Medical Alley Startups Raised $1.4B in 2020
2020 wasn’t a great year for many companies, but it was a good time to be a medical startup.
On Tuesday, med-tech trade group Medical Alley Association reported that its startups raised a record $1.4 billion in venture capital last year. Minneapolis-based health insurance startup Bright Health landed the biggest raise in 2020, securing an eye-popping $500 million in September.
The second-largest raise last year went to Preventice Solutions, an Eagan-based medical device startup that raised $137 million in the third quarter. Digital health firm Bind Benefits was close behind with a $105 million raise in October.
Altogether, Medical Alley’s digital health sector — which encompasses both Bright Health and Bind Benefits — netted more than $840 million in 2020. The medical device sector raised $507 million, while biotech and pharmaceutical startups landed nearly $48 million.
In Medical Alley’s 2020 investment report, officials noted that raises by Bright Health and Bind Benefits accounted for half of all funds raised by health companies across the United States.
In 2019, Medical Alley startups surpassed $1 billion in fundraising for the first time. The year prior, the group’s members raised $736 million.
But in 2020, Medical Alley members surpassed the $1 billion mark in the third quarter.
Minnesota’s angel tax credit — which returns this year after a hiatus in 2020 — may pave the way for even more VC money in 2021. The program lets investors claim a 25 percent tax credit on investments in tech-focused startups.
“We believe the return of the Angel Credit will enable more companies, including those owned by women, minorities, and veterans, to access investment and increase the levels of investment for earlier stage companies across all sectors,” said Bobby Patrick, Medical Alley’s VP of strategic growth and policy, in a statement. “The end result is job creation, a more robust early-stage ecosystem and a stronger overall economy.”
The Golden Valley-based association will continue lobbying for a permanent angel tax credit, he noted.