The alarming rise in the number of Covid-19 affected cases, amid the global lockdown, has been fuelling the rise in demand for digitally accessible healthcare products and services. Which in turn is accelerating venture capital (VC) backed healthtech deal values.

According to London headquartered Preqin, a provider of data on investments in alternative assets, the soaring deal values highlight a key trend that is being fast-tracked by the pandemic: the consumerisation of healthcare.

Christopher Beales, a private equity analyst and the executive editor of Preqin’s 2020 Global Private Equity and Venture Capital report, highlights that amid the global lockdown, demand for digitally accessible healthcare products and services is on the rise.

In his recent official blog, Beales wrote: “With entire populations sheltering in place at home, governments across the globe are lowering regulatory barriers that have long impeded the provision of digital healthcare services such as virtual medical appointments.”

Further, Beales flags recent Preqin deals’ data which reflects this growing trend. Between January and March 2020, the total value of global venture-backed healthcare deals jumped by 76% from Q1-2019 ($4.6 billion) to hit $8.2 billion. “That’s a 25% increase in aggregate deal value compared with Q4-2019, and the highest quarterly total on record,” Beales adds.

In terms of geographies, North America dominated Q1-2020 deal activity, comprising 56% of the total number of deals, followed by Europe with 21%, and Asia with 17%. “Activity in Q2-2020 is also looking strong,” says Beales. He adds that data as of May 18 shows Q2-2020 healthtech deal value at $3.2 billion, on course to exceed the 2019 quarterly average of $4.8 billion despite the challenge of keeping business operations steady in a time of social distancing.

Further, Beales noted that the largest venture-backed healthtech deal completed in Q1-2020 was the $285 million Series E financing held by ClassPass Inc. – a New York-based start-up that partners with boutique studios, gyms, and wellness providers, offering members access to a global network of wellness-inspired experiences and the ability to digitally book classes or view on-demand workout videos.

Interestingly, the latest financing round was led by L Catterton and Apax Digital, with additional participation from existing investor Temasek Holdings, helped ClassPass a unicorn status with its valuations reaching $1 billion.

Beales assessment of the rise of consumer–focused healthcare is further endorsed by the $250 million Series D funding secured by ScriptDash Inc., a San Francisco-based digital pharmacy start-up that trades under the brand name Alto. Founded in 2015, ScriptDash operates a web and mobile platform enabling patients to do things like request refills, schedule the delivery of medications, or message a pharmacist via their digital device.

According to Preqin data, ScriptDash’s financing, completed in January 2020, was led by new investor SB Investment Advisers, with participation from returning investors Greenoaks Capital, Jackson Square Ventures, Olive Tree Ventures, and Zola Capital Management.

“These deals underscore the growing investor appetite for consumer-focused, personalized, digitally accessible health and wellness solutions,” says Beales. “Digital technologies such as mobile internet are increasingly being deployed to provide consumers with fast, easy ways to look after their health.”

Independent of the Covid-19 pandemic outbreak, healthtech was already a flourishing industry. Beales noted that through his 2020 Global Private Equity and Venture Capital report he had previously highlighted that the sector had been consistently witnessing higher investments in recent years, as more and more general partners (GPs) have been looking for opportunities in this space.

“At $19 billion, the total value of venture capital deals completed in the sector in 2019 fell just shy of 2018’s $20 billion record,” Beales adds. The pandemic, and the lockdowns and mass quarantines have together been playing catalysts for healthtech, as the latter is playing a critical role in helping patients to access the information and medical services they need.

Beales highlights the example of London–based AccuRX, whose software solution provides a secure network for general practitioners to text vital information to their patients. In March, as the epicenter of the Covid-19 pandemic was shifting to the U.S. and Europe, AccuRX built a video-calling solution, over a single weekend, which is reported to have been used 4 lakh times since its launch.

AccuRX’s most recent investment came in the form of a £8.8 million Series A financing round in February 2019, led by UK-based investor Atomico. Similarly, in the U.S., KRY International, a Sweden-based digital health company, has rolled out a free video consultation platform in response to a spike in demand caused by the coronavirus pandemic. Per Preqin data, in January 2020, KRY International held a Series C financing round led by Ontario Teachers’ Pension Plan, raising €140 million.

While, in Asia, the Indonesian government is using healthtech to ensure that patients can continue to see medical health professionals. The Indonesian Ministry of Health has launched virtual health consultation services and partnered with four unicorns, including Jakarta-based start-up Halodoc.

Halodoc develops and operates a mobile application that enables patients to virtually consult with physicians through video calls, voice calls, and chat. Preqin data reveals that the firm held two Series B financing rounds in 2019, one in March raising $65 million, and one in July for an undisclosed amount.

On the future of healthtech, Beales believes that 2020 looks to be on track for record-high annual venture capital investment in the sector. “As a result of Covid-19, more alternative assets professionals are looking for opportunities in the healthcare sector,” adds Beales.

As per Preqin’s April 2020 survey of over 100 investors active in alternative assets, 36% said that they are targeting healthcare-focused investment in 2020 because of Covid-19’s impact. “This is likely to drive even greater interest in digital health innovations that can offer users on-demand health and wellness services – all at the touch of a button,” Beales added.

Covid-19 is giving a catalytic boost to the cosumerisation of healthtech; as solution seekers and providers prefer the virtual medium for solving problems as social distancing turns to be the new normal, now and going forward.

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