New Delhi: The contribution of start-up funding in healthcare-based investments rose to about 29% in 2016 compared to past range of 8-20%, News Corp VCCEdge, the financial research arm of News Corp VCCircle, said on Monday.
“Start-ups and investors alike see a huge opportunity in the demand and supply gap that exists in the Indian healthcare sector both as social cause and a business case...The increase in the share of start-up funding in the overall healthcare investment pie from the range of under 8 to 20% in the past to about 29% in 2016 so far is a telltale sign of the prospects of more investments in the sector,” said Nita Kapoor, chief executive officer, News Corp VCCircle, in a statement.
Healthcare start-ups raised $113.45 million across 73 funding deals in 2016, which include 13 series A deals worth $45.33 million and six series B deals worth $56.92 million. With overall funding slowing down this year, healthcare start-ups saw reduced funding activity compared to 2015 that witnessed the highest since 2012—97 deals worth $289 million.
Out of 88 deals in the healthcare sector amounting to $397.41, there were 54 seed investments worth $11.19 million, 23 venture capital funding deals worth $155.83 million and 11 private equity deals of $230.39 million in 2016.
In comparison, the healthcare sector received $1,342 million and $1,458 million across 124 and 144 deals in 2014 and 2015, respectively.
Healthcare start-ups that are based on the business to consumer (B2C) model and those who provide services via digital medium such as facilitating doctor appointments, efficient information management system and online pharmacies saw the highest amount of investor interest at $77.3 million this year, though decreased from $160 million in 2015.
Given that funding has reduced, online health players such as pharmacies and aggregator portals continue to lead the healthcare sector from last year in terms of witnessing the highest deal volume—35 deals worth $50.96 million in 2016, as compared to 40 deals worth $70.54 million in 2015.
In terms of deal value, across healthcare sector, the leading segments are healthcare facilities ($110.9 million from nine deals), biotech ($98.67 million from four deals) and healthcare services ($ 73.51 million from 20 deals) this year, as compared to pharmaceutical production in 2015 which received $759.57 million worth of investments from 14 deals.
“Trends suggest that we will see money backing those start-ups focusing on corporate tie-ups, medtech, virtual diagnostics & preventive care,” added Kapoor.