Four in 10 top health tech deals took place in New York this year
Digital health companies in New York have attracted some of the largest fundraising rounds this year, following years of sluggish activity.
Four of the largest 10 nationwide health tech deals this year so far have involved New York-based companies, Matt Griffiths, director of innovation banking in health care at HSBC, said at a summit in Midtown on Wednesday hosted by Digital Health New York.
“This is proving to be the preeminent digital health ecosystem to build a business,” Griffiths said.The report comes as the Federal Reserve cut interest rates by half a percentage point on Wednesday, further bolstering investor sentient towards potential exits in the sector. The report comes as the Federal Reserve cut interest rates by half a percentage point on Wednesday, further bolstering investor sentient towards potential exits in the sector.
Companies that have raised money this year focus on a range of health markets, including clinical administration, behavioral health and musculoskeletal care. Large deals dispersed across verticals points to a maturation of the digital health sector at large, Griffiths said.
Some of the largest deals include Chelsea-based virtual physical therapy company Sword Health, which raised $130 million in June in the fourth-largest deal nationwide. Talkiatry, a teletherapy firm based in NoMad, also brought in $130 million in a Series C funding round that month.
Other New York-based companies that brought in the largest funding rounds include Financial District-based Capital Rx, a prescription benefit management company that raised $115 million in March, and SoHo-based Rightway, a pharmacy benefit management tech firm that raised $109 million that month.
The largest venture capital deal – worth $250 million – went to the Silicon Valley-based digital health company Innovaccer, according to the data.
The rate cuts likely won’t significantly impact venture investments in early-stage companies, which are typically smaller and largely made up of equity, not debt, said Annie Lamont, co-founder and managing partner at Oak HC/FT, a health-focused venture capital firm. But lower interest rates could lead to more exit activity, she added.
The city’s firms could be attractive targets for initial public offerings because of its supply of mature startups. It also has a large supply of experienced health tech founders to form new companies and further cement New York as a digital health hub, according to Chris Lloyd, managing director and head of health care technology at J.P. Morgan Commercial Banking. There are more mature companies and a larger number of exits among New York firms, leading executives with experience within the industry to branch off and start new ventures, he said.
Even as funding fluctuates, Lloyd said that companies that can demonstrate sustainable growth and their value are likely to attract investments. “Good companies get funded in every market,” he said.
