The pandemic had accelerated many trends, but none more so than those seen in health technologies.
Mark Goldwasser, chief executive of Ceros Financial Services and its investing unit, Ceros Capital Markets, says healthtech has had a strong year, but that it was an area that had always been on the rise, even pre-pandemic: “It was a long time coming, and the trend’s not going to change since there continues to be opportunities post-covid.”
He adds that many innovations around health show promise because hospitals want to make better and more efficient use of their beds. There is therefore a lot of demand to make procedures safer and faster without admitting patients.
The health sector, in general, has enjoyed a strong year, especially after almost two years in which people have been marked by a public health emergency. Enterprise healthcare saw 387 US-based VC deals in total as of the third quarter of 2021, according to PitchBook’s Q3 Emerging Tech Research. The sector raised $20.1 billion during that period.
However, biotech and pharma are also becoming interesting to investors. The PitchBook and National Venture Capital Association Q3 Venture Monitor said the two sub-sectors saw 871 deals valued at $28 billion.
Despite strong investor interest in biotech, Ceros Financial focuses on medical technology instead of biotech because Goldwasser says the latter sector has some limitations.
“The problem with biotech is that it depends on a binary event,” he says. “Either you get FDA [Food and Drug Administration] approval and the stock goes from one to 34 or you don’t get it and the stock goes down. We thought medical devices have an easier time getting approvals”
Ceros Capital Markets recently made investments in several companies in the space. These included robotic surgical device company Memic, orthopedic device and data services provider OrthoSensor, and ultrasound device manufacturer Insightec. It has completed about $77 million in medical technology transactions in 2021, including leading a $24 million Series B fundraise for digital lab PathologyWatch. Medical device company Stryker acquired OrthoSensor in January for an undisclosed amount.
In terms of the future, Goldwasser sees the pandemic creating new behaviors that he believes many companies will seize. He notes that people want to spend less time with a doctor and want more outpatient or remote options.
It is this potential new market that makes him confident there will be even more growth in the areas Ceros Financial Services invests in.
Another trend Goldwasser sees growing in the next year is the expanding geographies in which investors work. He says that so many of the companies Ceros Financial Services invests in have moved to areas like Miami, and he believes more start-ups and even venture firms and private equity companies will follow.