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Robotic surgery startups help drive Q3 medical device funding over $5B, an all-time high.

Medical device funding hit a new high in the third quarter, growing 63% year on year to top $5 billion for the first time in CB Insights’ dataset.Investments in robotic surgery startups was a major driver of the increase. The analysts listed the progress of neuromodulation devices and Medtronic’s deals in diabetes and neurosurgery as other medical device highlights of the quarter.

The big quarter for device investment was part of a broader uptick in healthcare activity. CB Insights also tracked funding records in digital health and telehealth, largely due to a jump in the number of companies raising mega-rounds worth upward of $100 million.

There were signs early in the pandemic that the crisis could constrain access to capital. Consultancy EY tracked a 22% drop in medtech venture capital funding over a 12-month period, in part due to a steep decline as the coronavirus spread in the second quarter. However, CB Insights’ third quarter report is considerably more upbeat.

The value and volume of medical device deals grew sequentially and year on year in the third quarter as companies entered into 478 agreements worth $5.1 billion. The median value of deals over the previous 11 quarters was $3.4 billion. The sheer number of deals was a new record, too.

CB Insights identified three trends in its analysis of medical device dealmaking activity in the third quarter. The analysts highlighted a clutch of robotic surgery deals led by the $77 million raised by PROCEPT BioRobotics, the manufacturer of a robotic system for delivering aquablation therapy. The market intelligence firm also highlighted earlier-stage investments in Monteris Medical, Vicarious Surgical and NDR Medical Technologies.

The analysts selected novel neuromodulation devices as their second highlight.

Neuromodulation leaders blamed a lack of innovation for the slowdown of the sector last year. CB Insights sees signs innovation is picking up again, pointing to a financing at Neurovalens and updates from SetPoint Medical, Spark Biomedical and Synchron to make its case.

Medtronic, one of the neuromodulation leaders that suffered a slowdown last year, is the focus of CB Insights’ other quarterly highlight. The analysts identified Medtronic as an active investor and buyer in the third quarter, when it struck deals to acquire Medicrea and Companion Medical and invest in Sinovation and Triple Jump.

Other sections of the report detail new fundraising highs for other parts of the broader medtech industry. The digital health industry had a bumper quarter, pulling in $8.4 billion across 502 deals. CB Insights had never previously reported a quarter worth $6 billion or more and last tracked a $5 billion quarter in the first half of last year.

The surge in total deal value happened despite a modest increase in volumes, reflecting the rise of large, late-stage agreements. CB Insights tracked 23 digital health mega-rounds in the third quarter. There were only 34 mega-rounds across the previous year. CB Insights’ definition of digital health was broad enough to cover investments in liquid biopsy startups Freenome and Thrive Earlier Detection

CB Insights included telehealth deals in its digital health figures and broke them out for a separate analysis. The analysts tracked $2.8 billion in telehealth deals, up 72% compared to the second quarter. The jump was driven by five large deals, led by the $275 million investment in VillageMD, that accounted for more than 30% of all telehealth funding in the third quarter.

Author:Nick Paul Taylor


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