3Q21 Digital Health: Perpetual Motion Machine…



A whirling dervish…a ball rolling downhill. The investment activity in the digital health sector is extraordinary – and arguably overdue given the enormity of the market opportunity and the urgency created by the pandemic to re-architect such an important sector. According to Rock Health data, this past quarter saw $6.7 billion invested in 169 companies for an average deal size of $39.4 million. The investment activity for 2021 is on pace to reach $28 billion, which would effectively double the 2020 highwater mark of $14.6 billion.

And the robust investor enthusiasm is not exclusively a U.S. phenomenon. According to CB Insights data, across all of healthcare globally there has already been $97.1 billion invested, putting this on pace to be nearly $130 billion, which would be nearly 60% greater than last year’s highwater mark of $79.9 billion. Interestingly, CB Insights flags that the 3Q21 investment of $30.5 billion marks a deceleration from the prior two quarters although the number of deals spiked to 1,901, which is 15% greater than 2Q21, and itself the most active quarter ever. 

As highlighted with the Rock Health data, we should pause on the average round size to better understand what appears to be unfolding. Year-to-date there have been 62 “mega rounds” of financing (greater than $100 million) which represents nearly 12% of all financings. Arguably, the digital health sector is entering an “anoint the winner” phase. Entrepreneurs and investors today experience greater urgency than ever as the next few years may well define (Read more...)