Globally, corporate venture capitalists (CVC) dramatically increased their activity last year, according to a new report from CB Insights. They invested a record $169.3 billion in 2021, up 142% from 2020’a investment total.
Not surprisingly, CVC-backed deals for digital health startups have grown.
These corporate investors poured $16.6 billion in 2021, up from $9.9 billion, the year before, setting a record. The pandemic fueled growth in this sector substantially, with CVC deals jumping to 442 last year, compared with 372 deals in 2020.
GV (formerly Google Ventures) backed the most digital health companies at 22, making it the most active investor in the space four years in a row. But GV was in good company, as many invested in the space. For example, Maverick Ventures supported 20. And Salesforce’s and Sony’s venture arms funded over 5 digital health companies each in 2021.
Further, the venture arms of several healthcare companies also invested. For example, Kaiser Permanente, Johnson & Johnson, and Optum participated in 2021, with 10 deals, 9 deals, and 11 deals respectively, according to the report –
New investors joined the ranks, too. Specifically, CVS Health started its CVS Health Ventures in 2021 with a fund of $100 million.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
The United States received the most CVC-backed capital for healthcare in terms of both dollars and deals. In particular, half of the total CVC-backed digital health deals went to U.S.-based startups in 2021. And in terms of numbers, the U.S. took even more in 2021 thank in 2020, receiving almost 75% of funding. For comparison, second place — China — only received 7% of funding by corporate investors and 8% of the deals. The United States more than doubled its $40.5 billion from 2020, reaching $86.9 billion in CVC-backed funding in 2021, according to the report.
2021 saw a sharp uptake of mega rounds for digital health, with a 67% increase from 2021, according to the report – they included startups in diagnostics, drug discover and development, and mental health.
The trends from digital health mirrored the CVC-backed deals overall, according to the report.
For example, only 10% of all CVC deals in 2021 were mega rounds. However, in 2021 the mega rounds were 62% of total CVC-backed funding. And a majority of those mega round deals happened Stateside, just as in digital health.
Photo: drogatnev, Getty Images; Graph: CB Insights
