Financing in Medtech: An Overview

In recent years, the medical technology (medtech) industry has attracted significant attention from investors and companies alike, driven by ongoing innovation. In this article, utilizing the data Biotechgate has to offer on the medtech field, you’ll find an overview of how funding in the industry has developed, including a review of the past and what’s in store for the future.

Reviewing 2023

Like many of the other life science industries, funding in 2023 for the medtech industry proved to be erratic, with quarters 2 and 3 proving to be the strongest, buoyed by high funding in May and August. The latter saw the highest amount of financing in a single month, thanks in part to a convertible loan by Shockwave Medical worth USD 650 million, as well as a greater number of rounds taking place.

San Diego medtech DexCom had the largest financing round of the year, also coming in the form of a convertible loan with a value of USD 1.1 billion.

Overview of financing from 2014 to 2023

As shown in the below chart, starting from 2014, the total amount invested into medtech companies had a rather erratic journey. Following downturns in 2016 and 2020, the industry experienced a record high in 2021. Total investment reached almost USD 18 billion, reflecting heightened investor interest across the entire life science sector. USD 1.3 billion of this was due to QuidelOrtho’s (then Ortho Clinical Diagnostics) IPO on the NASDAQ.

2022 saw the high levels of financing come to a halt, with total investment in the year tumbling by 48%. Though 2023 has signaled an immediate recovery.

According to Biotechgate data, private equity sources accounted for the majority of financing over the 10-year period, representing 52%, followed by grants at 15%. IPOs made up only 3%.

While in terms of the locations of companies receiving funding, 60% belonged to US-based organizations, with the next closest country being China at 5% – highlighting the gap between the USA and other countries with respect to medtech investment activity and attention.

What’s in store for 2024?

Although we are only two months into 2024 at the time of writing, January has provided reasons for optimism within the medtech industry. When compared to January of previous years, January 2024 had the second-highest number of financing rounds of all time, the highest being 2021. It’s not a case where companies are taking on debt either, as 81% of rounds last month were private equity investments. The largest private equity round belonged to miniature neurostimulator developer Nalu Medical, earning USD 65 million as part of their Series E funding led by Novo Nordisk’s investment arm, Novo Holdings.

February marked the first medtech IPO of the year. Fractyl Health, a developer of medtech and gene therapies focused on reversing diabetes and obesity, made its debut on the NASDAQ and earned USD 110 million in proceeds.

The medtech industry has witnessed major growth, notably in 2021. Despite a downturn in 2022, the resurgence observed in 2023 and 2024 (so far) underscores the industry’s resilience and significance within the broader life sciences sector.