Key takeaways
01
Healthcare fundraising continues surge
After a record year in 2021, venture fundraising continued to surge, reaching $15.8 billion halfway through 2022 despite poor IPO performance and fear of valuation inflation.
02
Strong early-stage investment braces for slowdown
Early-stage investment in all four sectors is on track to rival 2021. However, the decline of investment in both early and later stage in Q2 may indicate a slowdown for H2 2022 as many companies look for additional funding to make cash last through 2023.
03
IPOs and M&As stall
After record venture-backed healthcare exits in 2021, IPOs and M&A were down across all sectors in H1 2022 due to public market volatility.
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Notes: US Healthcare Venture Capital Fundraising defined as an approximation of healthcare investment dollars to be invested by firms that historically invest in +50% US companies. Estimates based off of anecdotal conversations with investors and expert analysis of last fund deal pace and focus on healthtech.
Source: PitchBook and SVB proprietary data
Fundraising continues into downturn
Fundraising continued in earnest in 2022, on track at mid-year to match 2021’s record fundraising, despite the poor performance by recent IPOs and fear of frothy valuations in private venture portfolios.
We anticipate non-traditional investors to participate in fewer venture-backed deals this year compared to 2021. Nevertheless, these new funds provide substantial dry powder to support venture-backed companies for the next five to seven years.
After a strong start, healthcare investment tapers off
Despite a tough macroeconomic market with dwindling IPOs and downward spiraling public market valuations, Q1 investment was surprisingly robust totaling $23 billion, but Q2 showed weaker numbers with $14.8 billion in investment.
In H2 2022, we expect dollars and deals to slightly decline as bridges and insider rounds become widespread.
Note: Europe includes UK and EU countries.
Source: PitchBook and SVB proprietary data
Source: PitchBook and SVB proprietary data
HealthTech steps higher
In H1 2022, we saw 16 early-stage deals with 5x+ step-ups, primarily in alternative care, provider operations and wellness & education. Compared to other sectors, healthtech had the best step-up multiples in both early and later-stage deals.
We continue to see strong later-stage step-ups with nine healthtech companies raising later-stage rounds with 3x+ step-ups despite downward trending public market comps.
Biopharma investment falls
Biopharma investment in Q1 2022 was ahead of last year’s pace. However, investment for H1 declined to match 2020’s pace.
Decline in Biopharma LIPO activity in Q2 2022 indicates an investment slowdown for H2 2022 and into 2023.
Source: PitchBook and SVB proprietary data
Note: Top indications calculated by deal count. Top deals calculated by deal size. M&A defined as all private, venture-backed M&As with upfront payments of at least $50M, globally. CE Mark defined as achieving a CE Mark but not FDA approval. US Commercial defined as achieving FDA clearance or approval, with or without CE Mark. 510(k), De Novo 510(k) and PMA defined in appendix. Multiples calculated based on total dollars invested.
Source: PitchBook, press releases and SVB proprietary data.
Higher multiples for 510(k) while PMA drags
510(k)s’ most recent exits have yielded higher deal values and better returns for investors with less time and money spent.
We continue to see less pre-FDA approved PMA M&A deals, with longer time to exit and smaller deal sizes and multiples. M&A deal size may increase as the IPO market remains closed.
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