SEEDS of Growth: Highlights from Healthcare 

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The healthcare industry observed a sharp peak in VC funding in 2020, reaching an all-time high as the viral pandemic (the biggest disruptor in the VC space that year) catches up with the world. Investors and startups in Emerging Venture Markets(EVMs) understood the vitality of innovative solutions in the Healthcare sector to battle the pandemic and build healthy infrastructures for the future. As COVID-19 pressures ease off, the Healthcare sector seems to be doing more of the latter in 2021, observing a remarkable growth in deals across MENA, Turkey, and Pakistan

Despite a 30% YoY dip in VC funding invested in the Healthcare sector over H1 2021, Healthcare startups across EVMs observed a 24% increase in transactions closed. In MENA, driven by deal momentum in geographies like UAE and Egypt, collectively accounting for 66% of all transactions closed in H1’21, the Healthcare industry closed half the amount of deals in  FY 2020. What was most remarkable in H1 2021, however, was the sharp increase of SEED funding rounds valued below $3M, a feat unique to the Healthcare sector in the first half of the year. 

The $53M raised in VC funding by Healthcare startups across EVMS consisted 2% of the total funding amount raised across geographies in the first half of the year. Albeit a low proportion compared to its peer industries in the top 5 rankings, the impact of the healthcare sector lies in the nature of its deal flow as observed in our H1 2021 EVM Healthcare Venture Investment Report:


 


Accelerated to SEED 

In MENA, the Healthcare sector in 2020 observed a balance in accelerated deals compared to mature industries like E-commerce and booming sectors like FinTech. 2 out of every 10 deals in the Healthcare sector in 2020 was accelerated, a higher percentage share than the 12% in E-commerce, and 10% lower than FinTech’s 30% accelerated deals in FY 2020. Yet, the Healthcare sector was the only one out of 3 to observe no accelerated deals in H1 2021. On the other hand, SEED rounds under $3M in MENA observed a sharp increase in H1 2021 to account for 53% of all transactions closed in the industry over the first half of the year. Expanding to other geographies across EVMS, the highest funding round recorded in the healthcare sector was a $3M SEED round by UAE-based Valeo.

Healthcare startups specialize and scale 

Both accelerated deals and SEED funding rounds observed a consecutive yearly slump in the share of total transactions between 2018 and 2020; yet while accelerated deals fell to 0 in H1 21, SEED funding rounds almost doubled in 2021 YTD, raising more than 5x the amount of FY 2020. 

The SEED funding growth observed in H1 2021 could indicate maturity in the Healthcare startup scene after a Pandemic peak. One way to get more context is by looking at the startups funded in the first half of the year. Observing the highest growth in transactions closed (150% YoY), Turkey’s 10 deals indicated a tendency towards specialization and openness for innovation in Turkey’s Healthcare sector. Turkish startups unlock the complexity of Healthcare with fundings in startups like Inofab Health specializing in respiratory diseases, HoustonBionics in rehabilitation devices for neurologically impaired patients, and Legna Medikal tackling unresolved issues in Medical technologies.

On the other hand, MENA-based startups optimized their resources and infrastructure to create economies of scale in the Healthcare industry. MENA-based investors took a striking interest in the E-commerce leg of Healthcare with fundings in B2B platforms like Ammand-based Aumet Inc, Egypt-based Alpha Conex, and UAE-based Taajer, and most recently Egypt-based Yodawy raising $7.5M Series B. More on the nuances and trends of the Healthcare industry through the H1 2021 EVM Healthcare Venture Investment Report.


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