Financing for digital healthcare hit new highs after the mega-deal-rich first quarter

• US digital health companies hit a record $ 6.7 billion in the first quarter of 2021.

• According to data acquisition from Rock Health, the buffer quarter was driven by investments in coveted healthcare providers such as $ 500 million related to Ro and demographic startups such as Color.

• The proliferation of specialty vehicles (SPACs) can support further investment by providing an alternative to traditional mergers and acquisitions and initial public offerings. However, prices of many PSPC stocks have fallen, raising concerns about the model’s viability.

Rock Health provided $ 1.1 billion in digital health funding in 2011, the first year an industry report was released. In the second half of March 2021, digital healthcare companies raised $ 1 billion a week. The sharp rise in funding over this decade was due to both the steady rise in the years leading up to the pandemic and the steep rise after the COVID-19 crisis that shook healthcare.

Interest in telecommunications increased funding for digital health care in 2020, and businesses raised almost twice as much money as they did last year. There are now signs that investment will continue to increase in 2021. It took the industry six months to raise $ 6 billion in 2020. This year, the industry hit a major milestone in three months.

Rock Health’s $ 6.7 billion digital health fund has multi-company investments, and the technology-based drug development teams are on the world’s hottest offerings list along with subscription service providers. Quarter.

These great deals were a major factor in the first-quarter record. In the first three months of the year, 25 digital health companies raised at least $ 100 million. Only 40 companies have raised $ 100 million or more in the past year.

Investors in private digital healthcare companies should be aware that there are exit options that can bring them a return. Acquisition and routing routes for large corporations are two well-established exit routes, but in the first quarter of 2021, PSPCs has become a popular choice. With vehicles, companies can go public without an IPO process.

Rock Health announced or closed 10 PSPC acquisitions for digital health care in the first quarter. This could be a positive development. “The liquidity generated by leaving the PSPC can increase the confidence of vulnerable companies to continue investing in digital wellness and continue the high investment cycle and evaluation currently underway in the market,” wrote Rocks Group Health.

However, Rock Health also sees a potential downside in the trend as PSPC areas could create new risks and the outlook for the strategy could deteriorate rapidly. Financial market scholar Ivana Naumovska had previously warned that ups and downs could be applied to the PSPC, leading to reverse mergers, a similar way of entering the public market, on the verge of collapse ten years ago.