VC explains why funding could decelerate in 2022

The 12 months 2021 has been one other groundbreaking one for digital well being. We’ve seen extra corporations emerge onto the general public market, traders proceed to pour funding into the area and customers count on extra out of care. 

We sat down with Lee Shapiro, cofounder and managing companion at 7wireVentures, in addition to a Livongo vet, to speak in regards to the greatest developments of this 12 months and what’s subsequent for 2022 in digital well being funding. 

The COVID-19 pandemic kicked off two years of unprecedented funding within the digital well being area. 

“There was over $35 billion funded in digital well being in 2021, and that is greater than the prior two years mixed. So, important funding, important improve within the measurement of rounds that corporations have been capable of increase. So, the deal sizes have been getting bigger,” Shapiro stated. 

He famous that the businesses getting enterprise {dollars} have gotten extra numerous, each by way of founders and focus areas. 

“I might additionally say that there have been some encouraging developments. We noticed extra girls and minority-backed corporations get funded. We noticed a lot of corporations within the psychological well being area additionally get funded, and that is a really sturdy want, particularly for those who’ve been studying a few of the latest press across the challenges regarding psychological well being.

“[A] variety of corporations that we’re invested in are addressing a few of the challenges that we face by way of offering entry to healthcare.”

Whereas the final two years have been scorching for funding, we could also be seeing a settle down sooner or later. 

“My private view is that 2022 will decelerate for a few causes. The primary is extra of a macro situation. We’re more likely to see elevated rates of interest in 2022. Rumor is that the Fed will begin elevating charges — may very well be three or 4 instances in 2022 — and that may have some influence on the quantity of capital that is flowing into investments, particularly for early-stage investments. 

“It is an election 12 months, and that additionally will have an effect. And lastly, we predict that a few of the traders that got here into this sector could also be new […] in 2021, and can start to appreciate that issues in healthcare simply take just a little bit longer than in different industries.

“And due to that, you need to have a greater understanding of the healthcare atmosphere, and in addition relationships with a lot of the strategic events which can be essential by way of serving to corporations scale. So for all these causes, I feel that will probably be a little bit of a down 12 months by way of the quantity invested in digital well being total.”

Final 12 months, we noticed 79 digital well being M&As, in addition to an uptick in particular goal acquisition mergers by digital well being corporations, in line with a Rock Well being report. Lee stated that he foresees many alternative exit alternatives coming down the pipeline for digital well being startups, together with SPACs and M&As, and in addition provides IPOs to the checklist.

“I feel this 12 months was terrific, and a watershed 12 months by way of the variety of IPOs that actually began with a few of the work that we had carried out with Livongo again in 2019. And then you definitely noticed extra in 2020, however much more in 2021. I feel that corporations are attending to scale. And with that, you will see a want for them to entry public markets for added capital.”

As for what’s subsequent with tech developments, Shapiro stated he’s trying ahead to tech that meets the affected person the place they’re. 

“We’re actually enthusiastic about this convergence of what we name ‘shift final,’ with the ability to ship care nearer and nearer to the patron. So, fairly than constructing new amenities and having new instruments which can be going to have the ability to present therapies at larger and better prices, we predict that there must be a solution to make healthcare extra accessible.

“And corporations we invested on this 12 months: MedArrive, that is working with emergency medical technicians to ship care within the house. Corporations like Brightline, that is delivering providers which can be actually serving to to deal with challenges of oldsters with youngsters who’ve particular wants. …

“We noticed Amazon simply introduced an attention-grabbing resolution that may enable seniors to have the safety of with the ability to ask for assist with their sensible speaker. These are issues which can be going to make extra providers obtainable within the house. And we predict that is a great factor for supply of care total.” 

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