The Resilience of Early-stage European Healthtech (Octopus Ventures)

Summary

• Total funding for Pre-seed to Series B European healthtech companies grew 49% YoY from 2020 to 2021 and remained resilient in 2022 with an 8% YoY growth, reaching $4.4 billion.p.5
• European healthtech VC investment dropped to $7.3 billion in 2022 from its 2021 peak of $11.3 billion, mainly due to a decline in mega-rounds.p.8
• Investment in UK healthtech startups reached $1.9 billion in 2022, representing the highest total of any European country.p.11
• French healthtech startups raised $1.7 billion in 2022, up from $1.5 billion in 2021 and $514 million in 2020.p.19
• VC investment in German healthtech reached a record $1.1 billion in 2022, up from $1.0 billion in 2021.p.25
• Digital therapeutics is the fastest-growing healthtech segment in Europe, with VC funding growing 4.3x from $0.3 billion in 2017 to $1.3 billion in 2022.p.9

Key insights

1. Early-stage European healthtech funding grew from $2.3 billion in 2021 to $2.5 billion in 2022, showing resilience despite broader economic pressures.p.8
2. Digital health M&A exits in Europe reached a record-breaking 50 deals in 2022, increasing 1.7x year-on-year.p.6
3. Dry powder for European VC reached an all-time high of $44 billion at the end of 2021.p.6
4. European early-stage VC investment into digital therapeutics has grown 9x since 2016, outstripping the 3.6x growth rate in the US.p.10
5. In 2022, France directed 13% of its total VC investment into healthtech, surpassing the UK share of 12%.p.16
6. Early-stage healthtech investment in Germany expanded 29% from $272 million in 2021 to $351 million in 2022.p.25
7. European Medical Device Regulation certification costs are up to ten times higher than under previous directive rules, taking up to two years to secure clearance.p.42