Digital health hub shifts from Silicon Valley to New York: SVB | Modern Healthcare

The digital health investment landscape has plateaued and artificial intelligence has taken center stage.

A new report from Silicon Valley Bank published Wednesday analyzes the challenges, trends and opportunities in the digital health innovation market. The report’s authors reveal that the epicenter of digital health funding has shifted in the last year from the West Coast to the East Coast.

Related: Inside Alleycorp’s push to turn NYC into a health innovation hub

New York-based companies—including those in New York City and Long Island—have received $2.3 billion in venture-backed health tech investments through the first eight months of 2024 compared with $2.1 billion for San Francisco Bay Area-based companies.

In 2023, Bay Area companies—including those in San Francisco and Silicon Valley—received $4.1 billion compared with $1.6 billion for New York-based companies. New York City-based Maven Clinic recently added $125 million to the region’s total with a Series F deal on Oct. 8.

The report’s authors also reveal that mega venture capital funding deals—which SVB defines as $100 million or more—have plateaued in the last few years. In 2023 and through the first eight months of 2024, mega deals represented 34% of all funding, compared with 47% in 2022 and 50% in 2021.

As mega deals have decreased, AI-centric transactions are on the rise. In the first eight months of 2024, 44% of health tech investment dollars have gone to AI companies, compared with 36% in full-year 2023.

Mergers and acquisitions for provider operations, such as eVisit's acquisition of the University of Pittsburgh Medical Center inpatient virtual consulting technology, continue to lead health tech subsectors, the report found. After provider operations, the most M&A deals involved alternative care and wellness/education companies.

Meanwhile, the authors revealed that exits in the sector, including M&A deals and initial public offerings, are getting harder to find, with only 79 thus far this year. In 2023, there were 125.

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