantly last year, according to a new report from CB Insights. They invested a record $169.3 billion in 2021, up 142% from total 2020 investments.
Unsurprisingly, CVC-backed deals for digital health startups have been on the rise.
These corporate investors paid out $16.6 billion in 2021, up from $9.9 billion the previous year, setting a record. The pandemic has significantly fueled the growth of this sector, with HVAC deals rising to 442 last year from 372 deals in 2020.
GV (formerly Google Ventures) has backed the most digital health companies at 22, making it the most active investor in the industry four years in a row. But GV was in good company, as many invested in the space. For example, Maverick Ventures has backed 20. And the venture capital arms of Salesforce and Sony have each funded more than 5 digital health companies in 2021.
In addition, the venture capital arms of several healthcare companies have also invested. For example, Kaiser Permanente, Johnson & Johnson and Optum participated in 2021, with 10 deals, 9 deals and 11 deals respectively, according to the report –
New investors have also joined the ranks. Specifically, CVS Health launched its CVS Health Ventures in 2021 with a fund of $100 million.
The United States received the most CVC-supported healthcare capital in terms of dollars and deals. In particular, half of the total digital health deals supported by CVC went to US-based startups in 2021. And in terms of the numbers, the US took even more in 2021 than in 2020, receiving nearly 75% of the funding. For comparison, the second place – China – received only 7% of corporate funding and 8% of deals. The United States more than doubled its $40.5 billion from 2020, reaching $86.9 billion in CVC-backed funding in 2021, according to the report.
According to the report, 2021 saw strong adoption of mega-cycles for digital health, with an increase of 67% compared to 2021 – they included startups in diagnostics, drug discovery and development and mental health.
According to the report, digital health trends broadly reflect CVC-backed deals.
For example, only 10% of all CVC deals in 2021 were mega rounds. However, in 2021, mega-towers accounted for 62% of total CVC-supported funding. And the majority of these mega-deals have been in the United States, just like in digital health.
Photo: drogatnev, Getty Images; Chart: CB Insights