Health venture funding remains at record levels historically as we close out the first half of 2022 with BioTech firms attracting capital and compensating for a slowdown in other categories. An exceptionally strong January - which included the Jeff Bezos-backed Altos coming out of stealth with a $3B war-chest to reverse disease - was followed by dwindling levels of activity and capital deployment as wider economic concerns quelled investor optimism.
Against a backdrop of slowing economic growth, the return of global stagflationary pressures for the first time in a generation and concerns around energy security, healthcare has once again demonstrated its defensive qualities in the first half of the year. As nations emerge from the coronavirus pandemic – learning to live with its presence – advances in clinical understanding over the period are translating into investment across drug discovery, cellular rejuvenation, gene editing, cell-based therapies and other activities focused on prolonging and improving life. The spike in investment in HealthTech businesses seen in 2021 has flattened out in 2022 so far. A combination of Covid-speficic circumstances and high levels of dry powder among the investment community created a febrile environment for valuations last year. Digital health companies that listed in 2021 (many via SPACs) have experienced sharp corrections to share price, creating pain for investors and talk of a ‘HealthTech bubble’. Nevertheless healthcare continues to provide a rich environment for digital innovation. Legacy systems and antiquated infrastructure remain one of the greatest barriers to driving productivity – and removing cost – in healthcare and Oracle’s monster $28B acquisition of Cerner in June reflects the market opportunity for transforming health patient data from systems of record into systems of intelligence. The application of AI and machine learning remains a magnet for venture funding in health as the technology is adapted and applied to issues of cost, access and quality.