The global deceleration of the venture capital market is broad. If you are building a company in 2022, you should not expect to see the same amount of interest as you did last year. Things have changed.
There has been a notable inversion in the startup world this year. Companies that had a strong boost in demand due to COVID-19 are often seeing a growth flag, while companies that fell out of favor in the earlier periods are seeing the opposite. The Exchange wanted to explore Q1 data from the perspective of sectors that were hot last year and earlier in the COVID era to see how they are holding up today.
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The word we came away with was retreat after looking at a few hundred charts of data from CB Insights. The health tech market isn't collapsing, but the market seems to have shifted.
We will look at edtech to see if there is a similar boom and bust.
The recent $5 million round raised by Singapore-based telehealth startup Ordinary Folk has fallen out of favor, as compared to the CB Insights dataset. Let's find out.
To understand the declines in the health tech market, we'll start from a high-level perspective, burrow down to two key subsectors that TechCrunch covered the most during the pandemic, and then look at the geographic makeup of the 2022 health technology startup scene.
According to the CB Insights data, some $10.4 billion was invested into global health tech startups in the first quarter of 2022. When $16.2 billion was invested around the world, that figure was off 36%.
In the last quarter of the year, mega-rounds were worth $9.2 billion, but they were worth just $4.4 billion in the first quarter. Huge health tech deals saw their value halved. The Q1 2022 mega-round fundraising tally for health tech was smaller than any other quarter.
Money flows into health tech startups are down, as are big checks. The three factors sum up to a retreat in the sector.
The Exchange was most curious about the two subsectors.
Why are those two sectors the same? A surge in demand for meditation services was caused by the fact that many people's mental health took a hit during COVID. The world had a no-in-person-meetings vibe for a long time, which made seeing doctors and other health professionals remotely the norm.
We assumed that the two sectors, which saw a big boost in 2020 and 2021, would suffer a drop in venture volume in the first quarter of the year due to declines in venture activity in the health tech space. Were we correct? Yes.
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