After an extended downturn beginning in 2H 2022—driven by weaker exits and more selective follow-on funding—the healthcare venture market stabilized in late 2024 and entered a clear upswing in late 2025. In 1H 2026, momentum strengthened as traditional VCs moved toward a “risk-on” mentality, increasing pace and taking more early-stage risk, while mega rounds remained a key feature. A partially open IPO window and strong M&A (by both volume and value) improved exit visibility and reinforced confidence in the value inflection points that can unlock new rounds. Investment is tracking ahead of 2025 across Biopharma, Dx/Tools, and Medical Devices, with AI increasingly embedded across sectors and attracting new investors, including tech corporates.

For 2H 2026, we expect a similar run-rate to 1H 2026, supported by ongoing M&A and selective IPOs. Ultra mega rounds ($400M+), particularly in AI-enabled technologies, may swing totals, but we maintain our forecast of $65–70B invested in full-year 2026.

Biopharma

Biopharma in 1H 2026 was stable overall, with first-financing dollars up due to two outsized mega rounds. Even so, a stronger early-stage exit backdrop pushed investors back toward pre-clinical deals with smaller syndicates and check sizes, as both oncology and autoimmune rose versus 2025.

• Oncology: Investment spiked, helped by a $450M Phase III mega round
• Autoimmune: Three $100M+ first financings (two Phase II) drove outsized investment.

Mega rounds still drive totals (~58–60% of funding over the last three years), but signs of multiple compression and lower ownership persist. Exits were a bright spot, with record M&A values and solid IPO activity, including 19 VC-backed pre-clinical/Phase I M&A in the last 18 months with a median upfront of $1B.

Dx/Tools

Dx/Tools in 1H 2026 saw a first-financing rebound, helped by AI-driven momentum—especially in Dx Analytics, which has already exceeded 2025 full-year dollars as investors back companies turning data into actionable insights.

Overall investment was slightly down versus last year, with fewer mega rounds (three) and most larger deals in the $30–90M range, often as add-ons to prior financings. R&D tools continued to lead investment (drug discovery and manufacturing, including radio pharma and cell therapy), Dx Tests dollars fell (tracking ~40% down), and exits held up, with private M&A matching 2025’s full-year pace by midyear, with a strong Alamar IPO.

Med Device

Med Device in 1H 2026 saw a sharp rise in first financings, led by larger ($20M+) Series A rounds that give early-stage companies runway to reach the milestones Series B investors require. Investment increased across neuro, imaging and non-invasive monitoring (including AI-enabled plays), while cardiovascular pulled back.

Overall investment ran slightly below 2025’s record pace, but still above 2023 and 2024 activity, with 24 $50M+ financings, led by large financings in neuro brain/computer interface technologies.

Exits also improved:

• Twelve venture-backed M&A in 1H (ahead of 2025 year-end numbers),
• $345M median upfront, active dealmaking from Medtronic, and
• IPO momentum holding up (six IPOs in 18 months, +4% median post-IPO performance).

HealthTech

HealthTech in 1H 2026 delivered $8.9B across 389 deals, with dollars lifted by mega rounds, while deal volume stayed steady. First financings strengthened to $1.7B across 141 deals, reflecting larger financings and rising conviction in AI-enabled workflow.

By subsector:

• Provider Ops led at $3.3B,
• Alternative Care ($2.1B) and Wellness & Education ($1.2B) gained share;
• Healthcare Navigation was $0.9B and Clinical Trials cooled to $0.4B.

Mega rounds remained a key driver, with 22 mega rounds raising $4.0B, concentrated in Provider Ops and Alternative Care.

This report was developed by the HSBC Innovation Banking Healthcare investment banking team, with contributions from specialists across HealthTech, MedTech, Biopharma, Diagnostics & Tools, and Healthcare Services.

Matt Griffiths, Managing Director - Healthtech

Alex Hatzis, Vice President - Healthtech

Steve Agular, Head of Healthcare Investor Coverage - Healthtech

Chris Moniz, Managing Director - Healthtech

Noah Melnick, Associate Vice President - Med Device

Grace Georgi, Vice President - Biopharma

Jesse Essaff, Director - Biopharma, Dx/Tools

Mikaela Kimpton, Associate - Biopharma, BioInfrastructure

Naman Thakur, Analyst - Editor

Saira Reyes, Comp Bio - Editor