Israeli venture capital firm Pitango announced on Wednesday that it has raised $175 million in fresh funds to invest in healthtech-focused startups.
The $175 million marks the firm’s second healthcare dedicated fund after pulling in $150 million for its inaugural round in 2019. Over the next three years, the fund plans to invest in about 15 seed to commercial stage startups founded by Israeli entrepreneurs who are harnessing data science, AI, medical devices and novel biology to develop healthcare-related technologies.
With the second fund, Pitango seeks to back startups focused on digital health, medical devices, personalized medicine, biotech and diagnostics, life sciences, and software and data infrastructure. The size of initial investment will range between $2 million and $7 million depending on the the stage of the startup, and can amount to between $8 million and $15 million at later stages.
Pitango sees Israeli entrepreneurs building startups that are spearheading the digital transition in the $9 trillion global healthcare market. The recipients of the second fund’s initial investments include QuantHealth.ai, an Israeli startup that virtually helps pharma and biotech companies execute thousands of clinical drug trials within minutes; and Nevia Bio, a femtech startup, which is developing an AI-based biomarker platform for early detection of women’s health diseases.
“Despite the global and local macroeconomic challenges, the healthcare sector continues to show resilience and growth,” said Ittai Harel, managing partner at Pitango HealthTech. “Recent events such as the pandemic, decentralization of healthcare, and value-based care, have resulted in unprecedented openness towards the adoption of new technologies.”
Harel noted that Pitango believes that the “most promising healthcare innovations occur at the convergence of life science and medical technologies with data science and AI, coupled with innovative services.”
“This revolution is at its early onset, and is yet to accelerate,” he added.
In 2022, as the funds pouring into Israeli tech firms slowed down rapidly amid rising interest rates and a global stock market fall, investment in local healthcare-focused startups was found to be more resilient, according to a report by IVC Research Center, which tracks the industry, and aMoon, a healthtech and life science venture capital firm.
Israeli healthtech or life sciences startups drew $2.8 billion in investments in 2022, a 13% decline over the $3.2 billion raised in 2021 and the $2.7 billion recorded in 2020, the data showed. Digital health and biotech startups collectively nabbed over $2 billion, or 78% of the total capital raised.
Pitango’s health tech fund portfolio includes AI medical analytics startup Clew, AI drug discovery startup Protai, medical device startup Vertos, and medical equipment startup Visby Medical. The VC’s health tech fund is managed by Harel and Hila Karah, both managing partners at Pitango, Dr. Jonathan Glazer, Joel Schoppig, and Dr. Seth Rudnick.
Pitango, founded in 1993 by Chemi Peres, the son of the late president Shimon Peres, and Rami Kalish, has more than $3 billion in assets under management. Through the health tech fund alongside Pitango’s early-stage tech and its growth tech funds, the VC firm has invested in over 250 companies and seen more than 85 of them become publicly traded companies or acquired by strategic players.
“Over the last three decades we’ve had the opportunity to invest in over 50 healthcare companies and see 15 of them exit successfully and many others on a strong growth trajectory,” said Kalish. “That gives us the confidence to double down with a second dedicated healthcare fund.”
The health tech industry is generally divided into four major subsectors – digital health, medical devices, biotechnology and pharmaceutical therapeutics. The healthtech subsector accounts for 20% of Israel’s tech ecosystem, employing more than 63,000 people at 1,810 active life sciences firms in 2022 — slightly up from the 1,779 healthtech startups recorded in 2021. About half of the companies in the life sciences ecosystem were digital health and biotechnology startups.