Healthtech Sector Investment Shows Resilience and Early Recovery in 2024; Silicon Valley Bank Releases Fifth Edition of Future of Healthtech Report

Rhea-AI Summary

Silicon Valley Bank's 2024 Future of Healthtech Report reveals a resilient healthtech sector showing signs of early recovery. Investments have stabilized between $4.0 billion and $4.5 billion per quarter, surpassing pre-pandemic levels. Key findings include:

- 42% of healthtech investment rounds were seed rounds in 2024, up from 21% in 2019
- 35% of US healthtech deals $5M and above were undisclosed, with at least 12% being down rounds
- AI-focused healthtech attracted $4.8 billion in funding, with 50% in administrative healthtech
- AI valuations in healthtech are up 50% from 2019 values

The report highlights the growing importance of AI in reshaping healthcare, particularly in streamlining administrative workflows. Companies demonstrating clear ROI are driving the sector forward, despite challenges in finding capital or exits.

Positive

• Healthtech investments stabilized between $4.0 billion and $4.5 billion per quarter in 2024, surpassing pre-pandemic levels
• 42% of healthtech investment rounds were seed rounds in 2024, up from 21% in 2019
• AI-focused healthtech attracted $4.8 billion in funding
• AI valuations in healthtech are up 50% from 2019 values
• Tempus IPO in June 2024 has seen total returns of 48% as of August

Negative

• 35% of US healthtech deals $5M and above were undisclosed, with at least 12% being down rounds
• No deals over $500M in 2024, compared to at least one $500M+ deal in each of the prior five years
• Tempus took a significant valuation haircut for its IPO

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.

Ebert, along with Jackie Spencer, Head of US Relationship Management for Life Science and Healthcare and other SVB leaders, will be at the upcoming 2024 HLTH conference. 

Learn More
To read the complete Future of Healthtech 2025 report, click here:
The Future of Healthtech Report 2024 | Silicon Valley Bank (svb.com)

A leader in providing market insights about the innovation economy, SVB has produced 10 new market reports to date in 2024. For the complete library of SVB's signature reports, please visit Market Research Industry Trends & Insights | Silicon Valley Bank (svb.com)

About Silicon Valley Bank
Silicon Valley Bank (SVB), a division of First Citizens Bank, is the bank of some of the world's most innovative companies and investors. SVB provides commercial and private banking to individuals and companies in the technology, life science and healthcare, private equity, venture capital and premium wine industries. SVB operates in centers of innovation throughout the United States, serving the unique needs of its dynamic clients with deep sector expertise, insights and connections. SVB's parent company, First Citizens BancShares, Inc. (NASDAQ: FCNCA), is a top 20 U.S. financial institution with more than $200 billion in assets. First Citizens Bank, Member FDIC. Learn more at svb.com.

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SOURCE Silicon Valley Bank

FAQ

What is the current investment trend in the healthtech sector according to SVB's 2024 report?

According to SVB's 2024 Future of Healthtech Report, investments in the healthtech sector have stabilized between $4.0 billion and $4.5 billion per quarter, surpassing pre-pandemic levels.

How has AI investment in healthtech changed in 2024?

AI-focused healthtech attracted $4.8 billion in funding in 2024, with 50% of investments in administrative healthtech. AI valuations in healthtech are up 50% from 2019 values.

What percentage of healthtech investment rounds were seed rounds in 2024?

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

How did Tempus' IPO perform in 2024?

Tempus had a $411 million IPO in June 2024, taking a significant valuation haircut. However, since going public, Tempus has seen total returns of 48% as of August.