April 20, 2024

AI, proactive care and mergers and acquisitions: health technology predictions for 2024

In some ways, European healthtech seems to be in a pretty good place by 2023 standards.

Funding decreased, but not by much far fell like European tech as a whole, with nine-figure gains this year from tech company Apollo Therapeutics, which raised the sector’s biggest haul of the year at $227 million, and robotics companies of medical technology CMR Surgical and DistalMotion.

Healthcare technologies in the techbio space in 2023 raised similar numbers to the previous year, with healthcare technology funding remaining well above any previous year through 2021.

It’s all good, but if you look a little closer, you’ll notice a glaring absence in the upper echelons of healthtech funding rounds.

Only one digital health startup, digital-physical health platform Patient21, ranked among the top 20 healthtech fundraisings of 2023, as venture capitalists exited the subsector at all stages.

Investor caution will see funding for digital health startups fall to 2018 levels this year.

So, what does 2024 have in store for the sector? Tamiz asked the experts.

But first, we take a look at the key moments of the last 12 months.

2023 under review

Funding rounds aside, Patient21 points to another trend that will emerge in 2023: second-generation founders will start to make waves in healthtech.

Christoph Muhr, founder of Groupon and former COO of auto trading platform AUTO1, launched Patient21 in 2019 before emerging from stealth in 2022 and raising €100 million in debt and equity this year.

Spotify’s Daniel Ek also raised a €60 million Series A round in 2023 for body scanning clinic Neko Health, which officially launched earlier in the year after Sifted revealed its existence three months earlier. Then in December, Sifted broke the news that Gorillas’ Kağan Sümer had raised pre-seed of between $6 million and $8 million for a health management platform, set to launch in the new year.

But there was one healthcare tech founder who had a really bad 2023. Babylon’s Ali Parsa saw his expansion fail over the summer, less than two years after a failed special purpose acquisition company (SPAC) IPO that left the company with a cash deficit of $300 million. . Babylon abruptly abandoned its US business when a rescue merger failed in August and was left scrambling to sell what remained of its UK business. The parts of the business that Babylon managed to unload generated less than $7 million – just 0.17% of the $4.2 billion Babylon was once worth.

This was also the year that weight loss drugs like Ozempic and Wegovy began to make their way into the startup sector. The market for such treatments is expected to reach $100 billion over the next decade, and investors have begun pouring cash into startups offering the drug.

The topic that has grabbed the most headlines in 2023 is generative AI and it has already made a dent in many healthcare technology startups. Not only as a medical assistant when establishing diagnoses for patients, as in the case of the Danish AI startup Corti, but also in drug development. One startup that has been able to demonstrate how GenAI can halve the time spent on R&D in developing protein-based drugs is Dutch startup Cradle, which raised a €24 million Series A in November.

What will change in 2024?

Julia Hawkins, Partner at LocalGlobe

LocalGlobe is a London-based venture capital firm that invests in seeds for Series A startups across all sectors. Hawkins focuses on healthcare technology deals.

Julia Hawkins, Partner at LocalGlobe

We will see many more proactive healthcare startups entering the market in 2024.

People want greater access to information about their health so they can make informed decisions and adapt their lives, as shown by apps like Zoe. However, health systems are not prepared to offer this and, to some extent, venture financing has followed the reactive framework.

This presents an interesting opportunity because there is room in this misalignment for companies to have a large-scale impact, especially in areas where health systems routinely fail, such as early detection of serious diseases.

Health systems do it very badly, but people want to know if they are seriously ill so they can treat them quickly. Advances in biomarker discovery, biosensors, materials science and artificial intelligence mean that detection and diagnosis are about to be transformed. Companies that figure out how to do this successfully, in a way that people find easy to use, will become globally important businesses.

Ashish Patel, CEO of Deutsche Numis

Deutsche Numis is an investment bank. Patel advises growth-stage companies on strategic financing.

Ashish Patel, CEO of Deutsche Numis

Over the course of 2024, we expect to see an increase in the volume and value of healthcare mergers and acquisitions (M&A) deals across the venture capital-backed ecosystem.

An interesting trend we are seeing is that several leading venture capital-backed companies are considering M&A as a tool to leverage smaller-scale competitors, thereby acquiring customers, geographic access, and products or features in a cost-efficient manner. capital.

As this trend accelerates, it can help drive a generational shift by moving the emerging healthcare ecosystem from a series of fragmented, single-solution companies to a more mature, multi-product, enterprise-scale environment.

This will hopefully free up talent and capital that are currently trapped in subscale ‘zombie’ companies and will ultimately free up the resources needed for the next generation of healthcare entrepreneurs to build companies of scale that can have real impact. .

Johannes Blaschke, Director of Calm/Storm Ventures

Calm/Storm is an Austrian early-stage venture capital focused on healthcare technology. It was one of the most active healthcare technology investors in 2023.

Johannes Blaschke Calm/Storm Ventures

Within the historically slow-evolving healthcare landscape, the arrival of GenAI presents an unprecedented opportunity to move directly from outdated legacy systems to cutting-edge technology.

The substantial desire to close this gap, coupled with the immense scale and importance of the industry, positions healthcare as the number one sector poised to undergo profound transformation through AI.

In 2024, we expect a particular increase in the adoption of AI solutions by vendors. Specifically, we envision significant potential for public and private healthcare clinics to effortlessly automate and optimize non-clinical administrative workflows at scale.

This change may even have the potential to reverse the digital health funding decline we have seen in 2023.

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