Medtech Is Facing Stormy Season for Venture Capital

Santé

Medtech Is Facing Stormy Season for Venture Capital

October 5, 2022

Omar Khalil, Partner at Santé Ventures speaks with MD+DI about the state of financings in medtech.

BOSTON –  With today’s economy it’s hard to accurately diagnose the state of financings in the medtech and diagnostics industry.

A study by Deloitte says that while overall venture financing in medtech increased 67% since 2017, medtech investors are still shying away from unproven early-stage technologies, focusing instead on late-stage diagnostic and digital companies.

During BIOMEDevice Boston, Omar Khalil, a Partner at Sante Ventures, took a stab at describing the state of medtech financings and noted the environment was akin to a tropical storm compared to other industries in healthcare.

“I would say the biotech financing environment is very much like a hurricane right now,” Khalil told MD+DI. “The medtech environment is maybe a tropical depression. It’s not quite as bad as the biotech market.”

Khalil said that there have been a number of investments on the digital health side.

“Where we have seen some larger investments on the healthtech side, is around companies that have revenue growth, profitability – not focused on hope and hype quite as much as it was a couple of years ago,” he said.

One of the primary examples of a digital health company garnering significant funding is San Francisco, CA-based Komodo Health. The company raised $220 million in a series E round and brought its valuation to $3.3 billion.

Komodo Health is an enterprise software company that works with pharmaceutical companies, payers, providers, and other healthcare stakeholders. For example, a pharmaceutical customer might go to Komodo to help find and recruit a cohort of patients with very specific characteristics for a clinical trial.

Khalil noted that financings were occurring in later stages and more proven companies.

“Because of the number of companies that have come out in the last few years and have found financings – a lot of investors have reserved capital for their existing portfolio,” he said. “The focus is on how do I support my existing portfolio. There’s not a lot of attention being paid to investing outside of the portfolio.”