Report: VC Firms Gearing Up for Investments in Healthcare

Venture capital (VC) firms are reportedly gearing up for further investments in healthcare.

The pace of VCs’ fundraising for investments in the healthcare sector this year exceeds that of 2022, a year in which the second-highest total was raised, The Wall Street Journal (WSJ) reported Friday (May 26).

At the same time, VC investment in the sector’s startups has plummeted when compared to last year as the investors wait for the startups to raise capital at lower valuations due to the current environment around the stock market and initial public offerings (IPOs), the report said.

While VCs are currently sitting on the capital, they do intend to invest it in the healthcare sector in time, and expect substantial returns when they do, per the report.

Taking the long view, they expect the digital transformation in the sector to continue as innovations like artificial intelligence (AI) and machine learning (ML) are increasingly applied to solve healthcare challenges, according to the report.

In one part of the digital transformation occurring in the healthcare sector, consumers are clamoring for a unified system to manage their health.

PYMNTS research has found that the fragmented healthcare system has not yet been solved and a solution that would aid patients as they navigate the system is in demand.

Most consumers — across all age demographics — express at least a slight interest in using unified digital healthcare platforms and would prefer to access insurance features and benefits via such platforms, according to “The Digital Platform Promise: What Baby Boomers and Seniors Want from Digital Healthcare Platforms,” a PYMNTS and Lynxcollaboration.

Several other challenges in the sector are being solved with digital tools as well.

For example, on Monday (May 22), German digital health startup Patient21 said it has raised $108 million and will use the financing to enter new markets in Europe and develop its software platform.

Founded in 2019, Patient21 offers a mix of brick-and-mortar healthcare and digital services such as online booking, check-in and insurance.

Two months earlier, in March, OpenLoop raised $15 million in Series A funding for its white-label telehealth support platform.

The firm also began enabling clients to offer reimbursable services to patients via a nationwide insurance payer network, complementing the existing cash pay options.