The global pandemic has proved a catalyst for reshaping health care as venture capitalists reached deep into their pockets to deliver a record level of funding to medical-related startups in 2020. They sprinkled the money across sectors ranging from telemedicine to AI to medical devices in an effort to seize the moment and shake up an industry that has been notoriously resistant to reinvention.
According to the latest State of Healthcare report from research firm CB Insights, health care startups raised $80.6 billion in 2020, up from $53.7 billion in 2019.
The report notes that COVID-19 has exposed inefficiencies in current health care systems, in some cases highlighting the necessity of turning to tools like telemedicine in the face of resource shortfalls and the obligation to find alternative means to deliver care when in-person doctor visits became more problematic. The result is a sudden acceleration toward digitizing systems and a desire to find new ways to leverage a surge of patient data.
The growing momentum can be seen across the year as funding climbed steadily each quarter.
While an aging population has already been putting pressure on health care systems, the pandemic seems to have finally created fertile terrain to allow investors to believe that widespread disruption is within startups’ grasp. CB Insights counted a record 187 health care venture capital rounds that topped $100 million in 2020.
This faster pace also helped startups that are applying AI to health care raise $2.3 billion in Q4 2020. This included notable deals such as Human API raising $20 million to standardize health records with AI.