Investments in the space have grown five times between 2010 and 2014’s record US$6.5 billion, according to the health-tech investor
Venture investment in health-tech worldwide has increased over five times in value in the last five years, from US$1.2 billion in 2010 to US$6.5 billion in 2014, according to Julien de Salaberry, the Chief Innovation Officer at the Propell Group.
While investments in health-tech in 2015 have been “keeping pace” (at US$3.5 billion from 429 deals at the close of Q3) with those in 2014, the Briton, who founded the Propell Group, a boutique venture investor and advisory firm focussed on health-tech startups and growth companies, observes a leveling off this year.
“What’s interesting to note is that we’re seeing the number of deals drop a little but the sizes of the deals are growing, which is demonstrating a maturity of the venture funding,” said de Salaberry, who spoke last night at Blue Strands, an inaugural event Deloitte organised to gather the health-tech community in Singapore.
While it took 590 deals to reach US$2.9 billion worth of funding in 2013, the 459 deals of 2014 took funding to over two times that of the previous year. And de Salaberry sees more growth in the health-tech sector, especially in Asia.
Challenges are also opportunities
“We have two speeds in Asia: Developed Asia, which has spiralling-out-of-control costs caused by not only an ageing population but also the rise of chronic diseases, and developing Asia, which has poor [healthcare] infrastructure, generally,” said de Salaberry, who went on to describe the paradox that both these parts represent.
That paradox lies in the fact that the respective challenges faced by developed and developing Asia would represent opportunities for innovative business solutions such as those emerging out of health-tech, which can help lower barriers to entry to healthcare and its costs.
“Each of these markets has a consumer or a patient incredibly well-connected in terms of the number of smartphones we’re seeing. Particularly now that we’re seeing manufacturers like Xiaomi in China or Karbonn in India producing full-specification smartphones for less than US$100. Unlike the US…I believe that, in Asia, patients would drive the change [in the healthcare sector] over the next few years,” said de Salaberry.
China and India have the highest concentration of health-tech startups in Asia, with Singapore a distant third. Startups in the categories of “Navigating the healthcare system”, “Patient engagement”, and “Consumer health and wellness” are the three most popular respectively.
Listing noteworthy investments such as those in China’s Guahao (US$394 million Series D), India’s Practo (US$90 million Series C) and Portea (US$37.5 million Series B), de Salaberry said that the participation of Silicon Valley venture capital firms such as Sequoia Capital, Matrix Partners and 500 Startups in some of the biggest health-tech funding rounds in Asia is a promising sign.
“What we’re seeing is what’s generally known as ‘Branded Money’. In other words, money from VCs that are well-known in Silicon Valley taking a very strong interest in what’s happening in Asia and recognizing that there is substantial value going forward because of the size and growth in affluence of the populations, and the fact that these populations are able to access and want better choice [of healthcare options],” said de Salaberry.
What it means for Asian healthcare
Predicting a rise in Asian health-tech-focused accelerators over the next 12 months, de Salaberry said that this will bolster the health-tech ecosystem in the region, helping it to change Asian healthcare “dramatically”.
“It’s an opportunity for developed Asia to play an industry leadership role, particularly as it wants to continue to deliver the level of healthcare that we’ve all now become comfortable with, at a cost that’s affordable. It’s [also] a fantastic opportunity for developing Asia to leapfrog its own healthcare system,” said de Salaberry.
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