The world is currently - and rightly - focused on health, and the venture capital industry was no exception during the first three months of the year, with deals surging strongly, and pipeline activity suggests there's more to come.

Healthcare business deals backed by venture capital skyrocketed by 76 per cent in the first three months of 2020 from a year earlier as COVID-19 slammed the world, figures show.

Interest in medical treatments and wider health concerns has sharpened because of the pandemic. The urgent hunt for vaccines and anti-viral treatments have put healthcare innovation and investment at the top of the financial agenda. The trend is significant for family offices, for example, because they are important sources of such "patient capital". 

According to Preqin, the research group tracking alternative investments such as private equity and venture capital, it noted that VC-backed healthcare deals rose to $8.2 billion in Q1 2020, a 76 per cent rise. And that is 25 per cent higher than in the fourth quarter of 2019. North America dominated Q1 2020 deal activity, bagging 56 per cent of the total number of deals, followed by Europe with 21 per cent and Asia with 17 per cent. 

The firm said that the second quarter of this year looks “strong”: as of 18 May, health tech deal value stands at $3.2 billion, beating last year’s quarterly average of $4.8 billon.

That level of activity is all the more impressive because it is difficult to monitor business operations when people are restricted by social distancing. 

The largest venture-backed health-tech deal completed in Q1 was the $285 million Series E financing held by ClassPass Inc, earning the New York-based start-up a valuation of $1 billion and therefore “unicorn” status. ClassPass partners with boutique studios, gyms, and wellness providers, offering members access to a global network of wellness-inspired experiences and the ability to book classes digitally or view on-demand workout videos. The latest financing round was led by L Catterton and Apax Digital, with additional participation from existing investor Temasek Holdings.

The report said the second-largest deal was the $250 million Series D financing for ScriptDash, a San Francisco-based digital pharmacy trading under the brand name Alto. Founded in 2015, the start-up operates a web and mobile platform enabling patients to do things such as request refills, schedule the delivery of medications, or message a pharmacist via their digital device. ScriptDash’s financing, completed in January 2020, was led by new investor SB Investment Advisers, with participation from returning investors Greenoaks Capital, Jackson Square Ventures, Olive Tree Ventures, and Zola Capital Management.

Pandemic help
“At a time of mass quarantines, health tech is playing a critical role in helping patients to access the information and medical services they need,” Preqin said. 

The report referred to London-based AccuRX as a prime example. AccuRX’s software solution provides a secure network for general practitioners to text vital information to their patients.

Across the Atlantic in the US, KRY International AB, a Sweden-based digital health company, has rolled out a free video consultation platform in response to a spike in demand caused by the coronavirus pandemic. In January 2020, KRY International AB held a Series C financing round led by Ontario Teachers’ Pension Plan, raising €140 million ($153.6 million).

In Asia, the Indonesian government is using health tech to ensure that patients can continue to see medical health professionals. The Indonesian Ministry of Health has launched virtual health consultation services and partnered with four unicorns, Halodoc among them.