2021 has been a record year for Medical Alley’s early-stage companies, and Q3 was no exception. A total of 28 companies raised almost $200 million in the quarter, powered by large raises from GeneMatters, Francis Medical and Flywheel Exchange. M&A was also hot, with at least six different acquisitions, the majority of which were led by Medical Alley companies. And it wasn’t just large established startups making news: 45 companies have completed sub-$1M raises year-to-date, the most since 2017. Bolstering this success is an incubator with an impeccable record, a new fund for the region and an initiative to bring about further innovations.
Year-to-date, over $352 million has been raised in Medical Alley. Down from 2020, when Bright Health and Preventice raised over $600 million, the total is on par with the region’s average. GeneMatters’ acquisition by Genome Medical and its series C of $60 million was the quarter’s largest venture deal. Francis Medical, which is developing a water-based ablation system, had the largest medical device raise of Q3 with $55M raised. Flywheel Exchange’s $22M round, and Cryosa’s $21.5 million, rounded out a strong quarter
Q3 M&A activity was as strong, with most acquisitions led by Medical Alley companies. Biomerics made two acquisitions: Berg Manufacturing and Knight Machining. Recently-public Agiliti acquired Sizewise Rentals, and Flywheel Exchange acquired Radiologics. Digital health standout Carrot Health was acquired by NYC-based Unite Us. According to Fierce Healthcare, the acquisition of Carrot Health and its social determinants of health tool will “help healthcare organizations identify patients with unmet social needs and connect them to community resources across all 50 states.”
Early-stage companies have seen great successes in 2021. In Q3, 15 companies raised under $1 million, the most since 2016, and the total number of sub-million raises on the year (45) is the highest since 2017. This is due in no small part to the Angel Tax Credit Program (ATCP), which helped 30 healthcare companies raise funds this year, including 11 in Q3 alone.
Startups aren’t the only ones raising money in Medical Alley. Three venture funds raised a combined $755 million in capital to invest in technology companies, including healthcare. Matchstick Ventures, which is based in Colorado and Minnesota, closed a $55M fund. Matchstick has a long and successful history in this region, with investments in Branch, Upsie, Fulcrum, as well as healthcare company Reema. Arthur Ventures, an investor in companies like Datica and Zipnosis, raised $375 million to invest in technology companies. And Vensana Capital, a venture capital and growth equity fund, raised $325 million.
In the always challenging world of early-stage entrepreneurship, a Medical Alley accelerator has managed yet another successful quarter. Minneapolis-based incubator Invenshure, led by Troy Kopischke and Danny Cunagin, holds a who’s-who of prominent startups in the region, including Q3 standouts Gene Matters and Flywheel Exchange, as well as genome profiler OneOme, medical image analyzer Imbio, and precision medicine company Tychon Sciences.
The portfolio companies have raised over $150M since the incubator’s 2011 founding, with Flywheel and Gene Matters leading the pack. Incredibly, Invenshure companies have received funding in 23 different quarters since Q3 2012, with healthy usage of the Angel Tax Credit Program throughout the way. The Invenshure team has paired its skill and expertise with the resources of the Medical Alley ecosystem to bring health innovations to life.
Not only have Invenshure’s incubator companies found success in raising capital, but they have also received national recognition. In 2018, OneOme was placed at #2 on Fast Company’s World’s 50 Most Innovative Companies list, as well as the 2019 winner of the “Best Overall Genomics Company” in the MedTech Breakthrough Awards. Flywheel, Imbio and OneOme have also received varied Tekne Awards, and founder Troy Kopischke received the “Impact Entrepreneur Award” in 2015.
Recognizing the assets Medical Alley has to lead in health innovation and the challenges of starting companies here, the Medical Alley Association’s board directed the assembly of ecosystem leaders in 2018 to build the best startup ecosystem in the world. After a year of year of planning and testing, Medical Alley Starts was developed. Delayed by the global pandemic, it launched in Q1 of this year. Built to lower the cost of starting, scaling, and pivoting new ventures in Medical Alley through partnerships, public policy, and most importantly, directly supporting entrepreneurs, Medical Alley Starts is making an impact already. In the third quarter, Medical Alley Starts provided 71 supplier referrals, 35 investor introductions, 46 corporate development connections, and 80 peer-to-peer connections.
In addition to supporting startups, Medical Alley Starts has become a source of high-quality deal flow for investors and corporate development leaders around the world. If you would like to learn more about Medical Alley Starts, please contact Filip Kostal, Startup Principal, at [email protected].
2021 has been a remarkable year for Medical Alley’s early-stage ecosystem. Established venture-funded companies have either gone public or have been acquired, and new companies are filling the pipeline in record numbers, assuring the continuation of this cycle. Helping the next generation of innovation are incubators with proven records, new funds, and an initiative to assisting startups every step of the way. The advancements Medical Alley will continue in the years to come, affirming its place as the Global Epicenter of Health Innovation and Care®.
