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Venture Capital

What is healthtech in venture capital?

What is healthtech in venture capital? Find out more about emerging spaces within the industry and some of the top healthtech companies worldwide backed by VCs.

Healthtech has been a particularly hot topic in VC over the past few years. The onset of the COVID-19 pandemic had consumers clamoring for more convenience and flexibility in their healthcare, ushering in new innovations in virtual care delivery. Healthcare reached a peak of 18.4% of global VC deal count in 2020, largely driven by an unprecedented flow of capital into biopharma.

In the years since, consumer and investor enthusiasm for healthcare has deflated as the overall VC market has slowed—with a few exceptions.

While healthtech verticals stabilize, new innovations and startups are emerging with the potential to transform the healthcare industry again.

What is healthtech?

In the most general sense, healthtech is any application of technology in healthcare products and services. It is the fastest growing category within healthcare and includes five of the six healthcare verticals we cover at PitchBook: biopharma, digital health, healthcare IT, medtech, and pharmatech. While our analysts also cover healthcare services, it is not included in the healthtech category.

Our healthtech verticals

Healthcare IT
Enterprise software used by healthcare providers, patients, and insurance companies

Digital health
Virtual care delivery in the form of telemedicine, digital therapeutics, and chronic condition management

Medtech
Devices, diagnostics, equipment, and medical imaging software

Biopharma
Therapeutic drug development

Pharmatech
Technology enabling the drug development lifecycle from scientific research to clinical trials, to commercialization

Healthcare and the COVID-19 pandemic

During 2020 and 2021, the COVID-19 pandemic put healthcare front of mind for consumers stuck at home, making healthtech solutions and innovations more in demand than ever. In 2020 and 2021, healthtech startups boomed and unicorns being minted like pennies. To PitchBook’s Lead Healthcare Analyst Rebecca Springer, it seemed as if the healthcare VC ecosystem basically doubled overnight. “The market is contracting back down to its pre-pandemic size. Companies that raised rounds with very high valuations are now in golden handcuffs. In some cases, they’re not able to raise at all, or having to face a down round,” Springer says.

“The healthcare ecosystem really felt this boom bust cycle, probably more than other industries, because it was such a healthcare specific economic cycle we've just been through. The entire ecosystem hasn't collapsed—there's a lot of innovation happening in healthcare.”

In fact, recent research from PitchBook analysts shows the industry is brimming with opportunity.

Current opportunities in healthtech

In defiance of VC’s downward trends, two spaces continue to see strong venture capital activity: AI and weight loss drugs.

AI

A hot trend across many ecosystems, AI has the potential to solve for slow manual processes, redundancies, and inefficiencies throughout the healthcare industry. These two significant use cases have been gaining traction in the VC landscape.

AI-powered drug discovery

One of the hottest AI applications in life sciences, AI-powered drug discovery experiments with artificial intelligence to research and discover new pharmaceuticals and drug therapies. AI systems sift through millions of different chemical compounds and isolate the most promising candidates in a fraction of time it would traditionally take human researchers.

VC investors are pouring money into the promising space, but even powered by AI, drug development is an expensive process. Springer explains. “It’s expensive to do. The promise of AI is to accelerate the pace, but it doesn’t accelerate your clinical trial process, which can be a decade long and cost millions of dollars. It’s not a silver bullet, but it is significant.”

Clinical documentation

In care delivery, AI-powered clinical documentation is also increasing in popularity. Springer has seen plenty of capital flowing into the space over the last nine months.

“Imagine you are in a physician's office talking to a doctor. There's a device recording your organic conversation and using a natural language processor to transcribe it. An AI processes that organic conversation into structured clinical notes and writes it directly into your electronic medical records, which the physician can review later and sign off on.”

These innovations sound promising, Springer agrees, but she notes there’s still a long way to go. “It is limited. It’s important, but it’s not a systemic transformation. I think over time we will move toward using AI to automate aspects of care delivery, clinical decision making, and more sophisticated aspects of patient engagement and care. It’s exciting, but it’s going to take time.”

In time, Springer sees a broader application of AI solutions slowly transforming how patients and providers interact.

“We're really starting with the clinical documentation use case, gradually knitting together AI applications across the entire ecosystem, rather than one transformational event.”

Weight loss drugs

In just a few years, the weight loss drug class has surged in both popularity and efficacy, and is one of the most significant trends shaping the healthcare industry today.

“GLP-1 obesity drugs have been around for a long time to treat diabetes, and just came into the public consciousness for weight loss. Now, we have clinical data to show that they can significantly reduce the risk of cardiovascular disease, as well as treating diabetes and maybe even chronic kidney disease. That’s a huge and significant addressable population,” Springer notes.

Obesity drugs are a transformative force in healthtech, and opportunities to build off the category’s success continue to boom.

Top healthtech companies

PitchBook tracks over 21,000 private and public healthtech companies, including information on financing, investors, and contact information for key executives. Here’s a look at the top five global VC-backed companies, listed by capital raised to date as of April 4, 2024:

Devoted

💰 Total raised to date: $2.2B

📅 Last deal date: December 2023

💵 Last deal total: $175M

🤝 Last deal type: Series E

📈 Post valuation: $12.9B

Provider of healthcare planning services intended to improve the quality of patient care by offering personalized medical plans. The company’s healthcare plans feature personal guides, contracts, and Medicare Advantage plans that help to work closely with physicians to avoid unnecessary medical procedures, enabling beneficiaries to access healthcare through a network of doctors and tech-enabled healthcare platforms.

Tempus

💰 Total raised to date: $1.4B

📅 Last deal date: March 2024

🤝 Last deal type: IPO

Operator of a healthcare data analytics platform intended to make medicine by applying artificial intelligence in healthcare. The company’s library of molecular and clinical data and an operating system provide genomic sequencing services as well as analyze molecular and therapeutic data to empower users to make real-time and data-driven decisions, enabling physicians to deliver personalized care for patients through an interactive analytical and machine learning platform.

Freenome

💰 Total raised to date: $1.4B

📅 Last deal date: February 2024

💵 Last deal total: $245M

🤝 Last deal type: Later stage VC

📈 Post valuation: $2.2B

Platform designed to detect cancer at an early stage through a routine blood draw. The company’s platform uses a proprietary method that aims to reinvent disease management through early detection and intervention of disease screenings, enabling doctors to treat cancer and other diseases at manageable stages.

CMR Surgical

💰 Total raised to date: $1.2B

📅 Last deal date: July 2023

💵 Last deal total: $165M

🤝 Last deal type: Later stage VC

Developer of surgical robotic systems designed to bring the benefits of minimally invasive surgery to all patients. The company’s systems are making minimal access surgery universally accessible and affordable by significantly expanding the range of procedures that can be performed by robots, enabling surgeons to access 3D high-definition imagery along with feedback during the operation.

Ro

💰 Total raised to date: $1B

🤝 Last deal type: Series D

Operator of a direct-to-consumer telehealth platform intended to handle everything from diagnosis to the convenient delivery of medication. The company’s platform allows people to get in touch with physicians and has end-to-end services, some for erectile dysfunction and others to help people quit smoking, enabling users to get access to free medication delivery and personalized treatment.

The future of healthtech

As we continue to move past the COVID-19 pandemic and venture capital shifts toward a new wave of innovation, what do PitchBook analysts expect for the remainder of 2024? Springer shares her outlook.

“It continues to be very hard to build venture backed companies in healthcare. We’ve predicted that healthcare as a proportion of global venture activity will decrease in 2024 relative to 2023. The whole ecosystem is still feeling a lot of challenges. I think it will be a hard market to sell into as a startup and for investors to get behind for at least the next year or so.”

However, Springer’s long-term view is optimistic. “Both the demand and the need to solve systemic problems, improve patient outcomes, and improve patient and provider satisfaction remains in healthcare—so I’m bullish on the space long term.”

Related reports

2024 Healthcare Outlook
Q4 2023 Digital Health Report
Q4 2023 Biopharma Report
Q4 2023 Medtech Report
Healthcare Future Report: Weight Loss Drugs

Healthtech emerging spaces glossary

Kelly O'onnell headshot
Anti-aging
Assistive tech
CIRSPR diagnostics
Fertility tech
Gene therapies
Medical exoskeleton and prosthetics
Medical robots
Mental health tech
Nanomedicine
Neurotechnology
Psychedelics
Sleep tech
VR health

Track more than 156+ emerging spaces on the PitchBook Platform, including these 15 nascent but growing areas in healthcare. Data is as of April 25, 2024.

AI-powered drug discovery

Total capital invested: $17.4B

Companies experiment with artificial intelligence for the purposes of researching and discovering new pharmaceuticals and drug therapies. AI systems can sift through millions of different chemical compounds and isloate the most promising candidates at a fraction of the time it would traditionally take human researchers. However, there has yet to be a drug put to market that has been created using AI, but proponents hope that upcoming advances in technology might decrease drug development times and enable pharmaceutical companies to develop drugs in previously unprofitable areas.

A notable company is Unnatural Products, developer of an AI-enhanced drug discovery platform engineering synthetic macrocycles that mimic nature’s macrocycles, which has raised $38.4 million.

Anti-aging

Total capital invested: $3.8B

Companies research and develop restorative treatments to combat the effects of aging and increase lifespan.

Research areas include:

  • Genomic instability: DNA mutations occurring during cell division, characteristic of most cancer cells
  • Telomere attrition: Progressive shortening of DNA sequences limiting the number of times a cell can divide, thought to contribute to aging and cancer
  • Epigenetic alteration: A change in the structure of DNA that does not change the coding sequence, thought to cause early aging
  • Loss of proteostasis: Disruption of protein homeostasis, common feature of aging and disease
  • Deregulated nutrient sensing: Dysfunctions of nutrient monitoring networks caused by cellular aging, primarily manifests as insulin resistance
  • Mitochondrial dysfunction: Loss of efficiency in mitochondria, a contributing factor for many chronic diseases
  • Cellular senescence: Cell cycle arrest triggered by stress, which can cause both beneficial and adverse effects
  • Stem cell exhaustion: Declining stem cell numbers with a lower capacity for division and renewal
  • Altered intercellular communication: A hallmark of aging where cells increase self-preservation signals and cause damage to aging tissues

A notable company is InSilico Medicine, a researcher and developer of an artificial intelligence (AI) platform and new drugs designed to deliver breakthrough solutions for cancer, fibrosis, immunity, central nervous system diseases and age-related diseases. The company has raised $427.5 million.

Assistive tech

Total capital invested: $2.8B

This category encompasses any item, piece of equipment, software, or product that is used to increase, maintain, or improve the functional capabilities of persons with disabilities. Though assistive tech has been around for some time, a new wave of companies is using emerging technologies such as VR/AI and robotics to jump start innovation and offer more compelling solutions for differently-abled individuals.

A notable company is Altavo, operator of an artificial voice company intended to give voiceless people an individual, natural-sounding voice, which has raised $5.4 million.

CRISPR diagnostics

Total capital invested: $885M

This category includes the use of the gene editing tool CRISPR for diagnostic purposes. The underlying science relies on CRISPR’s ability to isolate snippets of genetic material that it is programmed to find. In theory, this technology could produce diagnostic results more quickly and cost-effectively, requiring fewer trained professionals to administer the tests.

A notable company is Colossal Laboratories & Biosciences, operator of a bioscience and genetic engineering company creating technologies for extinct species restoration, critically endangered species protection, and the repopulation of critical ecosystems that support the continuation of life on Earth. It has raised $230 million.

Fertility tech

Total capital invested: $1.9B

These are technology-oriented medical solutions for couples struggling to conceive. These technologies include sperm and egg freezing services, hormone testing systems, and monitoring platforms.

A notable company is Kindbody, a provider of holistic health and fertility services improving women’s access to healthcare, including fertility services, adoption and surrogacy, maternity care, ongoing gynecology, holistic wellness, and more. It has raised $344.4 million.

Gene therapies

Total capital invested: $60.8B

This is the insertion of sections of DNA into a patient’s cells to correct damaged or abnormal genes. Gene therapy can be done using a variety of mechanisms, including replacing a disease-causing gene that is malfunctioning or introducing a modified gene into the body to treat a specific disease. These therapies could enable researchers to find cures for cancer, HIV, and heart disease.

A notable company is AaviGen, specializing in the development of curative gene therapies for genetic and acquired cardiovascular and cardiopulmonary diseases, enabling doctors to administer therapeutic genes with unprecedented safety and precision to the diseased heart via a simple one-time intravenous injection. It has raised $24.8 million.

Medical exoskeletons and prosthetics

Total capital invested: $802.6M

This is the development of mechanically powered prostheses and rehabilitative exoskeletons. These devices offer a greater range of motion and activity to physically disabled individuals than their predecessors.

A notable company is Fourier Intelligence, an advanced robotics developer pioneering advancements in upper-limb rehabilitation through lower-limb exoskeletons, empowering individuals facing physical limitations to reclaim mobility and independence. It has raised $94.5 million.

Medical robotics

Total capital invested: $12.9B

Robots used in healthcare settings are developed to provide more precise or consistent services than human doctors. Applications include surgeries, rehabilitation, transportation, and general patient care.

A notable company is CMR Surgical, a surgical robotics developer bringing the benefits of minimal access surgery to all patients. It has raised $1.2 billion.

Mental health tech

Total capital invested: $3.8B

Companies are developing software and hardware solutions to empower individuals to take better care of their mental health and enable practitioners to better monitor their patients’ mental health.

A notable company is InStride Health, an outpatient care platform providing evidence-based care for pediatric anxiety and OCD. It has raised $56 million.

Nanomedicine

Total capital invested: $1.7B

The medical application of nanotechnology ranges from medical applications of nanomaterials and biological devices to nanoelectric biosensors and potentially biological machines.

A notable company is ViaNautis, a nanoparticle technology developer offering self-assembly polymers for intercellular delivery. It have raised $28.6 million.

Neurotechnology

Total capital invested: $9.6B

Technology enables us to better understand consciousness, thought, and higher order activities in the brain. Companies in this space develop brain machine interferences, implantable devices, neuroprosthetics, neurostimulation, and neuromonitoring devices.

A notable company is Precision Neuroscience, developer of a brain-computer interface technology designed to provide effective treatments for patients suffering from neurological illnesses. The tech is designed to be minimally invasive, safely removable, and capable of processing large amounts of data, enabling medical professionals to connect the human brain with artificial intelligence. It has raised $53 million.

Psychedelics

Total capital invested: $2.6B

Companies harness mind-altering substances for the purpose of treating mental illnesses such as addiction, depression, and PTSD. Substances such as psilocybin and LSD have long been outlawed by the US government, but changing cultural attitudes and recent promising scientific studies have reopened the door for their potential authorization. Companies in this space are primarily developing psychoactive treatments for mental health conditions but may also be operating clinics to provide said therapies or developing software to help clinics manage patient treatment.

A notable company is CaaMTech. It is a developer of drug discovery and optimization technology designed to focus on engineering psychedelic drugs to treat mental health conditions including depression, PTSD, and more. It has raised $23.3 million.

Sleep tech

Total capital invested: $3B

Sleep tech providers seek to improve behavioral, environmental, and genetic causes of insomnia along with common sleep disorders such as sleep apnea. Some examples of sleep tech include tracking sensors, smart mattresses, and sleep monitoring headbands.

A notable company is Ōura. This developer of a wearable wellness ring designed to track and improve the quality of sleep and performance has raised $701.2 million.

Spatial biology

Total capital invested: $7.6B

This innovative field of molecular biology investigates cells and their molecules within the 2D or 3D context of tissues. It uses advanced technologies to offer novel insights into cellular function and can lead to new strategies for preventing and treating various diseases.

A notable company is Nucleai. This operator of a spatial biology software platform using artificial intelligence to improve biopsy interpretation and detect signs of cancer has raised $60.5 million.

VR health

Total capital invested: $1.6B

Companies use virtual reality (VR) technology to provide innovative therapies and treatments for a variety of healthcare issues. The uses of VR in healthcare include education, therapy, rehabilitation, and even mindfulness.

A notable company is EvoEndo. This developer of a medical system designed to offer unsedated endoscopy procedures for pediatric and adult patients. It uses a virtual reality-based distraction method to eliminate the need for anesthesia. It has raised $26.5 millon.

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