This year has been like no other for many reasons, one of which was the unprecedented acceleration of digital health. The year 2020 has been marked with record-breaking fundings, mega-mergers and a wave of companies going public.
In fact, the third quarter of this year brought in more than $6.6 billion in health innovation funding, making the total funding for the year to date around $16 billion – a figure that is larger than any previous full year on record, according to StartUp Health.
“This has been a really significant year for digital health in general,” Katya Hancock, the investor network director at StartUp Health, said during an Accelerate Health panel. “We’ve never seen so much progress in terms of adoption of solutions as we have this year.”
Prior to the pandemic, venture firms saw the potential of digital health companies, but many struggled to take off, according to Maria Velissaris, a founding partner at SteelSky Ventures.
“Before it would take them 18 months to two years to raise a couple million bucks, [but now] in two weeks they’ve raised, you know, $5 million,” she said during the panel. “So we’ve definitely seen an acceleration in the ability of these companies to get funding, because a lot of companies and a lot of VCs are realizing that they missed the boat, and that this is here, and it’s here to stay.”
How much the pandemic impacted a company’s acceleration depended on its applicability to this new world, Hancock said.
“When we look across our portfolio, we have companies that were immediately applicable and felt the wind at their back because of the pandemic,” she said. “So those were really companies that hit the ground running and who are doing really well.”
However, others had to pivot their model to find their fit, and many are still working on their pivots to figure out how to survive in the market, she said.
COVID-19 also presents an opportunity for innovations focused on achieving a similar goal: ending the pandemic.
“The pandemic response is sort of a catalyst that pulls together the best of multiple moonshots for a very specific goal,” Hancock said.
She compared the pandemic response to the Apollo 11 moon mission, where, in order to achieve the goal, players from all over the world had to come together. Hancock predicts that this is the sort of collaboration needed to end some of the biggest health challenges.
“Unfortunately there will be other pandemics in the future and hopefully we can be much better prepared by some of the work being done right now,” she said.
This collaboration among innovative companies extends benefits to more than just population health, according to Hancock.
“There’s more to do together than there is to compete about,” she said. “So I think it’s about having that mindset of being in a community together, and figuring that out, and having a mechanism to have those conversations. And that’s where a lot of value can be unlocked.”
Looking ahead, these trends of new companies coming to market, large funding rounds and cross-company partnerships show no signs of slowing down.
“We’re at an inflection point and we’re just getting started, even though there’s been so much accomplished in digital health,” Hancock said.
Investors can expect to see a continued interest in technology keeping people out of the hospital and pharmacy, including telehealth, remote monitoring and direct-to-consumer medicine platforms, according to Velissaris.
She also predicts that the higher rates of adoption will be maintained, even among traditionally stagnant health systems.
“Everyone wants to compete in this new world, and everybody is grasping right now so they’re not left behind,” Velissaris said.