Deals to companies pursuing healthcare-focused applications of AI have leapt from less than 10 deals in 2011 to 60 in 2015.
There have already been over 40 deals to AI in healthcare this year as of 6/15/2016, including a Series E round raised by IBM Watson Group-backed Pathway Genomics, and Series A rounds raised Babylon Health (backed by investors including Kinnevik and Google-owned DeepMind Technologies), as well as AiCure (backed by investors including New Leaf Venture Partners and Pritzker Group Venture Capital).
Our AI in healthcare category includes companies using AI technologies like machine learning and deep learning for health risk analyses, imagining and diagnostics, and drug discovery, as well as startups using AI for remote patient monitoring and virtual assistance.
Annual trends: deals reach new high in 2015
Deals to healthcare-related AI companies have been increasing year-or-year since 2011, with deals more than doubling in 2014, and more tapered growth in activity in 2015. Funding jumped by nearly 460% in 2014 year, to $358M from $64M in 2013. This funding jump was driven by Butterfly Network’s $100M Series C round and Stratified Medical’s round of $64M. In comparison, the largest round in 2013 was for less than $20M.
Quarterly trends: Q1’16 sets new activity record
Deals reached a new high of 30 in Q1’16, breaking the previous quarter’s record of 21. Funding did not see a similar run-up, indicating that many of the deals in Q1’16 were for relatively small amounts. The funding peak in Q4’14 was driven by the previously-mentioned rounds to Butterfly Network and Stratified Medical.
For context, the median deal size that quarter was $10M, compared to $2.2M in Q3’14.
Healthcare gets 15% of AI deals in 2015
As a percentage of total deals to startups using artificial intelligence tech, healthcare increased gradually from 11% in 2011 to 15% last year.
Deal share by stage
New startups are clearly venturing into this space, with more than 20 AI-based healthcare-focused companies raising seed/angel funds in 2015, compared to less than 5 in 2011. Overall, seed/angel deals dominated with a 46% share of deals during the last 5 years, followed by Series A deals at 23%.
Dollar share by stage
Startups raising Series A rounds received the largest share of funding, 33%. The largest Series A round was raised by China’s iCarbonX in Q2’16 ($154M), which is backed by Tencent and VCANBIO.
Mid-stage startups raising Series B and C rounds accounted for 32% of total dollar funding to the space, though mid-stage deals constituted just 13% of the total deals to the space. The previously mentioned $100M Series C round by Butterfly Network was the largest mid-stage deal on our list.
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