Artificial Intelligence Drives Surge in Health Care Venture Capital in 2024
Venture capital investment in health care experienced a resurgence in 2024, fueled by enthusiasm for artificial intelligence (AI) startups, according to a report by Silicon Valley Bank (SVB). US health care companies raised $23 billion in 2024, surpassing the $20 billion invested in 2023. Nearly 30% of 2024 investments targeted AI-focused companies, signaling growing confidence in the transformative potential of AI in health care.
The report highlights a nuanced funding landscape across health care sectors, including biopharma, health technology, diagnostics, and medical devices. While total investments have not yet returned to the pandemic-era funding highs, the number of venture capital deals in 2024 outpaced those in 2021. Additionally, health care investment has grown 44% since early 2020, underscoring the sector’s resilience. The report also stated that biopharma startups emerged as major beneficiaries, raising $24.2 billion across 568 deals in 2024—a significant jump from $10.1 billion across 645 deals in 2023. Much of this growth was driven by AI applications for drug discovery, candidate screening, and clinical trial optimization.
Health care technology funding, on the other hand, lagged in 2024, with startups securing $10.6 billion across 706 deals, a decline from $15.4 billion across nearly 1200 deals in 2023. Early-stage health technology startups, however, saw a slight increase in funding, reflecting sustained interest in innovation at the foundational level. SVB noted a cautious approach toward AI-driven disruption in health tech, with many investors adopting a “wait-and-see” strategy as they assess the sector’s uncertain trajectory.
The exit environment for health technology companies remained challenging, with only 2 initial public offerings (IPOs) completed and merger and acquisition activity largely confined to undisclosed deals. However, 2025 may offer a turning point. High-profile companies such as Hinge Health and Omada Health, which have raised substantial funding, are expected to consider IPOs this year.
As the health care investment landscape evolves, AI continues to emerge as a cornerstone of growth, particularly within biopharma. “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 and author of the annual Healthcare Investments and Exits Report. "However, despite this growth, IPO activity is likely to remain subdued as market conditions continue to stabilize and investors remain cautious. Advancements in AI are poised to revolutionize drug development and clinical trial management, driving efficiencies, precision, and speed in bringing new therapies to market."
Reference
Spencer J, Bousleiman R, Lew T, et al. Healthcare investments and exits annual report 2024. Silicon Valley Bank. Published January 7, 2024. Accessed January 9, 2024. https://www.svb.com/trends-insights/reports/healthcare-investments-and-exits/
Venture capital fundraising in healthcare remains healthy; Silicon Valley Bank releases 15th edition of healthcare investments and exits report. News release. Silicon Valley Bank. Published January 8, 2024. Accessed January 9, 2024. https://www.prnewswire.com/news-releases/venture-capital-fundraising-in-healthcare-remains-healthy-silicon-valley-bank-releases-15th-edition-of-healthcare-investments-and-exits-report-302345432.html
