Venture capital (VC) funding has long been a vital lifeline for healthtech startups, offering not just capital but also the expertise, connections, and strategic support necessary for success in a complex industry. In this blog post, we explore why healthtech founders should consider VC as a critical part of their funding journey, look at current trends in VC funding in healthtech, and conclude with the expert insights and advice from  NanaYaa Thomas, Techstars Mentor and Managing Partner at Purelite Ventures.

Why Choose VC for Funding Your Healthtech Startup?

So let’s start addressing this basic question, what’s in it for founders when choosing VC funding for their startup? For healthtech entrepreneurs, securing VC funding can provide a myriad of benefits that go beyond just financial backing. Venture capital firms do more than just provide funding, they offer valuable insights and support that can be the difference between a startup’s success and failure. Here are five of the most compelling reasons to consider this option:

1. Access to Significant Capital

Probably the most evident benefit is the access to significant capital that VC can give to startups l. Healthtech startups often require large sums to develop innovative technologies, conduct clinical trials, and navigate regulatory approvals. VC investors are typically prepared to offer the substantial funding needed to move a startup forward through these high-cost phases.

2. Stage-Based Funding

Unlike angel investors or bootstrapping, VCs offer stage-based funding, providing startups with additional capital as they reach specific growth milestones. This approach allows founders to focus on innovation while ensuring they have a partner willing to continue investing as long as progress is demonstrated.

3. Mentorship and Expertise

Not less important is the fact that Venture Capital firms come with a wealth of industry knowledge. They offer mentorship that can assist healthtech startups in tackling regulatory hurdles, refining their product development strategies, and entering new markets with confidence.

4. Networking and Credibility

In the same vein, VC firms bring with them established networks within healthcare systems, pharmaceutical companies, and regulatory bodies. These connections can open doors to valuable partnerships and collaborations, helping startups accelerate growth.

5. Shared Risk

Last but not least, launching a healthtech startup is inherently risky, but VCs are willing to share that risk. This partnership allows founders to concentrate on scaling their business, knowing they have backing as long as they continue meeting key milestones, rather than being burdened by constant financial uncertainty.

Aside from the benefits just mentioned, it is also essential to understand how VC funding is currently distributed in the healthtech sector, and with 2025 just around the corner, it is important to anticipate what the future holds.

The venture capital funding landscape in healthcare for 2024 has shown signs of resilience and adaptation following a challenging previous year. In the first half of 2024, digital health funding reached $12.4 billion across 719 deals, surpassing the $11.8 billion recorded in H1 2023. This resurgence indicates renewed investor confidence. Regarding deal count, the number has shown a decrease in Q3 of 2024 compared to previous quarters. Yet, the average deal size has remained steady at around $22 million, indicating that investors are making more calculated bets on fewer companies, and reflecting a trend towards disciplined investment strategies.

In terms of areas of interest, AI driven health solutions and TechBio have emerged as the leading forces. AI-focused ventures captured 57% of total funding in H1 2024, showing the growing importance of AI technologies in driving innovation within healthcare. This is confirmed in the last-week launched Rock Health’s report on Digital Health investment trends highlighting a growing emphasis on AI-driven innovations, with companies increasingly collaborating with established tech firms to enhance their offerings. For instance, Hippocratic AI received $17 million from Nvidia's venture arm after launching a partnership to develop healthcare-focused large language models (LLMs).  On the other hand, the TechBio sector, which focuses on digital health applications for biopharma research, has also gained relevant traction, emphasizing partnerships between healthcare systems and technology companies.

As we look towards 2025, the landscape of venture capital (VC) funding in healthtech is poised for significant evolution. Several key trends and perspectives have emerged from recent data, highlighting the direction of investments and the factors influencing them.

Not surprisingly, the focus on AI and Machine Learning is a trend that will likely remain unchanged. A recent research conducted by Black Book shows that a substantial 83% of healthcare venture capitalists indicate that they will prioritize investments in artificial intelligence (AI) and machine learning (ML) applications. These technologies are seen as essential for automating medical delivery processes, enhancing data analytics, and predictive modeling. Although investors are enthusiastic about AI, they are cautious due to concerns about regulatory hurdles, integration challenges, and the need for extensive clinical validation. In the next few years, we are likely to see more discerning investment strategies where only proven AI solutions will receive funding.

Another sustained trend is the healthcare industry shift towards value-based care (VBC) (a topic you can read more about in one of our previous blogposts), which rewards providers based on patient outcomes rather than services rendered. The development of technologies that support collaborative care models and track patient outcomes will likely influence funding priorities. In this realm, Deloitte’s predictive report for 2025 highlights the relevance of MedTech as a major player. MedTech companies are driving innovation in healthcare by using new technologies to improve products and services, helping to advance personalized, preventive, and participatory care. They apply advanced data analytics and collaborate closely with users to incorporate robotics and cognitive tech that improve patient outcomes. MedTech companies are also partnering with consumer tech firms to gain insights into customer engagement and brand development, while many are shifting towards offering 'Software as a Service' for preventative care.

Furthermore, the move towards personalized medicine and health ownership is projected to accelerate, driven by advancements in genetic profiling and wearable technology. By 2025, treatments tailored to individual genetic makeups and health data are expected to become more commonplace, enhancing patient outcomes.

In summary, the perspectives towards 2025 indicate a healthtech landscape characterized by increased scrutiny from investors, a focus on AI and proven technologies, and a commitment to patient-centric care models. As the sector evolves, startups that can demonstrate real-world value and adaptability will be well-positioned to thrive amidst these changes.

The expert voice: Q&A with NanaYaa Thomas, Managing Partner at Purelite Ventures

An overview on this topic wouldn’t be complete without the investor’s perspective. Thus, we had the chance to talk with seasoned VC investor, NanaYaa Thomas. She currently serves as a Mentor in the well-known acceleration program Techstars, and is the Managing Partner at Purelite Ventures, a healthcare venture capital firm that invests in seed stage transformational startups. She's been a research and clinical laboratory scientist for over 20 years, and holds an MBA degree from Columbia Business School. She shared her insights into what investors look for and how they contribute to a startup's growth:

Q: What specific factors do you look for when deciding to invest in an early-stage healthtech startup?

A: My first thought is "what problem does the MVP solve?" Then I look for a particular subset of people who will find great benefit using the MVP. These two factors are important. They determine whether or not I will continue exploring the investment opportunity. It leads up to looking into important metrics like TAM, SAM and SOM.

Q: How important is the team in your investment decision, particularly in the healthtech space?

A: It is very important. Each team member must add something particular to the mission of the startup. The healthcare professionals, technical staff, advisors and board members must have the ability to carry out the mission of the startup. The journey of a successful founder can be unpredictable, so a founder and team must have grit! They must be flexible and pivot when necessary, but also be committed to the success of the startup.

Q: How do you evaluate the potential of emerging healthcare technologies?

A: As simple as it seems, a functional MVP that fully answers the problem that the founder has outlined is key. At seed stage, the startup should be well past the ideation/exploratory stage. I like to see companies move into proof of concept by securing letters of intent and seeking out partners to establish real efficacy within their space. It's important to secure satisfied customers.

If the innovation is within the medical devices, or pharmaceutical realm, founders need to demonstrate a valid timeline that showcases IND inflection points, experimental efficacy studies, FDA approvals and robust go to market strategies.

Q: Beyond funding, how do you see your role as an investor in helping healthtech startups succeed?

A: Startups need advocates who provide initial monetary investment, co-investment opportunities, and introductions to partners and fractional staff. We also expand customer pipelines and assist in moving companies toward market readiness. We are always poised to provide this kind of help to move the company to the stage where they can enhance people's quality of life and reach profitability.

Access to a list of +240 VC funds investing in healthcare

Overall, Venture Capital funding has been a driving force behind some of the most impactful innovations in healthcare, from AI-powered diagnostics to telemedicine platforms transforming patient care. As the healthcare landscape continues to evolve, securing the right investment partner is crucial for startups looking to scale, bring new products to market, and navigate regulatory complexities.

For healthcare startups, choosing the right VC can open doors not just to funding, but to valuable industry expertise and strategic partnerships. Whether you're working on cutting-edge digital health solutions or tackling complex challenges in medical devices, VC funding could be the key to accelerating your growth and reaching your goals.

If you're a founder or part of a healthcare startup looking for the right investment, finding VCs with experience in the healthcare space is critical. We've made it easier by curating a comprehensive list of 240+ VC funds that invest in healthcare.

This resource is perfect for startups in digital health, medtech, biotech, and beyond, offering you a chance to connect with investors who truly understand the healthcare ecosystem.

Download the full +240 VCs in Healthcare list here and take the next step in securing the funding you need to scale your healthcare innovation!

Want to learn more? Check out the sources we’ve consulted for writing this article: