AI Healthcare Funding Continues to Grow
Funding at the intersection of healthcare and artificial intelligence (AI) has been on a significant upward trend over the past year. Despite this growth, investment remains below the heights achieved during the 2021 market peak. According to Crunchbase data, more than $7.5 billion was invested globally in companies applying AI advancements to health-related areas such as medical services and pharmaceutical development last year. The current year is off to a brisk start, with nearly $1.68 billion already invested in AI-enabled health startups.
Ultra-Large Rounds Boost Investment
The total investment in the past year received a significant boost from a handful of ultra-large funding rounds. The largest recipient was San Francisco-based Xaira Therapeutics, which secured a $1 billion Series A funding round last spring. This was followed by Formation Bio, a New York-based startup, which raised $372 million in a Series D round.
Strong Start to 2025
Although we’re only about six weeks into 2025, large AI-related health funding rounds are already accumulating. The largest was a $275 million January Series F for Innovaccer, a San Francisco startup that offers an AI-enabled cloud tracking platform for healthcare providers. Additionally, Abridge, an AI-driven platform for clinician conversations, secured a $250 million Series D funding round. Other notable rounds include Hippocratic AI, which raised $141 million in a Series B, and Insilico Medicine, which raised $100 million in a Series E.
Exits in AI Healthcare
The past year also saw some significant exits for companies at the intersection of AI, pharmaceuticals, and healthcare. One notable success was Tempus AI, an artificial intelligence precision medicine company that went public in June. Its stock has performed well, with shares increasing several-fold and a recent market cap around $11 billion. However, not all IPOs have been successful; shares of Metagenomi and Alto Neuroscience have underperformed since their March IPOs.
Future Outlook
There’s currently no obvious sign that investors are slowing down their investments in AI healthcare startups. In fact, we might see a pickup as more health and biotech startups incorporate AI as a core focus area, driven by the technology’s rapid advancement and increasing sophistication. The potential for public offerings in this space appears brighter than for tech overall, with a steady flow of biotech IPOs, including both AI- and non-AI-focused startups.
