AI Powers Healthcare VC Investments to $23B in 2024 — Evening Brief – 01.14.25
Healthcare venture capital investment reached $23 billion in 2024, up $3 billion from the previous year, as artificial intelligence cemented its influence in the field, according to new research from Silicon Valley Bank, a part of First Citizens Bank.
Growth was especially significant in biopharma AI, which garnered over $5 billion in investments, indicating a 300% rise from 2023. Significant investments prevailed in the sector, with transactions beyond $100 million constituting 71% of global biopharma AI funding in 2024.
“In 2025, we could see a steady yet modest increase in both the volume and value of investments across various healthcare sectors,” said Jackie Spencer, head of relationship management for Life Science and Healthcare Banking at Silicon Valley Bank. Spencer, the author of the annual Healthcare Investments and Exits Report, observed that although growth is anticipated, IPO activity may remain muted as markets stabilize and investors adopt a prudent stance.
Nonetheless, the circumstances may shift in 2025. According to Business Insider, digital musculoskeletal business Hinge Health and chronic illness management provider Omada, both of which have secured substantial funding, may finalize an IPO this year.
The research indicated a notable transition towards early-stage financing, with seed rounds accounting for 40% of all transactions. In 2024, 35% of startups obtaining seed funding integrated AI technologies, an increase from 25% in 2023.
In the healthtech secror, established firms with proven success garnered significant investments, while emerging businesses are compelled to rapidly exhibit value. The diagnostics and tools sector exhibited incremental enhancement, with liquid biopsy and precision diagnostics firms gaining momentum by capitalizing on their association with precision therapy and data aggregation capabilities.
The device sector, albeit exhibiting sluggish growth, demonstrates potential in acute care, with hospitals likely catalyzing a resurgence in this area. The report indicates a resurgence of interest in imaging and monitoring technology, indicating a departure from wearables and home care solutions.
Companies that previously had down rounds observed a median valuation increase of 1.5x in future funding rounds, suggesting a possible market rebound. The report indicates that AI-driven protein design and forthcoming clinical trials for AI-designed pharmaceuticals are expected to sustain investment interest in the biopharma AI sector.