Health tech still commands venture capital dollars

Health tech investing is down significantly — but when you zoom out, the sector is attracting more venture dollars than other buzzy segments, including fintech and AI, per a new report from PitchBook.

Why it matters: Amid a cloudy and uncertain financial market, digital health has once again solidified itself as a resilient investment proposition.

Yes, and: That tracks with industry observer sentiment from the HLTH conference last month in Las Vegas, where consultants, investors and entrepreneurs told Axios they continued to view the sector as somewhat “recession-proof” despite the rise of high-deductible health plans and consumer financial responsibility.

• Health tech remains a “uniquely privileged sector, since both health care and technology are growth economies,” says digital health consultant Steven Wardell.
• And as One Medical CIO Rushika Fernandopulle points out, “people get sick regardless of the economy.”

By the numbers: Health tech raised over $26 billion in VC money across 1,413 deals this year through Nov. 29, according to PitchBook data.

• Health tech dealmaking still remains below 2021’s record of $34.5 billion across 1,865 deals, a 25% and 24% drop respectively.

The intrigue: Post-money valuations in health tech are robust, with the median deal in the segment valued at more than $45 million.

• That’s up almost 33% from the 2021 median valuation of $33.9 million.

What they’re saying: Digital health is succeeding despite a challenging market, with popular subsectors like fertility, behavioral health and women’s health at the forefront.

• The current climate “brings a little more urgency to what we’re doing,” says Calm CEO David Ko. “I think the world needs us now more than ever.”
• “It is far easier to launch a digital health company today,” says Maven Clinic CEO Kate Ryder. “There’s a power in having a collective voice.”
• “We’re seeing employers start to talk about abortion care, which we never saw before,” says Tia CEO Carolyn Witte.

What we’re watching: We’ve seen a significant uptick in early-stage investing, with a number of digital health companies collecting double-digit seed rounds.

• How do those seedlings grow into trees in today’s market?