Dive Transient:
- Enterprise capital funding throughout the healthcare sector slowed within the first half of the 12 months, however well being tech funding was a vivid spot — buoyed by rising curiosity in synthetic intelligence, based on a report revealed Tuesday by Silicon Valley Financial institution.
- Total healthcare funding and deal rely declined, however well being tech startups within the U.S. and Europe raised $8.2 billion throughout 358 offers, the perfect first half recorded within the section since early 2022.
- The efficiency was pushed by a lift in funding for corporations utilizing AI, particularly for administrative and back-office use instances. “From a VC perspective, these enterprise fashions may be very sustainable, and there’s a clear path to profitability,” mentioned Jackie Spencer, head of relationship administration for all times science and healthcare banking at SVB.
Dive Perception:
Total, the primary half of 2025 was a problem for healthcare fundraising. Funds within the sector are on monitor for the bottom capital closed in additional than 10 years, based on SVB.
Healthcare corporations — which embody biopharma, well being tech, medical gadget, and diagnostics and instruments startups — are lagging this 12 months. Companies within the U.S. and Europe scooped up $26.7 billion throughout 1,318 offers within the first half this 12 months, in contrast with round $29 billion in additional than 1,400 offers final 12 months.
One problem for funding and fundraising this 12 months is macroeconomic uncertainty — together with traits which have carried over from final 12 months, Spencer mentioned.
“In 2024, we talked a lot in regards to the rate of interest setting and the uncertainty round inflation and worldwide conflicts as being a motive for lots of the pullback in fundraising and funding,” she mentioned. “These issues nonetheless exist, proper? Rates of interest are nonetheless excessive.”
Plus, there are new financial questions for buyers and startups. Tariffs may very well be a major monetary hit for corporations that supply parts outdoors the U.S., whereas cuts to Nationwide Institutes of Well being funds may hinder innovation down the highway, based on SVB.
The well being tech section is dealing with its personal uncertainties too, from the affect of cuts to Medicaid within the just lately handed tax and coverage regulation to medical price will increase in Medicare Benefit — a priority as payers within the privatized Medicare program drive tech adoption to draw enrollees and preserve bills down, based on the report.
Nevertheless, well being tech has carried out nicely thus far this 12 months: The section made up about one-third of total healthcare funding, its largest proportion since 2021, based on SVB. Simply over 60% of well being tech funding is linked to corporations that use some type of AI, Spencer mentioned.
Again-office use instances for AI have develop into a big focus for funding. Instruments geared toward lessening administrative work fairly than medical duties made up 44% of AI funding within the first half of the 12 months, based on SVB.
“There’s an apparent use case for it, and there’s a transparent price financial savings that may be proven to in the end the consumers of the know-how,” she mentioned. “To not point out, the again workplace in healthcare could be very, very convoluted, very archaic. It’s ripe for disruption.”
Well being tech has additionally seen two preliminary public choices this 12 months — digital musculoskeletal agency Hinge Well being and power care administration firm Omada Well being — after an extended dry spell in digital well being IPOs.
Nonetheless, the IPO market will doubtless proceed to be “extremely selective,” Spencer mentioned. Well being tech corporations that went public over the previous decade that carried out poorly are nonetheless weighing down the sector’s efficiency, and so they may very well be holding again newer corporations, based on the report.
For different exits, well being tech has already notched a number of high-dollar mergers and acquisitions this 12 months, with nearly as a lot spent on non-public M&A thus far in 2025 because the previous three years mixed.
Non-traditional consumers, like venture-backed corporations with accessible money, are one avenue for M&A, Spencer mentioned. For instance, Waystar, a healthcare funds agency that went public in 2024, just lately signed a definitive settlement to purchase AI-backed income cycle administration firm Iodine Software program.
Plus, non-public fairness corporations are nonetheless actively shopping for and rolling up level options, Spencer added.
“I anticipate M&A to be a bit rosier of a narrative,” she mentioned, “simply because there are a number of consumers and there’s nonetheless a whole lot of capital out out there.”
