The idea that healthcare entrepreneurs are no longer restricted by geography and can succeed well beyond the historic startup and investment meccas of the Silicon Valley and Boston, is demonstrated more convincingly each year. A new report charts the growth of healthcare startups and investment in the Midwest over the past five years.
Last year, 375 Midwestern healthcare companies raised $1.7 billion, according to a report by BioEnterprise. The investment amount was the highest in the past two years and reflected a couple of trends, according to Aram Nerpouni, CEO of BioEnterprise. Investment size and the number of companies raising capital have more than doubled in the past five years, he said.
BioEnterprise’s Midwest Healthcare Growth Capital Report tracks healthcare investment in Midwestern states by companies, healthcare sector and amount raised from 2011 through 2016. The Cleveland group focuses on business formation, recruitment, and acceleration efforts to support bioscience companies.
The region is known for its medical device companies so it’s not surprising that 166 companies in this sector attracted $696 million in funding last year. Health IT startups have been on the rise nationally in recent years and the Midwest is no different. Investment in heath IT companies grew sharply in 2016 rising 34 percent over the previous year to $679 million across 166 deals with 134 companies. Biopharma has been a much smaller investment category by comparison with $353 million for 75 companies across 103 deals.
Minnesota ($424 million), Illinois ($327 million) and Ohio ($291 million) saw the most investment. Among the companies in those states that scored big deals were Accretive Health, a Chicago-based health business, which raised $200 million. Bright Health, a Minneapolis-based health IT startup targeting health insurance led by Bob Sheehy, former UnitedHealthcare CEO, raised $80 million. Other examples of Midwestern startups that closed funding rounds last year are Eccrine Systems, a clinical wearable developer based in Cincinnati, which raised $5.5 million. Rotation Medical, a medical device business based near Minneapolis in Minnesota, raised $12 million.
The infographic below highlights some of the investment trends outlined in the report.
Featured Photo: RomoloTavani, Getty Images
Report: Midwest healthcare companies raised $1.7B last year (infographic)