Entries Published On January, 2018
While the majority of our focus at AngelMD is spent on connecting physicians, investors, and promising companies, we also have to be constantly aware of the landscape in which we’re operating. This means that we’re always watching the deals that are happening, who’s involved with them, and how they’ll impact healthcare innovation as a whole. In 2017 we spent a considerable amount of time looking at every publicly-available healthcare financing deal, and we put together a report detailing all of this information. What follows is a breakdown of each section of the report, and an explanation of what it means for you as an AngelMD member.
2017 Healthcare Investment Overview
We started our investigation by compiling all of the publicly-listed filing data available through the Securities and Exchange Commission’s EDGAR system. For the purposes of our report, we focused on the SEC’s broad categories of Biotechnology, Pharmaceuticals, and Other Healthcare. Across these categories, 2017 saw a total of $25 billion in total investment dollars for 2017, a sharp rise of nearly 16 percent from 2016 figures.
The problem that we wanted to solve was to break down these investments into more detailed specialties, which would be more valuable to members of the AngelMD network. This long, manual process required significant research into each filing, but yielded some surprising data points.
Who Raised The Money?
On the whole, oncology was the standout winner in total dollars raised. At $7.2 billion for 2017, the field represents nearly 35 percent of all money across every specialty. This was followed by endocrinology at $1.9 billion, and then pathology at $1.3 billion. Neurology, cardiology, and medical genetics round out the top six specialties, though each of them raised just slightly more than half of pathology, with $800 million in total funding.
Healthcare Startup Funding in 2017
The figures listed so far only tell part of the story. After breaking down the investments by specialty, we then wanted to get a better understanding of the money that was raised by startups since this is a specific focus of AngelMD members. For example, startups will generally seek funding at or below $50 million in a single round.
When we narrowed the investments to these numbers, we get a more accurate representation of which specialties are capturing startup attention. Interestingly, in this view, oncology falls down to the ninth spot, while otolaryngology, gastroenterology, and immunology make up the top three.
Healthcare Seed Funding in 2017
If you want to get a better understanding of trends, it’s important to look at the smallest, youngest companies. In this grouping, where we see seed-stage investments of $2 million or less, the numbers change once more and oncology rises back to the top.
What’s interesting to note in this breakdown versus the larger subset of all startups is how closely seed-stage investment aligns with the overall healthcare landscape. Again we see oncology rising to the top (unsurprising, given its focus in healthcare), but we then see significant investments in pathology, neurology, and internal medicine. When we look at the big stories surrounding healthcare today (aging population, infectious disease control, impact-related injuries, etc.), these seed investments align themselves almost perfectly. This leads to a potentially interesting question of how closely seed-stage investment is related to top-of-mind awareness and current events.
Where The Money Lands
One other important point to note is related to geography, and the results are somewhat surprising. While California might be known for consumer technology, it also leads healthcare investment by a wide margin, nearly doubling the Massachusetts as the second biggest investment area on the list.
It’s also interesting to note that, while Maryland has some of the top hospitals and medical schools in the country, the state ranks last in our report with only $330 million raised in 2017. By way of comparison, Texas, the home of Johnson & Johnson and their innovation-focused JLABS at TMC, raised $450 million over the same period.
What Does It Mean?
The end result of the report is that it raises a number of points for discussion. For AngelMD members, perhaps the most important one to note is the tie between seed-stage funding and top-of-mind awareness. When we look across the different startups that are on the AngelMD platform, those in the “popular” areas are of course well-represented. But there are opportunities to invest in some great companies, doing important work, without having to compete so heavily.
Another notable point is the lack of Angel investment in many areas of the country. Nashville, for instance, is dubbed “Athens of the south” for its significance in healthcare, but the state is not even represented on the top 10. This should mean that, in areas where healthcare as an industry excels, there are notable investment opportunities lying under the surface.
We’re interested in your takeaways from these results as well. Have something on your mind? Drop us an email and let us know what you’re thinking. We’ll continue to examine these results, and others, as we move ahead. We look forward to sharing the results with you.