In the past five years, venture capital investments in artificial intelligence for healthcare have skyrocketed, expanding at twice the pace of the overall tech industry, according to a June 11 report from Silicon Valley Bank.
The report, leveraging Silicon Valley Bank's proprietary data and insights, offers a detailed analysis of current fundraising activities, challenges, macro trends and emerging technologies in healthcare, with a particular emphasis on AI applications in patient care and provider options.
The report found that:
- A record 25% of healthcare investment dollars are now being allocated to companies utilizing AI.
- Sixty percent of healthcare AI investments are directed toward administrative and clinical applications. Investors are especially attracted to administrative AI because it faces fewer regulatory and adoption challenges than clinical AI.
- Startups that integrate their new products with a provider's existing infrastructure could receive favorable attention from venture capitalists. For instance, given that 70% of U.S. providers use Epic for their EHR, AI firms that ensure compatibility with Epic could have a competitive edge.
- Since 2022, the pre-money valuations for seed and series A rounds in healthcare companies leveraging AI have outstripped those not utilizing AI. In 2024 alone, investments in AI healthcare companies have already reached $2.8 billion, with SVB projecting a total venture capital infusion of $11.1 billion for the sector, the highest since 2021. Despite a decline in the number of funds focused on healthcare and AI (66 in 2024, down from 101 in 2022), total funds raised in 2024 are anticipated to surge to $16.9 billion, up from $9.7 billion in 2023.