Investors are now seeing startups raising funding rounds at a lower valuation than their last round, or hoping to merge with a competitor to extend their lifespans. Some startups are adjusting their prices to raise more capital, while others are shutting down due to lack of traction. The healthcare AI sector has been particularly hit, with telehealth startups seeing a significant drop in VC capital. Investors are now pushing for better discipline in balancing growth with profits in the next generation of healthcare startups.
Key takeaways:
- Many healthcare startups that raised funding in 2021 are now struggling, with some cutting their valuations, selling off assets, or closing their doors.
- While 2021 saw a record-breaking 729 healthcare startup deals, the first three quarters of 2024 only brought in about half of those deals with much smaller check sizes.
- Investors are seeing more startups raising funding rounds at a valuation lower than their last round, also known as a down round, or hoping to merge with a competitor to extend their lifespans.
- Despite the struggles, certain areas of healthcare still have room for winners, with startups like Hinge Health and Omada Health expected to test the IPO waters next year.