Midwest raises $2.5 Billion in 2017

CLEVELAND, Ohio—Midwest healthcare companies attracted $2.5 billion in new equity investments in 2017, according to the BioEnterprise Midwest Healthcare Growth Capital Report. For the first time in history, the Healthcare Software and Services sector took the lead with $1.2 billion, or 47 percent.

BioEnterprise is a business formation, recruitment, and acceleration effort designed to support the growth of bioscience companies. Located in Cleveland, BioEnterprise provides management counsel and support services to health IT, medical device, and biopharmaceutical companies. Since 2002, BioEnterprise and its partners have created, recruited and accelerated more than 350 health IT, biomedical, and biopharmaceutical companies, and have helped these companies raise more than $2 billion in new funding.

“Midwest healthcare companies continue to perform at recording breaking levels,” said Aram Nerpouni, president and CEO of BioEnterprise. “The investment total is the largest to date: a 38 percent increase over 2016. A few large healthcare IT and software services investments put the Healthcare Software and Services sector well above the Biotech and Device sectors.”

Outcome Health, a Chicago health IT and software services company reported a $500 million deal – the largest fundraise in the Midwest, and the largest single raise in the report’s history. Minneapolis had the second largest raise, $160 million by Bright Health, and Cincinnati-based PatientPoint secured a $140 million raise.

Illinois ($866 million), Minnesota ($561 million) and Ohio ($497 million) led Midwestern states in attracting investment dollars. Chicago ($854 million), Minneapolis ($553 million), Cincinnati ($222 million) and Cleveland ($218 million) were the leaders in the Midwest regions.

By sector, the 2017 growth capital funding was invested as follows: Healthcare IT and Software and Services companies received $1.2 billion (47%); Biotech and Pharmaceutical companies received $710 million (29%); and Medical Device companies received $587 million (24%).

According to BioEnterprise’s website, “The Midwest Healthcare Growth Capital Report compiles data from Pitchbook, SEC Filings, company press releases, news items and regional Midwest organizations. The report details investments in three biomedical sectors: medical device, biotechnology and pharmaceuticals, and healthcare IT/software and services. Sectors are

defined by the FDA’s definitions of Medical Device and Drug Establishments (Biotech and Pharmaceuticals). Sector assignment for combination products is determined by the product’s primary mode of action. Health IT/Software and Services includes software related to EMRs; coding services; communication; payment processing; educational tools; business operation automation tools; mobile apps that are not used in diagnosis or in the cure, mitigation, treatment, or prevention of disease; and distributors and suppliers.

“Investments include seed, venture, individual and group angel funding, private equity, bridge funding, convertible debt, foundation funding with an equity component, strategic and corporate investment, secondary offerings and PIPEs. Funding is broken into three main categories: Seed (includes: Accelerator/ Incubator, Friends and Family, and Seed), Early (includes: Early stage VC, Series A, and Series B) and Late (includes: Later stage VC, PE Growth & Expansion, PIPE, Series C, Series D, etc.). Convertible debt, Angel, and Undisclosed funding rounds are included within one of these three categories based on the company’s life stage.”

The Midwest Healthcare Growth Capital Investment Report is funded in part by The Fund For Our Economic Future, the Cleveland Foundation and the Burton D. Morgan Foundation. The full interactive report can be found here.