Record-breaking levels of investment in healthtech last year have left the space effectively reeling as it looks to plug the holes left by 2022’s relative downturn, according to a new report from Silicon Valley Bank. Though $23 billion has been raked in as the year nears its end, drastic declines, such as the third quarter’s huge drop of 39% from the previous quarter and 67% from Q3 2021 tell a tale of diminishing returns for investment. Additionally, mega-rounds worth more than $100 million occurred at a rate 40% lower than the previous year, and 2022 has to date seen a startling 47% decrease in new unicorns. The report also showed that a grand total of zero healthtech IPOs from venture-backed organizations in the U.S. and EU have come to fruition, and recent IPOs in general have been followed up by downward-trending financial performances.
One bright spot among the bad news is a notable upswing in M&A action, though even those figures are tempered by an apparent tapering off as the year progressed. While the first quarter featured 48 deals, in the second quarter only 30 were struck. Industry-wide attempts to balance out from the lofty valuations of years past left median acquisition prices at a nadir.
"We've moved from a growth-at-all-costs era to an era that emphasizes clear value creation, whether it's through improving health outcomes, access, or affordability,” said the report's authors. “Investment has shifted into earlier stages where valuations are corrected from last year's sky-high levels. With a record amount of dry powder available to healthtech startups, and mergers and acquisitions on the rise, there is still a tremendous opportunity for healthtech companies to grow."
