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MEDICAL ALLEY Q1/2022VENTURE REPORT
MEDICAL ALLEY VENTURE REPORTThe Medical Alley Venture Report is a quarterlyanalysis of investment, M&A, and developmentsdriving growth in The Global Epicenter of HealthInnovation and Care.Supported 120 startupsProduced by the Medical Alley Starts team toprovide vital insights for entrepreneurs, investors,and deal makers on the state of the market. Nowentering its 15th year, the report is expandingsources of data and analysis.Added two sponsors, J.P. Morgan andCliftonLarsonAllen, alongside DiversifiedPlastics and A COUPLE of GURUSThe Medical Alley Starts team celebrated oneyear since launching in February of 2021 andhas started Q1 strong:Added Kylle Jordan, an experiencedinternational business professional,expanding our global reach
MEDICAL ALLEY STARTS A Global Investor Network: Connecting Startups toinvestors from pre-seed to growth.Medical Alley Starts is aventure platform to lowerthe cost of starting, scalingand pivoting new venturesin Medical Alley. Global Corporate Partner Network: Facilitatingpartnership, M&A, JVs and other engagements withhealthcare’s global leaders. Ready Reserve Entrepreneur Volunteers: A networkof experienced entrepreneurs ready to lend their expertiseto your venture. The Global Epicenter Campaign: Connection to MAA’snational branding campaign to position Medical Alley asThe Global Epicenter of Health Innovation and Care
MEDICAL ALLEY STARTS SERVICESMedical Alley Starts Companies Supported byQuarterMedical Alley Starts Services by 1 20210Q1 2021Q2 2021Q3 2021Q4 2021Q1 2022Q2 2021Investor DevelopmentQ3 2021Corporate DevelopmentQ4 2021Q1 2022Peer to Peer Connections
SUMMARY: GROWTHMedical Alleystartups raisedmore money inQ1/2022 thanall of 2021Late stage and growth deals made up most of the 475million private capital raised, particularly PMA device firms 125 million for Saluda Medical, 50 million for Nuvaira,and 35.4 million for 4C Medical Technologies. Homehealth was a second major theme, with Nice Healthcareraising 30 million, and UnitedHealth Group acquiring LHCGroup for 5.4 billion. Insurance and benefits innovationcontinued with Gravie having the second largest raise at 75 million.Continued
SUMMARY: GROWTHAfter 2021's 1.5 billion public market record, Medical Alley startups were less active to start 2022,with one secondary offering, Anteris Technologies, and one Special Purpose Acquisition Company(SPAC), bringing FOXO Technologies public. An additional four companies succeeded with theirSBIR applications Q1/2022, and 21 healthcare companies took advantage of Launch Minnesota'sinnovation grant in 2021.Jobs data has a 6-month lag so in Q1 of 2022 we received the Q3 2021 jobs numbers. The largestyear-over-year changes in healthcare employment numbers were a 4% increase in the healthinsurance category and 6% increase in the retail category. Providers remain the largest category,employing 10 times as many people as the next largest healthcare category with 386 thousandemployees.
RECORD-BREAKING STARTMedical Alley startups raised 475 million inQ1/2022, more than FY/2021.Medical device companies led with 289million, followed by digital health companieswith 153 million.Companies raised more in private capitalthis quarter than the last three Q1scombined.The 475 million is the largest amount raisedin a quarter since Q3/2020, when BrightHealth alone raised 500 million.In total, 29 companies reported raises.
Q1/2022 LEADER BOARDThree medical device and two digital health companiesmade up the top five.The quarter's largest raise was Saluda Medical’s 125million to support commercialization, research and clinicaldevelopment of their proprietary neuromodulationportfolio.Gravie raised 75 million to accelerate growth,Nuvaira raised 50 million to get to FDA approval, 4CMedical's 35 million Series C will further develop theirtechnology, and Nice Healthcare will use 30 millionfunding to expand in-home care.Largest Raises in Q1/2022Saluda Medical 125 millionGravie 75 millionNuvaira 50 million4C Medical Technologies 35.4 millionNice Healthcare 30 million
NOT SO QUIET ON THE M&A FRONTWe tracked 12 M&Atransactions with atotal reported valueof 6.83 billion.*The largestreported wasUnitedHealth Group’sacquisition of LHCGroup for 5.4 billionto strengthen its homehealth business.UHG’s Optum alsoacquired RefreshMental Health for anundisclosed price.Medtronic acquired Affera,a cardiac mapping andnavigation systemscompany, for 925 million.* Only 4 of the 12 transactions reported deal value
PUBLIC MARKET ACTIVITY SLOWSAnteris Technologies was the only publiccompany to raise capital in Q1/2022,having raised 20 million through aprivate placement.FOXO Technologies took a differentroute to the public markets. It went public(NYSE: FOXO) through a merger witha special purpose acquisitioncompany (SPAC) and in doingso raised 224 million.Compared to 2021 when Medical Alley companies raised just under 1.5 billion in the public markets, 2022 has started slower.
ANGEL TAX CREDIT For 2022, 5 million in credits is available, 2.5 million ofwhich is reserved for minority- and women-ownedbusinesses, as well as businesses located in GreaterMinnesota. In Q1/2022, one healthcare company (LuminaryTherapeutics) took advantage of the Angel Tax Creditprogram. At the time of this report’s publication, legislation waspending to renew the program for future years withincreased funding
NIH FUNDING IN MINNESOTA – NON-PROFITOf the 178 million awarded to Minnesotabased organizations in fiscal year 2022 bythe National Institute of Health (NIH) thusfar, 2% was awarded to for-profitorganizations, the rest was divided bynon-profit or public organizations.The leading recipients werethe University of Minnesota ( 100million for 214 projects) and MayoClinic ( 71 million for 128 projects).
GRANT FUNDING EARLY STAGEFor-profit organizationsthat received NIHfunding were MinnHealth,Koronis BiomedicalTechnologies, LEAHLabs, and Habitaware.MinnHealth succeededwith more than one project.Minnesota SBIR/STTRAccelerator continuedto provide invaluablesupport to companiesapplying for SBIR/STTRfunding.Out of LaunchMinnesota's 1.5 millionof grant funding, morethan 694 thousand wasallocated to 21 healthcarecompanies, whichrepresents almost halfof the grant funding.
MEDICAL ALLEY WORKFORCE Minnesota's healthcare jobs showed steady growth from 2017-2019,until COVID-19 caused decrease in 2020. In 2020, we were 2nd behind only Massachusetts in healthcareemployment per 100,000. The number of total jobs across healthcare sectors remained steadythrough the first three quarters of 2021, the most currentlyavailable data. Providers employed by far the most people in healthcare inMinnesota with over 386 thousand people, followed bymedical device companies with more than 32 thousand people. Year-over-year employment in health insurance increased by 4.23%and in retail by 6.33%. Biotech/pharma decreased by 6.08% duringthe same timeframe.**Federal jobs data has a 6-month delay so the most current data in Q1/2022 is for Q3 of 2021.
MEDICAL ALLEY JOB BOARDMedical Alley Association's jobboard is a free for members jobsite and is among the highesttrafficked pages on MedicalAlley's website.In Q1/2022, there were225 postings, a 24%increase over Q4/2021,and the third highestnumber of posts ever.The 69 unique companiesposting on the job boardis the third most in anyquarter to date.
Frank Jaskulke, VP of Intelligence –fjaskulke@medicalalley.orgCONTACTSKylle Jordan, Startup Principal –kjordan@medicalalley.orgFilip Kostal, Startup Principal –fkostal@medicalalley.orgReece DeVries, Data Analyst & Engineer –rdevries@medicalalley.org
APPENDIX
MEDICAL DEVICE RAISES BY YEAR2022 YTD
Q1 MEDICAL DEVICE RAISES BY YEAR
DIGITAL HEALTH RAISES BY YEAR2022 YTDIncluding Bright Health Group2022 YTDNot Including Bright Health Group
Q1 DIGITAL HEALTH RAISES BY YEAR
BIOTECH & PHARMA RAISES BY YEAR2022 YTD
Q1 BIOTECH & PHARMA RAISES BY YEAR
M&A TRANSACTIONSTRANSACTIONVALUE (IF REPORTED)Biomerics acquired by MMTGoodness Growth (Vireo) acquired 413,000,000Wellbeats acquired by Lifespeak 92,500,000Aldevron Acquires Nature Technology CorporationCirdan Health Systems and Consulting acquired by Health ManagementAssociatesNovavita Thera acquired by Castle Creek BiosciencesFairmont Family Dentistry acquired by Cherry Tree DentalDowntown Dental Associates acquired by Cherry Tree DentalLHC Group acquired by UnitedHealth Group 5,400,000,000Refresh Mental Health acquired by OptumIntellivisit acquired by UCP Merchant MedicineAffera, Inc. acquired by Medtronic 925,000,000
NIH FUNDING IN MINNESOTAORGANIZATIONPROJECTSTOTAL FUNDINGMayo Clinic128 71,300,132Hennepin Healthcare Research Institute4 1,618,973HealthPartners Institute1 601,049Children's Hospitals and Clinics1 323,777Minneapolis VA Medical Center16N/AUniversity of Minnesota214 100,674,216St. Catherine University1 296,711Minnesota State Dept. of Agriculture1 145,016MinnHealth3 1,617,953Koronis Biomedical Technologies1 667,212LEAH Labs1 337,433Habitaware, Inc.1 879,144Total372 178,461,616.00Non-ProfitPublicFor-Profit
HEALTHCARE JOBS IN MINNESOTAHealthcare Jobs in Minnesota since 2017Growth by Industry from 2017-2020Location NameMinnesotaLocation NameMinnesotaYearSum of Employment Count2017467,875Sum ofEmploymentCountYear2018476,6882019484,317NAICS Category20172020Change byCategory2020471,639Health Insurance16,83417,9276.49%Medical Device30,49932,3756.15%Other511492-3.72%Top 5 All Health Care Employment per 100,000 in 2020Location NamePer 100,000 ail23,34527,03815.82%District of Columbia8229.70North Dakota7717.09New York7632.33Note: Data is undercounted as digital health/health ITworkforce cannot be measured fully.
ALL HEALTHCARE - QUARTERLY EMPLOYMENT
PROVIDER – QUARTERLY EMPLOYMENT
MEDICAL DEVICE – QUARTERLY EMPLOYMENT
RETAIL – QUARTERLY EMPLOYMENT
HEALTH INSURANCE QUARTERLY EMPLOYMENT
BIOPHARMA– QUARTERLY EMPLOYMENT
OTHER HEALTHCARE – QUARTERLY EMPLOYMENT
4C Medical Technologies 35.4 million Nice Healthcare 30 million Three medical device and two digital health companies made up the top five. The quarter's largest raise wasSaluda Medical's 125 millionto support commercialization, research and clinical development of their proprietary neuromodulation portfolio.
