Last reminder: We're hosting our quarterly Venture Monitor webinar on Wednesday, Feb. 2, to discuss the most important trends in US venture capital following a record-breaking 2021. Don't miss it!
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| Tech, healthcare help propel 2021's huge year for M&A worldwide | | Global M&A flourished in 2021. Deal activity rebounded from the COVID-19-induced slowdown in 2020 and blew past previous records, reaching nearly $5 trillion in combined deal value. Strong public equity markets undergirded the resurgence, reflecting high business confidence and providing the swelling ranks of public companies with increased buying power. Now, as inflation persists, supply chain and labor shortages continue, and stock markets falter, we are watching to see whether M&A activity slows in 2022. Companies will face a higher cost of capital and margin pressure due to increased input costs. Nevertheless, the outlook for 2022 is overwhelmingly positive as companies across sectors use M&A to navigate technological change and the growing importance of ESG themes. Unprecedented PE fundraising, especially by the largest funds, also puts a floor under M&A activity.  | | Interest rates and antitrust scrutiny will be themes in 2022. | Breaking activity down by geography, both Europe and North America contributed to 2021's record year. Having avoided a no-deal Brexit, the UK & Ireland region continues to attract buyers due to the supply of fundamentally strong but undervalued companies, while Germany's renewed focus on digitization and sustainability is creating M&A opportunities. In North America, a robust macroeconomic climate enabled numerous gargantuan tie-ups. A few industry-specific highlights: - Financial services buyers are acquiring digital and fintech assets to keep pace with aggressive tech adoption among consumers and businesses.
- In healthcare, growing health spending is enticing new players such as brick-and-mortar and e-commerce retailers and cloud computing giants into the fray.
- Technology accounted for a growing proportion of M&A activity even as regulatory pressure grows in China, the US, and Europe.
- Meanwhile, the energy and materials & resources sectors improved from 2020's slump but have yet to witness a full resurgence despite soaring commodities prices.
For more data and analysis, click to download our free 2021 Annual Global M&A Report.
Please feel free to reach out with any feedback or questions.
| | | | | | | | | | Lower costs, better customer experience drive the subscription healthcare industry | | Healthcare membership models appear to be gaining traction as venture capital dollars have been flowing into startups that offer relationship-based care through a fixed fee arrangement.
These companies typically focus on providing direct-to-consumer primary or specialty care or partnering with Medicare Advantage (MA) payers.
In 2021, we tracked $7.7 billion raised in VC funding across 21 startups, a significant increase from the $594 million in 2020.
To provide high-quality service at a lower cost, several companies in this space are investing in proprietary technologies, including member engagement software, risk prediction techniques that can proactively engage high-risk members, and other clinical and social products and services like transportation, remote patient monitoring devices, and home visits.
To help augment their platforms, providers are seeking partnerships with secondary care providers.
Despite these innovations, we believe significant scale will be needed before these models can generate profits. For example, One Medical—the largest provider in the space—has about 730,000 members yet still isn't profitable.
While these models represent a relatively niche subsegment of the primary care landscape, we expect they will become more mainstream as operating models improve.
However, competition from health insurance startups developing their own consumer-centric, value-based care initiatives may limit the market potential for DTC membership-based care providers.
We expect the market for membership-based care providers partnering with MA insurers to continually increase as MA enrollment rises and insurers seek to offload risk and decrease healthcare costs.
So far, early outcomes have been promising outcomes.
Oak Street Health reports a 51% reduction in hospital admissions, a 42% reduction in 30-day readmission rates, and a 51% reduction in emergency department visits versus Medicare fee-for-service.
Privia Quality Network has delivered total shared savings of more than $519 million across government programs and commercial payers since 2014.
For more analysis, download the free research: The Rise of Subscription Healthcare
Feel free to reach out with any questions or feedback, or if you would like to discuss the research.
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Fintech analyst Robert Le weighs in on what to expect from the crypto industry following a massive year for VC investment in the space:
"2021's increased venture funding into the crypto space highlights the growing traction of crypto, DeFi, and Web3.
"Many of the major crypto exchanges, wallets, and DeFi protocols had an explosion of growth during the year regarding active users and fees generated.
"VCs have been attracted to this growth. Investors are also betting that the next generation of financial apps, social media, and other online services will be crypto-native services.
"While the industry is still relatively nascent, some services have already reached escape velocity and have become mainstream (e.g., crypto exchanges).
"We expect to see more use cases reach this stage of adoption over the next year or two."
| | Robert Le
Senior Emerging Technology Analyst
Fintech | | | | | |
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Our insights and data featured in the press: - More than half of the US private equity funds that closed in 2007 were still actively holding assets at the end of March 2021. [WSJ]
- VCs pumped $1.4 billion into publishing startups in the US and Europe last year, more than twice the investment of any previous year. [Bloomberg]
- Why personalized medicine startups are poised to received record VC funding. [Healthcare Dive]
- A breakdown of European VC's remarkable 2021, and why fundraising will only increase this year. [Silicon Canals]
If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team. | | | | | |
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Highlights from our other recent research:
Market updates Thematic research Emerging Technology Research Coming next week (subject to change) - Global Fund Performance Report
- ETR: Information Security
- Our data-driven healthtech partnerships tracker
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| | Since yesterday, the PitchBook Platform added: | | 396 Deals | 1568 People | 603 Companies | 37 Funds | | | | | | |
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