2020 Q1 Investment Report

 // Reports

April 13  

After a record-breaking year of investment in Medical Alley companies, early returns for 2020 demonstrate changes in the healthcare market. 2019 saw investments in digital health companies skyrocket, exceeding investments in medical device companies in Medical Alley for the first time. So far in 2020, medical device deals have returned to prominence, capturing over 85% of Medical Alley investments in Q1.

In Medical Alley, 22 companies raised $98.6M in the first quarter of 2020, with medical device company Aria CV leading all investments with a $31M Series B raise to fund the clinical trial for their treatment of pulmonary hypertension. Their device, which was recently granted a Breakthrough Device designation by the FDA, restores the arteries of those suffering from pulmonary arterial hypertension.

Another notable Q1 raise was Cardionomic’s $15.8M, which will move its novel heart failure treatment along the path to FDA approval. New Enterprise Associates invested in Cardionomic’s round, its eighth investment in a Medical Alley company in the past five years. Imricor, Vydyne LLC, and Interrad Medical Inc, rounded out the top five raises for the quarter.

The COVID-19 pandemic has produced great uncertainty about economic conditions in 2020. Healthcare will likely be redefined in the short term, with longer-term impacts on the definition of value, the regulatory environment, and changes in the health of portfolio companies impacting the venture investment landscape. This crisis presents unique broad-based economic challenges but will also create unique opportunities for growth in the healthcare market. Specifically, the rapid introduction and utilization of digital health solutions during this crisis should speed adoption and accelerate investments in companies and technologies that may have found fundraising more difficult before the crisis.

Strong signs of recovery and opportunity for health technology and care companies include a particular focus in Congress on the early-stage ecosystem. Minnesota’s congressional delegation has taken a leadership position in advancing tomorrow’s health technology solutions, with proposed measures in both the House and Senate to help both startups and investors navigate this unprecedented period. We anticipate that there will be growth in the capital markets for health technology companies in 2020. We expect to see new partnerships between large, established healthcare companies, new health technology companies, and non-traditional healthcare companies to create new solutions, as the needs assessment of the U.S. healthcare system post-COVID-19 pandemic plays out.

The response to the pandemic has put Medical Alley leaders front and center, as they deliver the products and services most needed during this crisis. We believe the attention brought to the critical roles Medical Alley companies are playing during this pandemic will drive new investments in Medical Alley companies and will be essential to the new frameworks of transformation as healthcare is redefined.

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