The findings have been released to coincide with this week’s Silicon Valley Comes to the UK  event series, bringing together investors, entrepreneurs and CEOs from the UK and the Bay Area both physically and virtually to discuss the role of technology in building a better future and solving the great challenges of our time.

As the world continues to tackle the impacts of COVID-19, the pandemic has acted as a catalyst to an already growing healthtech sector and investment has reached record highs in 2021. The US leads globally with $31.9bn in VC investment so far this year, while the UK comes in third with $3.8bn, close behind China’s $4.1bn. UK healthtech investment has risen from just $420m in 2016, an increase by nine times whilst US investment has increased by 3.4 times. 

The new findings reveal that UK healthtech growth is being driven primarily by the Golden Triangle of London, Oxford and Cambridge, a region home to five universities in the world’s top 25 for life sciences and medicine1 and a world-leading hub for research and development.

Total VC investment for these three key city clusters between 2016 and 2021 YTD is $5.7bn, accounting for over 25% of European healthtech investment and 65% of the UK’s over this time period. London healthtech startups secured $2.9bn in funding while Oxford’s attracted $2.2bn and Cambridge’s $600m.

US-based healthtech companies continue to attract the lion’s share of global VC investment, with the Bay Area, New York and Boston raising significantly higher levels of investment than other global hubs. However, over the last two years investment has started to become more globally distributed, with investment less concentrated around the US and China.

Europe is now the fastest-growing region globally for healthtech according to the findings, with European healthtech startups raising $8.1bn in 2021, up from $1.7bn in 2016 and growing at a rate of 4.9 times (compared to North America at 3.5x and Asia 3.7x).

In Europe, London is the leading hub for healthtech investment over the last five years, with investment growing 11.1x, faster than in the Bay Area, New York and Boston.

The UK and US are also the top two countries globally for the number of healthtech companies which have received funding since 2016, with 1,090 and 6,551 startups respectively.

In the UK, the Golden Triangle is home to 508 healthtech startups who have been backed by VC investors between 2016 and 2021YTD, the biggest cluster outside of the Bay Area (1,161) and Boston (517).

The majority of these companies are based in London, home to 408. The combined value of London’s healthtech startups has also increased by nine times since 2016, taking its total value to $21.3bn, the largest in Europe.

Laura Citron, CEO at London & Partners, London’s business growth and destination agency said: “Coronavirus has accelerated the use of tech and innovation to address human disease and health. Today’s findings demonstrate that the UK and US are leading the way for innovation in this sector and tech hubs like London, the Bay Area and New York are key partners for collaboration.

"The UK’s Golden Triangle is home to world-class universities for life sciences and medicine, a deep research and development landscape and dedicated funding and government support. These factors make London, Oxford and Cambridge a world-leading innovation hub for life sciences and healthtech.”

Neelam Patel, CEO of MedCity, the life sciences cluster organisation for London said: “Like Silicon Valley, London is a hub for AI and data programming expertise. When you combine this with the city’s academic excellence in life sciences and the UK’s actively evolving regulatory environment and unrivalled dataset, it helps to explain why London has become a world leader in healthtech.

"There are synergies between the UK and US markets in this respect, so we are seeing UK companies establishing a presence in the US, and US companies moving to the UK to grow in the healthtech space.”

Healthtech refers to any company using technology to improve the research, delivery, payment and/or consumption of care, and a number of subsectors have seen rapid growth in both London and the Bay Area.

Digital care (including telemedicine) is amongst the sectors in both regions to attract the most interest from investors, accounting for 40% of investment in London and 21% in the Bay Area. The pandemic has accelerated the adoption and innovation of digital healthcare as countries went into lockdowns and populations needed alternative ways to access health services.

The fastest growing subsector in London is remote monitoring and wearables, raising $345m so far this year, up from $17m in 2016, an increase by 20 times. Some of the largest rounds this year involving monitoring and wearables companies include an $130m Series C for Huma and a £58m Series C for femtech company Elvie. Other fast-growing healthtech subsectors in London include drug development with AI, home tests startups and digital health insurance. 

While domestic and European investors still contribute the majority of investment into London’s healthtech companies, interest from North American investors has been increasing year-on-year.

Funding rounds including at least one North American investor have made up $141m of VC healthtech investment in London so far this year, up from $32m in 2020 and accounting for 14%.

There is also an increasing number of healthtech companies expanding in both directions across the pond, gaining access to different market opportunities in each region.

These include London-based healthtech companies like virtual GP platform Babylon, point of care diagnostics testing company LumiraDx and Lumeon, a digital health company providing care pathway management solutions. US companies with a London presence include medical technology company revolutionising precision heart care, Heartflow and Big Health, which uses data to create personalised behavioural medicine programmes.

Matthieu Vallin, health investor at Octopus Ventures, said: “It’s an incredibly exciting time to be a health investor in London, with remarkable innovation wherever you look. This is partly due to the volume of top talent across healthtech, deeptech and biotech all converging to create category-defining companies.

"We’re also lucky to have lots of brilliant incubators, early-stage investors, and growth funds, which help startups build their product, grow at pace, and then keep scaling into bigger markets such as the US, which is something we focus on with our own portfolio. More than ever before, founders have the ambition to build global health companies from Europe, and they now have talent and capital to make it happen.”

Dr. Mridula Pore, Co-Founder and Co-CEO of London-based healthtech startup Peppy said: “In the UK and in the US, the pandemic has exacerbated key trends that support the traction of health tech startups like Peppy.

"Firstly, we’ve proven that it’s possible to work and access healthcare remotely. Secondly, employees have started to value their health and wellbeing more highly, and employers have recognised that investment in wellbeing is paid back in improved productivity and retention.

"Finally, we’ve seen gaps in the healthcare market widen, particularly around family, reproductive and gender-specific health.”