Venture capital investment in radiology peaked in 2021 at just over $2B and has been on a slow decline since then. That’s according to a study in JACR that documents the ebb and flow of VC investment, in particular its shift to companies developing AI algorithms.
VC investment is the lifeblood of any industry built on innovation, and healthcare is no exception.
- Venture capital funding helps many innovators bring their ideas to fruition and helps fund them until revenue from product sales can start rolling in.
So it stands to reason that changes in VC funding levels can have ripple effects, with declines potentially affecting the rate of new technology development.
- Indeed, some studies have found that every 1% increase in interest rates can cause a 3% decline in R&D spending and a 9% drop in patent filings.
The new research tracks VC funding specifically in radiology, with researchers from Emory and Harvard universities using PitchBook to track VC investments from 2000 to 2023.
In particular, researchers found…
- A total of $11.4B was invested in 646 radiology companies during the entire study period.
- The average investment was $6.3M with an average $51M post-investment valuation.
- VC investment activity in radiology peaked in 2021 at $2.18B.
- Medical devices attracted 28% of investment, followed by AI healthcare software (22%), non-AI healthcare software (18%), healthcare services (14%), and biotechnology and drug discovery (18%).
The new data track with research from other sources – like Signify Research – that have also documented a slowdown in radiology VC investment, particularly in AI.
- Most sources attribute the declines to the end of the “cheap money” era during the COVID-19 pandemic as governments began dialing back on stimulus payments and started raising interest rates to tamp down inflation. On the other hand, other research has found that the recent declines are occurring at a rate that’s not proportional to inflation or interest rates alone.
The Takeaway
The new JACR research comes as the investment and healthcare worlds are set to begin their annual courtship ritual next week at the J.P. Morgan Healthcare Conference in San Francisco. Undoubtedly these new findings will be a point of discussion as radiology companies look to secure the capital that will fuel the next innovations in medical imaging.
