AI-related deal activity remains positive for the healthcare sector, according to a report from Silicon Valley Bank.
SVB's report analyzes and predicts trends for venture capital investing, fundraising and exits across healthtech, biopharma, diagnostics/tools (dx/tools) and device sectors in the U.S. The report also includes a spotlight on China.
According to the report, all healthcare sectors witnessed strong growth in AI deal activity over the last three years, but companies not leveraging AI experienced a 20% decline.
"Amid the regulatory and geopolitical turmoil, overall fundraising appears to be heading for the lowest volumes in more than 10 years," the report reads.
U.S. healthcare venture capital fundraising totaled $3 billion in the first half of 2025, representing a precipitous drop from 2024.
Still, the healthtech sector remains strong, raising $8.2 billion during the first half of 2025, the strongest half since H1 2022. Series B deal size increased to $40 million, the highest over the past five years.
"AI is driving a new resurgence in healthtech investing. While the previous peaks were largely driven by virtual and hybrid care companies, the current boom is coming from administrative tools for both the front- and back-office that are integrating AI," the report noted.
The report highlighted a bright spot in a slowing market for early-stage diagnostics and tools companies. Although deal activity has slowed down since 2024, Series A median pre-money valuations and deal sizes hit a five-year high at $38 million and $14 million, respectively.
"With strong commercial dynamics, minimal residual disease tests are continuing to make a splash in the Dx/Tools space," according to the report.
Late-stage companies in the biopharma sector showed signs of heading in a positive direction. Median biopharma pre-money valuations among Series C+ sat at $247 million in H1 2025, compared to $46 million and $87 million for Series A and B biopharma startups, respectively.
Data showed that medical device investments were consistent, totaling between $3 billion and $4 billion every half since 2022.
According to the report, that might be about to change, "if neuromodulation and AI-enabled remote surgery continue to attract attention and money. A few strong exits would not hurt either, but macroeconomics might be a barrier there as device companies look likely to be among the hardest hit by tariffs."
The report noted that China has established itself as a force in global biotech, with structural advantages in cost, development speed and regulatory efficiency.
For example, in 2025, upfront value from China-related licensing deals exceeded all of 2024, marking an almost 2.5x increase over 2022 spending.
Regarding biopharma exits, the report stated that the comedown from the pandemic market highs of 2021 has been especially rough for public companies.
Looking ahead, the report noted that 2025 is on track to beat 2023 totals in mergers and acquisitions, putting it squarely in line with pre-pandemic mergers and acquisition trends.
"If activity in the second half does pick up steam, it wouldn’t take much for this to be the fourth year in a row of growth in mergers and acquisitions totals," the report reads.
THE LARGER TREND
The industry has seen a flurry of investment activity this month alone.
Ambience Healthcare, an ambient AI documentation company, secured a whopping $243 million in Series C funding in a round co-led by Oak HC/FT and Andreessen Horowitz (a16z).
Journey, an employee assistance program that focuses on mental health, scored $8 million in Series A funding.
Stephen Sokoler, founder and CEO of Journey, told MobiHealthNews that the company is using "the capital to double down on what sets us apart: personalization, proactive outreach and meaningful results. That means expanding our AI-powered support tools, deepening our clinical impact and growing our global reach. Employers are tired of low-impact, reactive solutions. We're building a platform that engages people and changes lives, before a crisis hits."
Also in July, Cooler Heads closed an oversubscribed $11 million Series A funding round. The funds will be used to increase manufacturing capacity, expand the company's commercial team and develop the next generation of its offering.
Aidoc announced that it secured $150 million in financing. The round included a $40 million revolving credit facility and brought the company's total funding to $370 million.
The funds will be used to support the expansion of aiOS, Aidoc's enterprise-grade platform, which enables health systems to deploy and govern multiple AI offerings with real-time performance monitoring and to accelerate the development of CARE, the company's clinical-grade foundation model that helps physicians make informed clinical decisions.
