Funding at the intersection of healthcare and AI has been in tears over the past year. Still, investments remain below the heights that were expanded during the 2021 market peak.
Last year, more than $7.5 billion worldwide was found worldwide for companies applying advances in artificial intelligence to health-related areas such as health services and drug development, with each crunch-based data. This year is also off to a lively start, with nearly $1.68 billion already invested.
However, even in the hottest period for AI funding, investments in AI-enabled health startups continue to be below 2021 levels. For perspective, we have graphed the total investments and trading over the past five years.
Super large round
The total over the past year has been boosted by a few handfuls of super-large rounds.
The biggest fundraiser was Xaira Therapeutics, based in San Francisco, the developer of the AI platform that secured a $1 billion series last spring, led by Arch Venture Partners and Forestite Capital.
The next big thing was Formation Bio, a New York-based startup using AI. This drew $372 million in Series D last summer led by Andreessen Horowitz.
A strong start in 2025
We’ve only been in six weeks since the New Year, but we’ve already accumulated a massive AI-related health funding round.
The biggest was the $275 million Series F of San Francisco startup Innovaccer, which manufactures AI-enabled cloud tracking platforms for healthcare providers. And last week, Abridge, an AI-driven platform for clinician conversation, won a $250 million Series D.
Two other big rounds went to Hippocratic AI, a generative AI healthcare startup that raised $141 million in Series B at a valuation of $1.644 billion.
Where is the exit?
It also brought several exits to businesses last year at the intersection of AI, pharmaceuticals and health.
The smash hit of the past year was Tempus AI, an artificial intelligence precision medicine company that was released in June. The stock has been doing well, with the stock being several times higher, with a market capitalization of around $11 billion recently.
The other two people who were released in March had a hard time. Metagenomie strains that find naturally evolved genome editing tools mining through proteins using AI-driven algorithms have declined by more than 70% since IPO. Alto Neuroscience, developer of machine learning-driven precision therapy platforms for psychiatric care, is also performing poorly.
There will be no obvious slowdown in the future
So far, there is no clear indication that investors are tapping on the brakes of investments at the intersection of AI and health. Given the rapid advancement of technology and increasing sophistication, you may even see the pickup as more health and biotech startups incorporate AI as their core focus area.
As for the disclosure, the possibilities for this space look a little brighter than the technology as a whole. Even as venture-backed technology delivery slows down to crawling, we continue to see a steady trend in biotech IPOs, including both AIL and non-AI-focused startups.
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Illustration: Dom Guzman
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