Where VC Funding Is Surging

PitchBook has ranked the top venture capital and private equity firms in the enterprise health and wellness tech sector.

Ariana Drehsler/Bloomberg

Ariana Drehsler/Bloomberg

Health and wellness technology has received a big boost from venture capital.

“VC deal activity within this space has spiked significantly,” with $8.3 billion worth of venture capital deals in 2020, PitchBook analysts said in a new research report. That’s 70 percent more than enterprise-oriented companies within enterprise health and wellness received in 2019 — and the most venture funding they’ve obtained in at least a decade, according to the report.

The most active venture capital firms in enterprise health and wellness tech since 2018 include Oak HC/FT, F-Prime Capital, and Echo Health Ventures, while the top private equity firms in the area since 2008 include Warburg Pincus, Francisco Partners, and Blackstone Group, the report shows. PitchBook, which tracks private-market data, projects the valuation of the sector will double to $1.3 trillion by 2025, from $640 billion at the end of June.

“In the wake of the Covid-19 pandemic, we expect governments and NGOs will prioritize technologies that can help mitigate the health impacts of future pandemics,” the firm’s analysts said. “This will likely accelerate investment into technologies in the realm of disease tracking, public health tools, and pharmaceutical technology.”

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Prescription tech is the fastest-growing area of enterprise health and wellness, with a 16 percent compound annual growth rate, according to PitchBook’s research. The pandemic has helped drive the segment’s expansion, the analysts said, citing increased demand for prescription tech from consumers and hospitals as well as improved digital infrastructure.

“We believe the e-pharmacy space remains ripe for consolidation,” they said.

Meanwhile, clinical trial tech, another segment of enterprise health and wellness, saw deal value jump last year on more late-stage venture activity, the report showed. The segment is projected to expand at a 13 percent compound annual growth rate from 2019 to 2025, nearly on pace with the broader enterprise health and wellness sector, according to PitchBook.

As for deal venture capital exits within clinical trial tech, the analysts pointed to two recent deals: TriNetX’s agreement to be purchased by Carlyle Group and Longboat’s acquisition by private-equity-backed Advarra.

Most of the venture funding within health and wellness tech in the last three months of 2020 went to operations and care management startups, according to PitchBook. The segment also drew the “largest infusion of VC in 2020,” totaling $5.3 billion across 184 deals, the private-markets data provider said in the report.

The largest deal last year was a $500 million investment in Chinese health-care tech company DXY’s series E funding, according to PitchBook. DXY announced in December that the financing was led Trustbridge Partners, with Tencent Investment and GL Ventures also participating as investors.

“DX Doctor – a platform operated by DXY, took the lead in introducing a COVID-19 Global Pandemic Real-time Report, which has become a major source of global data on the pandemic,” the Chinese company said in the announcement.

The need for pandemic response systems will help drive growth in the operations and care management segment of health and wellness tech, according to PitchBook.

“The Covid-19 pandemic has increased government funding for creation and adoption of outbreak monitoring systems,” the analysts said. “Increased awareness of pandemics will likely sustain investment in such systems.”