From 2020 through mid-2022, frothiness in the public and private healthcare market led to record highs in deals, investments, M&A and IPOs. However, as the venture healthcare industry moved into a down cycle in 2023, marked by valuation uncertainty and limited exit opportunities, new investment appetite declined and valuation inflection points for new deals became harder to meet. In response, many private companies were forced to secure insider rounds.¹

Although 2024 saw increased investment, this growth was concentrated in a few mega round deals, leaving many venture-backed companies still struggling to secure a new investor-led fundraise. 1H 2025 saw investment rise and deal volume drop, reflecting a market defined by both mega rounds and shut-downs. Only the top 15% of deals were able to raise new capital in 1H 2025, often at step-ups, while many companies reliant on insider rounds have had to pursue consolidation or shut-down. Q1 2025 was dominated by $100M+ financings and set a two-year high for invested capital. However, continued headwinds and uncertainty led to a 20% drop in Q2 investment.

Overall, a surge in mega-rounds drove healthcare venture funding in the first half of 2025, even as deal volumes declined and fewer startups secured new investor-led capital.

• Biopharma: First-financing dollars dropped 60% from Q1 to Q2, with larger deals accounting for the preponderance of capital invested. Oncology, autoimmune and metabolic indications accounted for most of the mega round activity.
• Dx/Tools: First-financing activity remained soft, with top deals clustered around AI-enabled drug discovery and clinical decision support.
• Med Device: Overall funding is on a record-setting pace, however there was continued consolidation toward later-stage pivotal trial funding and commercialization efforts.
• Healthtech: One of the few sectors where first-financing activity increased, driven by AI-platforms, SaaS infrastructure, and payer-provider solutions.

The HSBC Global Investment Research Team put together a collection of related research from 1H 2025 for clients interested in the Mid-Year Venture Healthcare Report. This research is available to clients who are logged into the Global Investment Research website.

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• Life Sciences & Healthcare - A coiled spring with H2 rally potential (July 2025)
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• Biopharma - Ready for tomorrow? Next step in US pharma pricing (June 2025)
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• Life Sciences & Healthcare - The question no one asks – testing pharma certainty (June 2025)
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• US Drug pricing - Biopharma: MFN executive order implications (May 2025)
• Biopharma - Accounting, macro sensitivities and risk-reward (April2025)
• Life Sciences & Healthcare - Navigation dashboard for tariffs turmoil (April 2025)
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• Life Sciences & Healthcare - GLPNomics: Tracking catalysts and pipeline (March 2025)

¹Insider rounds defined as equity/convertible financings where only insiders participate, typically at smaller amounts.