Last year, healthcare funding in the New York metropolitan area showed a steep decline to $3.9 billion among 141 companies from $9 billion among 182 companies in 2021, a new report shows. Biotech companies saw the most interest, whereas investment in women’s health appears to have fallen off a cliff.

The annual report — New York Healthcare Innovation Report — was published Wednesday by Digital Health New York (DHNY), a network of CEOs, founders, investors, payers and providers in the New York metropolitan area. Now in its sixth year, the report analyzes trends in healthcare innovation and investment in New York startups. 

Biotech startups in New York raised $858 million in 2022, compared to nearly $1.2 billion in 2021. The biotech company that won the most investment last year was Kallyope, which raked in $236 million.

Women’s health, meanwhile, only pulled in $78 million in 2022, compared to $540 million in 2021. Biotech startups represented 22% of total funding in 2022, a stark difference from women’s health only representing 2%. 

After biotech, the top sectors to receive funding in 2022 were care delivery and coordination ($702 million), analytics and insights ($507 million) and mental health ($429 million). Most categories saw a decrease in funding from the year prior, except for provider enablement. However, a couple of categories in this year’s report were not mentioned in last year’s report, including care delivery and coordination and medtech.

Bunny Ellerin, co-founder and CEO of DHNY, is unsure why women’s health received so little investment in 2022. She said it could be that a lot of women’s health companies received major funding in 2021, while more small startups surfaced in 2022 with lower funding amounts.

“I don’t have a good answer for it, to be honest,” Ellerin said in an interview. “But I don’t think that means that women’s health is going to exit the scene at all. In the general public, people are talking about menopause now and at-home STD testing for women. The conversation is there, it’s happening. I think we’ll start to see even newer types of companies forming … What may have happened is in 2021, there were some really big amounts funded toward women’s health companies. In 2022, I definitely saw a bunch of small startups, which by definition have much lower numbers of funding.”

One women’s health company did gain major funding in 2022, however. Maven Clinic, a virtual clinic for women’s and family health, received $90 million in late stage funding from General Catalyst, CVS Health Ventures and others. It had the tenth highest funding amount of the New York metropolitan startups in 2022. 

Across all companies, and besides Kallyope, which took the top spot for raising capital overall, the other two major funding recipients were Cleerly and Ro. Cleerly, a digital health company tackling heart disease, attracted $223 million while Ro a direct-to-consumer telehealth company, raised $150 million.

Two of the above companies raised money earlier in the year but as the year progressed, New York startups faced an increasingly tougher fundraising landscape.

The first quarter of 2022 saw $1.3 billion investment in 50 deals. By the fourth quarter, funding dwindled to $620 million in 23 deals.

The report also showed that investors were more open to putting money in early stage startups in 2022 than in 2021. Pre-seed, seed and series A funding represented 39% of all funding in 2022, compared to 15% in 2021.

“2021 was absolutely a banner year. Everywhere, not just in New York, it was funding, funding, funding,” Ellerin said. “2022 was very much a reset year. But through that, we still see the drive of entrepreneurs and founders to want to start companies. So actually, early stage funding really jumped up during 2022.”

Amid a looming recession and news of widespread layoffs across certain industries, including healthcare, a survey included in the report betrayed a sense of foreboding.

The survey of healthcare CEOs, entrepreneurs, investors, payers and providers showed that about 47% said they are “concerned” or “very concerned” about the economic outlook and its potential effect on business in 2023. Additionally, 24% said funding will be their biggest business challenge in the year ahead. More than half believe the market won’t rebound for late-stage fundraising until 2024.

When asked which New York startup they expect to have an exit in 2023, 22% of stakeholders said Capsule, 15% said Cityblock Health, 15% said Komodo Health, 15% said Ro, 9% said Cedar and 9% said Maven Clinic.

The stakeholders also shared the areas they feel are the most underfunded, with 32% listing health equity. Women’s health was the lowest ranked in this area, representing only 9% of respondents.

Photo: StockFinland, Getty Images