Global investments in healthcare startups set a new record in 2020, as investors flocked to this sector due to the pandemic.
According to data presented by StockApps, healthcare startups raised over $38bn in funding rounds since mid-March 2020, with the total value of investments into this hub reaching $135.5bn last week.
Almost $12B of Investments in Q1 2021, the Highest Quarterly Figure So Far
In 2015, healthcare startups worldwide raised $5.4bn in funding rounds, with the cumulative value of investments reaching $24.4bn that year, revealed the CrunchBase data. This figure surged by more than 68% during the next two years, reaching $45.2bn in the fourth quarter of 2017.
Statistics show that 2018 delivered $20.2bn of investments into healthcare startups, with the cumulative funding value rising to $65.4bn that year. In 2019, the cumulative funding value jumped by $24.7bn to $90.1bn. However, the year 2020 set a new record, despite the global slowdown in venture capital funding amid the COVID-19 crisis.
The Crunchbase data revealed the first quarter of 2020 delivered $7.4bn worth of investments into healthcare startups, a 68% increase year-on-year. After a slight drop to $7.2bn in the second quarter, quarterly investments jumped to $10bn between June and September 2020. By the end of the year, the cumulative funding value rose by another $9.1bn and hit $123.8bn.
The strong investment activity continued in 2021, with almost $12bn worth new funding rounds since January, the highest quarterly figure so far.
North America represents the leading region with $85.5bn of investments in healthcare startups. The US companies raised more than 97% of that amount, with California and San Francisco as the leading hubs. Asian startups hit $83.5bn in total funding, ranking as the second-leading region globally. European healthcare startups follow with $15.9bn worth funding rounds.
Three Largest Funding Rounds Worth $2.3bn
The CrunchBase data also revealed the three largest healthcare startup funding rounds in the last year hit $2.3bn value.
In May 2020, MGI Tech, a gene-sequencing equipment unit of Chinese genome giant BGI Group, announced the completion of a $1 billion series B funding round led by IDG Capital and CPE, the biggest investment in the last year.
Three months later, JD Health, the healthcare unit of Chinese e-commerce giant JD.com, raised more than $830 million from Hillhouse Capital in Series B funding, the second-largest investment in 2020. The company announced it would use this capital to further strengthen its pharmacy supply chain capabilities and explore additional healthcare services opportunities in the broader healthcare sector.
Last week, ElevateBio, a cell and gene therapy technology company focused on powering transformative cell and gene therapies, announced it had raised $525 million in Series C funding, the third-largest investment in the last year. This new funding led by Matrix Capital Management will help the company increase its manufacturing capacity and advance its cell and gene therapies.
Agricorp Raises $17.5M To Boost Africa Food System
Nigerian startup Agricorp, which is utilizing technology in a bid to become the largest spices exporter on the continent, has raised US$17.5 million in Series A funding to help it increase its production capacity to 7,000 metric tonnes.
Founded in 2018 by Kenneth Obiajulu and Wale Omotimirin, Agricorp has so far supported over 5,000 smallholder farmers with inputs and training on good agronomic practices and built a 0.5MT/hour spice processing plant in Kaduna that produces value-added products for the export market.
The startup has developed proprietary technology, Farmbase, that registers, aggregates, and pays farmers for produce sold. In a market where farmers are largely undocumented and unbanked, Agricorp collates data that can help provide detailed analysis for stakeholders to make informed agricultural decisions and also helps with traceability of all farmer activities from the need for farm input to disbursement to sales of products and, eventually, payment. Financial institutions can also use this information to provide loans, credit facilities, and insurance to interested parties.
It is now seeking greater scale and impact and has therefore raised a US$17.5 million Series A round. The Nigeria-based Vami led the funding round with US$11.5 million in equity, while One Capital LLC and AFEX provided working capital financing for the company.
The funding will be used to expand Agricorp’s spices processing capacity to hit 7,000MT per annum, set up regional sales operations in South Africa and East Africa, acquire certifications for food safety and hygiene, increase staff strength to meet growing demand, and improve marketing efforts.
“We believe that by increasing our capacity to 7,000MT, we will maximise the potential to boost Nigeria’s forex earnings through export, contribute our quota to improving the Nigerian GDP from agriculture, and serve as a worthy model to African youths who aspire to be agribusiness owners. We want to show them it is possible and very rewarding as well,” said Obiajulu, Agricorp’s chief executive officer (CEO).
AgriCorp’s founders raised US$330,000 in seed capital back in 2018 to get the company started, and One Capital has previously invested an undisclosed amount in convertible notes to help it scale operations. The company has also raised several debt notes to meet its working capital requirements for buying raw materials from farmers within its network.
Since its launch – less than 3 years – the company has supported over 5,000 smallholder farmers. The company also says it has grown its revenue by over 585% to service global clients in the food processing and pharmaceutical industry.
Obiajulu, who is also the co-founder of One Capital, said Agricorp was intentional about choosing the right funding partners for this round.
“We wanted strategic partners that would allow us to grow our business and impact, not just see us as a portfolio in their investment mix.” He added.
According to Lead Investors, Vami Nigeria, they led the funding round because they saw in the startup a clear growth path, strong social impact, solid financials, and global collaborations with key partners. Most importantly, “the unrivaled depth of knowledge, passion, and resilience of the Agricorp team.”
“We have transacted with Agricorp on several occasions and have seen the business grow over time. Now, we are committed to providing the working capital they require, through our investment arm, to scale their operations at any level,” Samirah Ade-Adebiyi, Managing Director at AFEX, said in a statement.
Investors Flock Ibadan, Pours $10.5M Into Ecommerce Startup Alerzo
The majority of startup investments in Nigeria are centered in Lagos, the country’s main commercial hub. However, investors appear to be increasing trust in Nigeria’s other cities, following the relative success of firms such as Safeboda and Gokada, among others, after they were pursued from Lagos in the now-famous ban on bike-hailing activities. The new investment in Alerzo, a B2B e-commerce retail startup based in Ibadan, Nigeria, has further confirmed reality.
Alerzo has announced that it has raised $10.5 million in a Series A round led by Nosara Capital of London. The round also included FJ Labs and various family offices from the United States, Europe, and Asia, including Michael Novogratz’s.
“Growing up in Ibadan, I watched my mother operate two informal retail stores to raise my three siblings and me. Seeing the many challenges she faced running her stores, and I decided to start a business that uniquely catered to the needs of retailers just like her,” said Adewale Opaleye, founder and CEO of Alerzo.
Alerzo has raised more than $20 million in total since its inception. The Baobab Network, a London-based Africa-focused accelerator, and Signal Hill, a Singapore-based fund manager that invested in the company’s $5.5 million seed round last year, are among the early investors. In order to better serve its customers, the company has also announced the closing of a $2.5 million working capital facility.
Alerzo claims to have a network of up to 100,000 small enterprises, 90 percent of which are run by women. Ibadan, Ekiti, and Abeokuta, to name a few, are among the tier-2 to tier-4 cities in Southwest Nigeria that the company serves solely. It connects retailers with consumer brands including Unilever, Nestlé, Procter & Gamble, Dangote, and PZ, as well as local and multinational distributors.
Also, Approximately one-third of Alerzo’s total retailers use the platform on a monthly basis. Retailers may order products via SMS, phone, or WhatsApp, and have them delivered to their stores in less than 10 hours, according to the company’s website. The startup also claims to have processed over 1 million orders in 2020.
Alerzo was launched in 2018 by Adewale Opaleye as a last-mile distribution network that assists shops in receiving merchandise directly from producers. Its mission, which began in 2019, is to assist street sellers and retailers in Nigeria’s south-western cities in obtaining household products more quickly and efficiently.
According to the founder, Ibadan was the best location for the company’s headquarters because informal shops in the region face more obstacles than those in Lagos.
To process these orders, Alerzo owns and controls its full-stack tech-driven supply chain and logistics. Suppliers can use the company for warehousing and fulfillment, and informal retailers can use it for storefront delivery. To serve its hundreds of customers, it currently possesses approximately 200 cars and 20 warehouses.
SoftBank Makes First Africa Bet on OPay at $2B Valuation After 400M Funding
SoftBank Vision Fund 2 led a $400 million funding round for OPay, valuing the Nigerian mobile payments platform at $2 billion and marking the investment vehicle’s first bet in Africa.
Also participating in the round were Sequoia Capital China, DragonBall Capital, the venture arm of Chinese food-delivery giant Meituan, Redpoint China, Source Code Capital, SoftBank Ventures Asia and 3W Capital, according to OPay.
“We want to be the power that helps emerging markets reach a faster economic development,” OPay Chief Executive Officer Yahui Zhou said in an emailed statement.
The company’s technology is designed to replace cash and other legacy payment methods, helping local governments “improve financial and information security,” according to OPay. Founded in 2018, the company’s monthly transaction volumes exceed $3 billion. In addition to expanding in other African countries, OPay is focused on the Middle East as well, it said.
“We believe our investment will help the company extend its offering to adjacent markets and replicate its successful business model in Egypt and other countries in the region,” said Kentaro Matsui, a SoftBank Group Corp. managing director and former managing partner at SoftBank Investment Advisers, which oversees Vision Fund and Vision Fund 2.
OPay previously counted ride-hailing and logistics services as part of its offerings. Last year, OPay closed its ride-hailing and bike-sharing businesses following a government ban and the rise of the Covid-19 pandemic.
Norway’s Opera Ltd., which counts Zhou as its chairman and co-CEO, said in June that it sold 29% of its stake in OPay, recording a $31.1 million gain. Zhou is the billionaire founder of Kunlun Tech Co., which last year sold dating app Grindr under U.S. regulatory pressure due to national-security concerns.
Earlier this month, SoftBank’s billionaire founder Masayoshi Son said he’d begin to invest personally alongside Vision Fund 2, to which SoftBank has committed $40 billion.
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