OCTOBER 2023LIFE SCIENCES REVIEW8By Sarah Meibusch, Partner, OneVenturesTHE OPPORTUNITIES IN HEALTHCARE TECHNOLOGY: FOR THE FUTURE AND NOT SO DISTANT FUTUREIN MY OPINIONI t hasn't been the easiest 12 months for the health tech sector. Like the technology sector more broadly, the ability to raise capital and fuel growth at all costs came under closer scrutiny from investors, with many later-stage companies having to review their plans and streamline their enterprise.Globally, however, there is still a significant amount of available capital for new and innovative health tech companies, and early-stage companies in this sector received record levels of investment in 2022, which is expected to continue. Meanwhile, there was a decline in later-stage raises compared to the highs of 2021, similar to the rest of the venture capital industry. According to SVB, Series B activity in the health tech sector steadily declined in 2022, with a lower percentage of companies raising a Series B after a Series A. Later-stage deal sizes were also down, with US$200M+ financings dropping by 65% from 2021, and unicorn formation decreased by more than half from 44 in 2021 to 18 in 2022. From what I have seen the trend appears to be continuing in 2023, with no significant changes expected until the latter part of the year. However, early-stage investing is less affected by the global financial challenges impacting latter-stage investing and this is particularly the case for Australian companies. Health tech companies seeking to raise later rounds are facing mounting pressure from global investors to demonstrate successful conversion from pilot programs to commercial contracts, along with well-defined unit economics and profitability plans. Investors are also seeking concrete evidence of improved clinical outcomes or cost-effectiveness and evidence that early companies understand the complexities of the US market especially, and the extent of competition in that market, and have clear go to market strategies with sustainable competitive advantages. In response, some companies are opting for Series A extensions or convertible insider bridges to buy more time to achieve these critical milestones and this we believe will continue in 2023.Whilst we wait to see whether IPOs open back up, or if there is more money available in the market for late-stage private market acquisitions, we believe that pre-clinical companies are starting to climb. Which is good news, as the healthcare industry is undergoing a transformation which will enable both patients and physicians' access to more personalised data from multiple sources - presented as a whole person profile. As OneVentures is a multi-strategy investor, we have been paying close attention to the emerging trends in the tech space, and we are seeing increasing crossover between technological innovation and personalised healthcare. The continued growth of genomics, self-tracking devices and a focus towards patient centricity and improvement to patient access from all treating professionals are being aided and abetted by improved technology and data capture. Sarah Meibusch
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