Due to The Garage's active investments in Healthtech projects, I have decided to conduct a small study on the "entrances" and "exits" that have been made in this market segment recently. The study does not consider the BioPharma, Medical Devices, or SDx/Tools segments, as I am analyzing only the Healthtech segment.

In 2022 and 2023, leading Healthtech startups continue to attract capital through insider and bridge rounds. Priced rounds are scarce, and all that I could find is described below. This is due to various reasons, primarily the state of the economy and capital markets. However, investors, including The Garage, maintain high demand for proven business models in the areas of mental healthcare and chronic condition management.

Public markets remain largely closed, with no IPOs taking place in the first quarter of 2023. Based on comments on Twitter, most companies will continue to postpone their IPO plans at least until the end of 2023 or the beginning of 2024. This is partly due to the upcoming presidential elections, as some players have a feeling that the capital markets will be unleashed before this event to provide support for the election campaign.

The main trend and motivation for venture investors to enter the Healthtech sector in 2023 is the lowered valuations compared to the peaks of 2021 and 2022, with very low multiples averaging around 7-8X. Additionally, most investors expect an improvement in macroeconomic trends in the near future. Many of them plan to profit from the revaluation of multiples and the entry of new investors. This year, we have also seen investors shifting away from late-stage investments in favor of their traditional strategies, focusing on earlier-stage rounds. For instance, Lux Capital, primarily an early-stage investor, raised its fund in 2023 without a mandate to invest in late-stage companies.

Another confirmation of this thesis is that investments in Healthtech in Q1 of 2023 increased by 60% compared to Q4 of 2022. However, these volumes are still not comparable to the peak of 2021 when investors were investing in anything labeled Healthtech. Today, we are seeing a predominance of insider rounds, accounting for 34% of all deals (104 out of 307) in Q1 of 2023, compared to 30% in 2022 and 28% in 2021.

The next section of this small study is dedicated to the most interesting companies, in my opinion, that have raised their Series A and Series B rounds in 2023.

Paradigm — a technology startup that raised $203 million in their Series A round. They offer a new, efficient ecosystem where less physician burden translates to wider patient access and accelerated study timelines. The lead investor for this round is www.archventure.com.

Synapse Health They help reduce costs and simplify the process of ordering medical supplies for patients, providers, and healthcare insurance. They raised $15 million in their Series A round.

Bend Health — a national provider of pediatric mental health services for children, teenagers, and their families. They raised $32 million in their Series A round, led by specialized funds https://www.wvvcapital.com and https://www.maveron.com.

Nest Health They offer medical services aimed at minimizing the stress associated with childcare, travel, and home care. They raised $15 million in their Series A round. The lead investors are https://www.8vc.com and https://blueventurefund.com.

Medix Infusion — a Healthtech platform focused on improving patient care. They raised $35 million in their Series B round. The lead investors are https://noromoseley.com, Future Family Office, and Echo Health Ventures.

CodaMetrix — a leading artificial intelligence technology platform transforming revenue cycle management in healthcare. They raised $55 million in their Series A round. The lead investor is SignalFire. Other participating funds include https://fcventures.com (FCV), https://www.martinventures.com, Yale Medicine, CU Healthcare Innovation Fund, and Mass General Brigham (MGB).

Empassion — a provider of digital care services for patients dealing with serious illnesses. They raised $25 million in their Series A round.

Sevaro — a medical company providing tele-neurological services to patients with stroke. The investor https://www.apavp.com is also a newcomer to the Healthtech sector, like us.

I would also like to say a few words about the state of the Healthtech market, which is large and growing. According to a report by research firm Research and Markets, the global Healthtech market is valued at around $320.7 billion. It is projected to grow at a compound annual growth rate (CAGR) of 27.7% and reach $1.5 trillion by 2030.

There are several important trends actively driving growth in the Healthtech sector:

1. Increasing adoption of telemedicine — here we can again mention our investments in Recuro Health, Zyphicare, and Medvidi.
2. Growing reliance on data analytics and AI (also ZyphiCare).
3. Personalized medicine and remote patient monitoring (Phoenix is involved in this area).
4. Optimization of medical services (it is currently our focus, as we are looking for startups at a good price that would help us understand this topic).

And finally, I would like to provide some figures on the number of exits. The numbers fluctuate around 250 deals per year. In 2020, there were 310 deals, not far from the record of 323 deals set in 2016. The disclosed deal value amounted to $34.1 billion. In 2021, the number decreased to 250 deals as buyers continued to consolidate the market. The disclosed deal value reached $125 billion, thanks to mega-deals such as the acquisition of Cerner by Oracle for $28.3 billion. In 2022, there were 320 deals, but the disclosed deal value returned to a more normal level at $32 billion. In 2023, there is very little information available on deals, and this report will be updated as soon as I aggregate all the data.