After a years-long fundraising dry spell, New York’s digital health firms may be starting to see the light at the end of the tunnel, a new report shows.
Twenty-nine health tech companies in New York raised $914 million in the first quarter of 2024 – more than the previous two quarters combined, according to a report released Thursday by Digital Health New York, an organization that tracks deals among local health tech companies.
Digital health funding has lagged in New York City in recent years, falling from a pandemic-era boom. City-based tech companies raised $2.9 billion in 2023, down from the record-breaking $9 billion they raised in 2021.
The uptick in funding in the first quarter of this year is a “very good sign” for health tech companies seeking funding in 2024, said Maria Gotsch, president and chief executive of the Partnership Fund for New York City, the $180 million venture arm of the Partnership for New York City. But she cautioned that venture markets are nowhere near the strength they had two years ago.
“People are cautiously optimistic that we are trending the right way,” Gotsch said. “But we are not fully back.”
Gotsch added that it’s too early in the year to make any conclusions about what the funding landscape has in store. Last year at this time, digital health companies had raised about $1 billion, before ending the year on a sour note.
She said that during “in-between” periods for funding, health investors look to markets with a large selection of both entrepreneurs and scientists — New York is a case in point.
In the first quarter, health tech companies developing products focused on health insurance raised more money than other sectors. Insurance and health benefit firms raised 27% of total funding, signaling interest in products that simplify health insurance and claims processing.
Financial District-based pharmacy benefit management firm Capital Rx raised $115 million in a Series D round led by Prime Therapeutics to expand its artificial intelligence-based technology that processes prescription drug claims and handles reimbursements. Healthee, based in Midtown, also raised $32 million in an early-stage funding round to grow its health benefits navigation platform, a solution that aims to give employees more information about their medical costs.
A. J. Loiacono, chief executive of Capital Rx, said that there’s a lot of investor interest in companies that can upgrade decades-old systems that process insurance claims – a system that’s comparable to the U.S. electrical grid, he said. He added that he expects to see solutions that attempt to address security vulnerabilities in insurance claims as well, which was evident in the recent Change Healthcare attack.
Fundraising last quarter wasn’t limited to startups focused on simplifying insurance; companies aiming to help patients navigate care also topped the list of firms raising money. Fabric, which is headquartered in Chelsea, raised $60 million to expand its health navigation platform to more hospitals.
Biotech companies raised 17% of all funds in the first quarter, led by companies like OnCusp and Claris Bio, which develop oncology and ophthalmology therapeutics, respectively. Mental health companies raised 8% of the total funding in the first quarter, and women’s health firms raised 4%.
Amanda D'Ambrosio , 2024-04-12 11:33:04
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