VC investment in the AI medical imaging sector has shifted notably in the last couple years, says a new report from UK market intelligence firm Signify Research. The report offers a fascinating look at an industry where almost $5B has been raised since 2015.
Total Funding Value Drops – Both investors and AI independent software vendors (ISVs) have noticed reduced funding activity, and that’s reflected in the Signify numbers. VC funding of imaging AI firms fell 32% in 2022, to $750.4M, down from a peak of $1.1B in 2021.
Deal Volume Declines – The number of deals getting done has also fallen, to 42 deals in 2022, off 30% compared to 60 in 2021. In imaging AI’s peak year, 2020, 95 funding deals were completed.
VC Appetite Remains Strong – Despite the declines, VCs still have a strong appetite for radiology AI, but funding has shifted from smaller early-stage deals to larger, late-stage investments.
HeartFlow Deal Tips Scales – The average deal size has spiked this year to date, to $27.6M, compared to $17.9M in 2022, $18M in 2021, and $7.9M in 2020. Much of the higher 2023 number is driven by HeartFlow’s huge $215M funding round in April; Signify analyst Sanjay Parekh, PhD, told The Imaging Wire he expects the average deal value to fall to $18M by year’s end.
The Rich Get Richer – Much of the funding has concentrated in a dozen or so AI companies that have raised over $100M. Big winners include HeartFlow (over $650M), and Cleerly, Shukun Technology, and Viz.ai (over $250M). Signify’s $100M club is rounded out by Aidoc, Cathworks, Keya Medical, Deepwise Shenrui, Imagen Technologies, Perspectum, Lunit, and Annalise.ai.
US and China Dominate – On a regional basis, VC funding is going to companies in the US (almost $2B) and China ($1.1B). Following them are Israel ($513M), the UK ($310M), and South Korea ($255M).
Signify’s report shows the continuation of trends seen in previous years that point to a maturing market for medical imaging AI. As with any such market, winners and losers are emerging, and VCs are clearly being selective about choosing which horses to put their money on.