TLDR: Healthcare Startups Are Grabbing More Funding This Year
Key Points:
- Healthcare startups are experiencing a resurgence in funding after a two-year slump.
- Investors are showing interest in startups powered by AI and specialty-care players.
After a slow year for venture capital in 2023, the healthcare startup market is bouncing back to life with more deals on the horizon. Investors are receiving pitches from new startups looking to secure funding, with VCs starting to write checks again after withholding funds during the downturn. While investors remain cautious about a funding surge similar to 2021 levels, many startups are readjusting their expectations and are looking to secure funding to avoid running out of cash.
Investors are resetting expectations for growth-stage raises, with many mid- to late-stage companies struggling to land extra capital. Healthcare startups specializing in AI are seeing a surge in funding, with companies like Ambience Healthcare and Nabla raising Series B rounds. However, investors are also looking to back specialty-care startups targeting specific healthcare niches like mental health and value-based care.
While some biotech startups have gone public, the IPO window for healthcare startups remains mostly closed. Investors are anticipating more M&A activity and specialty-care “rollups” by private equity firms. Some startups may need to turn to existing investors for extension rounds or face shutdowns. Overall, investors are split on how to handle struggling companies in their portfolios.
