There is some good news in the healthtech space, with PitchBook’s new Emerging Tech Research showing a rebound in venture capital (VC) funding for the sector. Startups in this space raised an impressive $3.9 billion in Q3 of this year. While this was a bit lower than the previous two quarters, it was enough to move the YTD total ahead of 2024 values. According to PitchBook, this signals a strong rebound for healthtech.
Below is an overview of some key takeaways from the report and trends to watch in the healthtech sector.
Increase in Deal Volume and Size
There was a slight increase in deal volume, up 12% over the previous quarter. The analytics, operations, and telehealth segments were standouts, with each bringing in more than $800 million in funding. Even with the elevated deal count, median healthtech VC deal size still hit a record of $7.7 million, an indication that higher valuations are leading to larger deal size.
A Mixed Report on Exit Activity
While there was a sharp increase in exits in Q3 (a record of 42), the total exit value came in at $200 million. PitchBook correlates this gap between exit count and value to the significant number of acquisitions of smaller, early-stage startups. There were also no major IPOs in the sector this quarter, and their analysts are not expecting to see any other major healthtech listings as we wrap up the year. However, they are tracking several as we move into 2026.
The Continued Impact of AI
As with many other sectors, artificial intelligence (AI) continues to define healthtech. One of the areas that is quickly expanding in terms of commercial use is ambient scribes. These AI-powered tools listen to conversations between patients and providers and generate clinical notes. This is already being adopted across the healthcare space, from physicians’ offices to large health systems, demonstrating a strong demand for these kinds of AI solutions. AI-driven revenue cycle management (RCM) vendors were also a focus for investors. These tools help to reduce claim denials and improve cash flow for healthcare providers.
PitchBook notes that AI adoption for this sector is mostly on the provider side, rather than the payor side, and providers are already “realizing meaningful AI-driven revenue gains” as they deploy these tools. They do expect payors to increasingly utilize AI tools in the future as they seek to identify overpayments and make prior-authorization workflows more efficient.
This sector is expected to gain significant attention as we enter the new year and the adoption of AI grows increasingly prevalent. Notable advancements have the potential to reshape the industry, and investors are likely prepared to support technologies that will drive the future of healthcare.