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AI Investments Dominate Healthcare; Silicon Valley Bank Releases New AI Patient Journey Report


New report finds one in four dollars invested in healthcare going toward companies leveraging AI

SAN FRANCISCO – June 11, 2024 - Venture capital deal activity in Artificial Intelligence (AI) for healthcare has surged the past five years, growing twice as fast as the tech industry overall. A record one in four healthcare investment dollars goes to companies leveraging AI, according to the latest report from Silicon Valley Bank (SVB), a division of First Citizens Bank.

Leveraging SVB’s proprietary data and insights, SVB’s AI-Powered Healthcare Experience report provides an in-depth look at current fundraising activity and challenges, macro trends and emerging technologies in healthcare, with a specific focus on AI enablement related to patient care and provider options.

“The current and future impact of AI on the patient journey ,” said Raysa Bousleiman, co-author on the report and vice president, Life Science & Healthcare venture capital relationships at SVB. “While companies may face challenges to adapt to the AI-enabled future, we are optimistic about the innovations we see on the horizon and in the growing investment in these companies.”

The report analyzes four key themes shaping the future of AI across the patient journey, including:

  • Administrative AI may be low-hanging fruit: the buzz around AI for drug discovery, the majority (60%) of healthcare AI dollars are going towards administrative and clinical uses. Investors are especially drawn to administrative AI because it often faces fewer regulatory and adoption hurdles than clinical AI.
  • Doing the diligence: Companies that can leverage a provider’s existing infrastructure in their new product may find preference among VCs. For example, 70% of US provider’s use EPIC for their Electronic Health Record (EHR) and AI companies in the EHR space may find themselves with a leg up if they establish interoperability with the EPIC system.
  • Startups flexibly delivering value: Organizations often favor established players when purchasing AI solutions. To overcome this, startups must clearly articulate why they’re the better choice compared to larger incumbents that organizations might already have as partners. Startups’ flexibility is their strength. Massive adoption and margins are not as crucial for startups as they are for established big tech, and the bottom-up nature of startups lend themselves to working closely with physicians.
  • Patient diagnostics face challenges: Especially with AI-driven diagnostic tests, there are challenges from navigating the regulatory environment to managing high costs and securing quality data.

Key 2024 Report Findings:

Investors see the opportunity

  • Since 2022, seed and series A pre-money valuations for healthcare companies leveraging AI have outpaced those not utilizing it. The report found that $2.8 billion has already been invested in AI Healthcare companies in 2024, with SVB projecting the sector to see $11.1 billion in VC capital deployed across the full year, the highest it has been since 2021. While SVB estimates fewer funds focused on healthcare and AI will close than in previous years (66 in 2024, down from 101 in 2022), it also projects that total funds raised in 2024 will tower over 2023 ($16.9 billion compared to $9.7 billion).

Adoption Will Make or Break AI Healthcare Companies

  • While AI Healthcare companies across the patient journey are receiving increased funding in 2024, the immense costs of developing generative AI, industry consolidation, and limited education and training resources for healthcare professionals on technological advancements can impact adoption. Companies that can access data, partner with clinicians and hospitals to leverage patient data, and partner with big tech companies are better suited to deploy AI at scale.

Bright Spots and Roadblocks Within Patient Diagnosis AI Companies

  • While AI patient diagnostics accounts for 52% of the total AI investment in clinical solutions, there is a significant gap in access to quality data and computing power necessary for training a model to the point where it can accurately diagnose. For the economics to make sense in the near term, companies must demonstrate the value of their diagnostics. Diagnostic imaging has seen impressive growth, with trailing 12-month investment doubling since Q1 2021. Notably, half of this recent surge in investment has been in cardiovascular disease

Learn More 

For a preview of the AI-Powered Healthcare Experience report, click here: 

https://www.svb.com/trends-insights/reports/artificial-intelligence-ai-in-healthcare

SVB is a leader in providing market insights on sectors across the innovation economy. For the complete library of SVB’s signature reports, please visit Market Research Industry Trends & Insights | Silicon Valley Bank (svb.com) 

About Silicon Valley Bank
Silicon Valley Bank (SVB), a division of First Citizens Bank, is the bank of some of the world’s most innovative companies and investors. SVB provides commercial and private banking to individuals and companies in the technology, life science and healthcare, private equity, venture capital and premium wine industries. SVB operates in centers of innovation throughout the United States, serving the unique needs of its dynamic clients with deep sector expertise, insights and connections. SVB’s parent company, First Citizens BancShares, Inc. (NASDAQ: FCNCA), is a top 20 U.S. financial institution with more than $200 billion in assets. First Citizens Bank, Member FDIC. Learn more at svb.com.

 

 

 

 

 

 

 

 

 

 

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