Healthcare venture fundraising soared to $17 billion in 2020, a 57% increase over 2019's record, according to Silicon Valley Bank (SVB). Investment in venture-backed companies also rose to a new high of $51 billion.

SVB's 10th annual Healthcare Investments and Exits Report, released today at SVB's Innovate Next virtual summit, analyzes and predicts trends for global venture capital fundraising, investing and exits that shape the biopharma, healthtech, diagnostics/tools (dx/tools) and medical device sectors.

"2020 was a remarkable year for venture fundraising and investment in healthcare at a time when innovation is more important than ever," said Jonathan Norris, Managing Director of SVB's Life Science and Healthcare Practice and author of the report. "One of the bright spots this year has been the investment dollars pouring into Dx/tools and biopharma companies developing solutions to battle COVID-19."

Notable results from 2020:

• A strong IPO environment and robust private M&A activity propelled US healthcare venture fundraising to a fourth-consecutive record year to $17B.
• The third quarter of 2020 set a high-water investment mark of $15 billion, the largest healthcare investment quarter ever recorded. Each sector – biopharma, healthtech, dx/tools and device – experienced record investment.
• IPOs in all sectors set or tied record numbers. Post-IPO performance for venture-backed 2020 healthcare IPOs has been exceptional, with average performance of +100%.
• Record biopharma investment was led by large mezzanine rounds that quickly transitioned to IPOs. Thirty-three biopharma companies closed mezzanine rounds in 2020 and went public in the same year. The time between mezzanine round and IPO averaged just three months.
• The number of healthtech deals surpassed biopharma for the first time ever (614 vs 570), however, biopharma investment was highest with $24.5B invested.
• Biopharma and dx/tools each saw multiple $1B+ private M&A in 2020, leading both sectors to record returns for the year.
• Healthtech companies achieved a market cap of $9.8 billion at IPO. Compared to 2019's total of $5.7 billion, this year's class of IPOs were nearly twice as valuable at IPO.
• Device M&A was down in 2020, but the sector has seen sustained IPO activity and record post-IPO performance Post-IPO performance for the class of 2020 achieved a healthcare best of +150%.

"Following the record highs seen in 2020, we don't expect healthcare fundraising to have the same momentum in the year ahead," said Norris. "However, with fresh capital to invest and a continued open IPO window, the flow of investments into venture-backed companies should continue at a healthy pace."

SVB's outlook for 2021:

• SVB anticipates stable biopharma investment in Series A and later-stage mezzanine financing, slightly below 2020's record numbers.
• Healthtech investment will remain strong. As virtual and hybrid care models see continued growth, more venture-backed healthtech companies will expand to provide alternative care.
• Dx/tools could achieve record investment again in 2021; deal numbers will likely fall but dollars invested should be in line with 2020 volumes.

Norris will present the key findings from the annual report at Innovate Next at 11:40 am PST today. Innovate Next is a new virtual summit convening executives and investors from around the world to discuss the most pressing topics and innovative solutions transforming healthcare. The event is hosted by SVB Financial Group entities Silicon Valley Bank, healthcare investment bank SVB Leerink, and SPD Silicon Valley Bank (SSVB), SVB's joint venture bank in China. The Innovate Next agenda features keynotes from Dr. Sanjay Gupta, Chief Medical Correspondent for CNN, and Sylvia Mathews Burwell, President of American University and the 22nd Secretary of the US Department of Health and Human Services (2014 to 2017), in addition to panels and breakout sessions with change-makers from the world's most pioneering companies and institutions.

The Life Science and Healthcare Practice at Silicon Valley Bank delivers specialized solutions and market expertise in the areas of biopharma, healthtech, medical device, diagnostics/tools (dx/tools) and healthcare services, with a focus on helping companies of all sizes grow. Learn more about SVB's Life Science and Healthcare Practice at svb.com/industry-solutions/global-life-science-healthcare.

Read the full 10th annual Healthcare Investments and Exits report here.