Venture capital funding of medical imaging AI developers continues to slow. A new report from Signify Research shows that funding declined 19% in 2023, and is off to a slow start in 2024 as well.
Signify tracks VC funding on an annual basis, and previous reports from the UK firm showed that AI investment peaked in 2021 and has been declining ever since.
- The report’s author, Signify analyst Ellie Baker, sees a variety of factors behind the decline, chief among them macroeconomic headwinds such as tighter access to capital due to higher interest rates.
Total Funding Value Drops – Total funding for 2023 came in at $627M, down 19% from $771M in 2022. Funding hit a peak in 2021 at $1.1B.
Deal Volume Declines – The number of deals in 2023 fell to 35, down 30% from 50 the year before. Deal volume peaked in 2021 at 63. And 2024 isn’t off to a great start, with only five deals recorded in the first quarter.
Deals Are Getting Bigger – Despite the declines, the average deal size grew last year, to $19M, up 23% versus $15M in 2022.
HeartFlow Rules the Roost – HeartFlow raised the most in 2023, fueled by a massive $215M funding round in April 2023, while Cleerly held the crown in 2022.
US Funding Dominates – On a geographic basis, funding is shifting away from Europe (-46%) and Asia-Pacific (no 2023 deals) and back to the Americas, which generated over 70% of the funding raised last year. This may be due to the US providing faster technology uptake and more routes to reimbursement.
Early Bird Gets the Worm – Unlike past years in which later-stage funding dominated, 2024 has seen a shift to early-stage deals with seed funding and Series A rounds, such as AZmed’s $16M deal in February 2024.
$100M Club Admits New Members – Signify’s exclusive “$100M Club” of AI developers has expanded to include Elucid and RapidAI.
The Takeaway
Despite the funding drop, Signify still sees a healthy funding environment for AI developers ($627M is definitely a lot of money). That said, AI software developers are going to have to make a stronger case to investors regarding revenue potential and a path to ROI.
