Record levels of capital were allocated and deployed to support innovative companies in the healthcare industry in 2020, according to a report by Silicon Valley Bank (SVB).
The Healthcare Investments and Exits Annual Report provides an overview of trends and data covering venture fundraising and deal flow in the life sciences sector globally.
It found that investment in Europe sky-rocketed in 2020, providing the sector with momentum for years to come.
The UK was at the centre of this and by Q3 2020 was responsible for 30% of deals by volume and value, with approximately $1.3 billion (€1 billion) funded into UK life sciences from venture investors.
The pace of investment in the UK also increased and the total by the end of Q3 2020 exceeded the total number of deals for the whole UK in 2019.
An increase in Series A investments in European healthcare companies points towards strong momentum for latter-stage funding rounds in the coming years. For example, in biopharma specifically, European Series A investment almost doubled to $1.1 billion (€900 million) in 2020, compared with $637 million (€523 million) previously and more modest growth in US Series A investments.
There were also more Series A funding rounds in Europe of a similar size to those in the US, demonstrating the strength of management teams in the sector and the broader market environment.
Venture-backed dx/tools and biopharma sectors showed the largest increases in investment versus 2019. These two sectors were bright spots in battling the pandemic, with many venture-backed companies leveraging their technologies to develop COVID-19 tests and treatments.
WHY IT MATTERS
SVB says that investment in Europe demonstrates the attractiveness of innovative healthcare companies coming out of the region.
In 2021, SVB predicts the UK is likely to continue to build on its existing areas of strength, gene therapy and diagnostics, while at the same time considering what regulatory innovation might be introduced following its exit from the European Union.
THE LARGER CONTEXT
HealthTech was thrust into the spotlight in 2020 by the shift toward virtual care due to widespread lockdowns.
Globally, both VC fundraising and investment in healthcare companies surged to record levels in 2020.
An unprecedented $17.1 billion (€14 billion) was raised in new venture funds dedicated to the sector, representing a 57% year-on-year increase from 2019’s total of $10.7 billion (€8.7 billion). Meanwhile, venture investment in healthcare companies grew more than 47% to $50.7 billion (€41.6 billion), compared with $34.5 billion (€28.3 billion) last year.
ON THE RECORD
The report says: “Despite being in lockdown due to the pandemic, we saw noteworthy deal and dollar growth in Q2 2020. This demonstrated the resilience of healthcare, which is a tightly networked industry with many repeat entrepreneurs. The industry continued to complete deals, even without face-to- face interactions.”
