Healthtech Investments Surpass Pre-Pandemic Levels, Stabilizing Between $3.5B and $4.5B Per Quarter in 2024

SAN FRANCISCO, Oct. 16, 2024 /PRNewswire/ -- The healthtech sector is experiencing a recalibration in valuations, as the industry is showing signs of early recovery with investments stabilizing and artificial intelligence (AI) driving new growth, according to the 2024 Future of Healthtech Report from Silicon Valley Bank (SVB), a division of First Citizens Bank. Despite ongoing market volatility and macroeconomic uncertainty, healthtech investment in 2024 is on a positive trajectory, hovering between $4.0 billion and $4.5 billion per quarter and surpassing pre-pandemic levels.

The 5^th edition of SVB's Future of Healthtech Report provides a detailed analysis of the healthtech market, including investment trends, sector evolution, and the growing importance of AI and value-based care in reshaping healthcare. It also explores the challenges companies face in finding their next round of capital or an exit as investors and acquirers have become more discerning.  Despite these challenges, the report indicates that healthtech remains a hotbed for innovation, with investments in Provider Operations and Alternative Care leading the sector.

"We are witnessing a transition from the inflated valuations of 2021 and 1H-2022 to more sustainable investment practices," stated Julie Betts Ebert, Managing Director of Life Sciences and Healthcare Banking at Silicon Valley Bank. "AI is playing a crucial role in streamlining administrative workflows, and companies that can demonstrate a clear return on investment are driving the sector forward."

Additional findings from the Future of Healthtech 2024 report include:

Healthtech Key Data Points

• Dollars raised in the first eight months of 2024 (January through August) have already exceeded the totals for all of 2019.

• In 2024, 42% of healthtech investment rounds were seed rounds, up from 21% in 2019, with a median deal size of $3.8M.

• Of all US healthtech deals $5M and above, 35% were undisclosed and at least 12% were down rounds, the highest proportion in recent years.

• Thus far in 2024, we have yet to see a deal over $500M, where each of the prior five years had at least one deal of $500M or more.

AI Investment by the Numbers

• Overall funding for AI-focused healthtech attracted $4.8 billion, with AI-focused administrative healthtech generating 2.4 billion in funding.

• 50% of 2024 healthtech AI investment has been administrative, compared to 37% clinical, and 13% R&D.

• There have already been more investments in healthtech companies leveraging AI in 2024 than in any prior year. AI valuations in healthtech are up 50% from 2019 values.

• Tempus, with its $411M IPO in June 2024, showed that taking a significant valuation haircut could be a worthwhile price of admission into the public markets. Since going public, Tempus has seen total returns of 48% as of August.