Three years ago, in its inaugural report on the venture capital landscape, New York City Health Business Leaders calculated that 79 startups and growth stage companies received $703 million in 2017. To put that in a national perspective, StartUp Health ranked New York City the second most active city for health tech dealflow that year. This month, New York City Health Business Leaders’ third annual venture capital report revealed that investment has more than doubled to the tune of $2.6 billion across 117 companies for 2019.
The report by NYCHBL, led by Bunny Ellerin, also spotlighted the top 100 healthcare startups in the city, highlighted investment trends, such as the growth of the digital therapeutics sector, and perspectives from venture capitalists.
Series A stage companies led investments at 34%, followed by late stage venture capital at 30% and Series B at 23%. The lion’s share of investment was pretty much evenly split between digital, tech-enabled businesses (46%) and life science companies (42%), the report noted.
Largest exits
Dassault Systèmes’ $5.7 billion acquisition of Medidata marked the largest M&A deal in the region last year. The $550 million acquisition of Crossix by Veeva Systems came a distant second followed by Lantheus’s acquisition of Progenics Pharmaceuticals for $520 million.
Investors by volume
A few years ago, the largest investors accounted for 25% of healthcare and life science deals: Orbimed, New Enterprise Associates, Venrock, Deerfield Management and Canaan Partners.
In 2019, Alexandria Venture Partners dominated deal volume in New York City with 25 investments, far ahead of Partnership for New York City with 12 investments. Deerfield, Primary Ventures Group and Box Group each had 9, according to the report. As a group, they accounted for more than half of the deals in New York last year.
The report noted that lack of affordable and accessible lab space in the city
was a major challenge, but the rise of incubators and accelerators over the past decade has helped stimulate the life science startup community. Among them are the Entrepreneurship Lab (2012), Harlem Biospace and New York Genome Center (2013), and NYC Life Sciences Fund (2015). More recently, Alexandria LaunchLabs, BioLabs@NYU Langone, JLabs and a life sciences campus supporting LifeSci NYC, as part of a partnership between New York City Economic Development Corporation and Deerfield Management.
turn the situation around.offered a snapshot of Alexandria’s strategy from Jenna Foger, senior vice president of science and technology.
“Alexandria builds ecosystems centered around collaborative urban campuses where life science and tech companies want to be. We look for four main attributes to underlie our core cluster markets: location dynamics, innovation, talent and capital. The science coming out of New York’s leading academic medical centers, the density and diversity of NYC’s patient population, and the ability to attract talent and capital were all compelling drivers. We came here to provide real estate, specialized infrastructure, venture capital, strategic programming, and community building — all critical elements for nurturing an ecosystem.”
Digital health investments
Capsule, a company that has re-imagined the pharmacy business, secured the most investment for a digital health business at $200 million. Ro, an early stage, direct-to-consumer telehealth company with services focused on men’s health, women’s health, smoking cessation and weight management, raised $85 million. Behavioral health business Quartet ($67.5 million) and Cityblock Health ($65 million), which provides primary care and social services for underserved members of the community, were also in the top 5 digital health companies by investment last year, along with dental services business Candid ($63.4 million).
Life science investments
Oncology therapeutics developer Nuvation Bio raised $275 million last year. It’s led by David Hung, who previously served as CEO of Medivation, which Pfizer snapped up for $14.3 billion in 2016. Shrödinger, a drug discovery software business, raised $107.8 million ahead of its IPO this month. Two more companies in the top five for 2019 investments, Caelum Biosciences ($69.9 million) and Neurogene ($68.5 million) target rare diseases.
Photo: a_Taiga, Getty Images
