Funding into healthtech companies falls 55% in 2022: Tracxn report

While the sector gained investors' interest during the pandemic, it started witnessing a declining trend in funding from Q4 of FY2021, the report showed.

The drop in healthtech funding was mainly due to a massive decline (75 per cent) in late-stage investments from $2.4 billion in 2021 to $606 million in 2022, the report showed. (File image)

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India’s total funding in the healthtech companies plunged 55 per cent from $3.2 billion in 2021 to $1.4 billion in 2022, a report released by market intelligence platform Tracxn on Wednesday showed.

The drop in healthtech funding was mainly due to a massive decline (75 per cent) in late-stage investments from $2.4 billion in 2021 to $606 million in 2022, the report showed.

Seed-stage funding for the sector also fell 52 per cent year-on-year (YoY) to $75.2 million in 2022. However, early-stage funding saw an increase of 26 per cent YoY to $743 million in 2022, according to the report by Tracxn.

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Tracxn data showed that 70.3 per cent of the total funds raised throughout 2022 were recorded in the first half of the year. While the sector gained investors’ interest during the pandemic, it started witnessing a declining trend in funding from Q4 of FY2021, the report showed.

Despite witnessing a sharp decline, 2022 was still the second-highest funded year in the past decade, after 2021.

The report added that investors across the globe have become more cautious in spending their money amid the funding winter, current macroeconomic conditions, and rising interest rates. The trend was observed in the healthtech sector as well.

Online pharmacy Tata 1mg was the only Indian healthtech company to become a unicorn in 2022. In a funding round led by Tata Digital, with participation from KWE Beteiligungen AG, HBM Healthcare Investments, and others, Tata 1mg raised $40.8 million, after which the company’s valuation reached $1.3 billion, making it a unicorn.

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The Tracxn report also stated that only two $100 million+ funding rounds took place in 2022, compared with 10 during the previous year.

Digital healthcare platform MediBuddy raised $125 million in a Series C funding round from Quadria Capital, Lightrock India, and others. Consumer nutrition platform HealthKart raised $135 million in a Series H round from Temasek, A91 Partners, and others.

Meanwhile, telemedicine services provider Lytus was the only company from the sector to go public last year.

The healthtech sector recorded 18 acquisitions overall in 2021 and 2022, the report showed.

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Last year’s major acquisitions include Clinix, a provider of online consultation services, with doctors by MediBuddy, and AQFIT, a developer of fitness trackers, by Deep Nordic.

According to the report, Sequoia Capital, Accel, and Chiratae Ventures emerged as the top investors in the healthtech India segment to date.

At $3.1 billion each, healthtech companies in Bangalore and Mumbai have attracted the maximum investment till date, the report showed.

Despite the downturn last year, higher digital adoption, and favorable government policies are expected to increase the activity in the sector, and advancement in technologies like artificial intelligence (AI), robotics, cloud computing, data analytics, and IoT are expected to improve India’s healthtech sector, Tracxn stated.