Dive Brief:
- Venture capital investment in medtech companies is on track to reach the second-highest annual funding total in PitchBook’s records, the market data research firm said Friday.
- Companies received $4.1 billion of VC funding in the second quarter, maintaining the pace set in the first three months of 2025 and keeping the sector on course for its biggest year since 2021.
- The rise in funding happened despite the lowest quarterly deal count since at least 2017. With exits via buyouts and initial public offerings down, VC funds are investing larger amounts in a smaller pool of relatively mature companies.
Dive Insight:
PitchBook predicted a “strong year for global medtech funding” in June after seeing investment data for the first quarter. The second quarter supported that prediction. With $8.5 billion of investment at the midpoint of 2025, the sector is on pace to top the $16.2 billion raised in 2022.
Yet, the data suggests the number of VC deals in 2025 will fall to the lowest level since 2017, when PitchBook tracked 758 investments. PitchBook logged 421 deals over the first half of 2025, including 189 in the second quarter.
VC funds may disclose some investments retroactively, but the data still suggest the resurgence of deal value will happen despite a stagnant or declining deal count. PitchBook said the trend is aligned with broader VC activity.
“The data underscores a meaningful shift in private markets toward capital concentration: Larger rounds increasingly favor top-tier companies and AI-native startups, leaving other startups fighting for a smaller pool of capital,” PitchBook wrote in its report.
PitchBook’s analysis of exit activity suggests an explanation for the trend. The number and value of VC exits, either via a buyout or IPO, are lagging behind the pace set in 2024. PitchBook tracked exits worth $2.9 billion over the first half of 2025, compared to $10.7 billion across all of last year.
VC funding for more mature companies has increased as exits, which provide an alternative source of cash, have dried up. The value of investments in companies in the latest stages of the venture lifecycle increased 25% in the second quarter, offsetting falling funding for earlier-stage businesses. The mature companies accounted for 25% of VC deals in the first half of 2025, up from 11% in 2021.
“With medtech companies struggling to reach an exit, more are turning to venture-growth funding to extend their runway,” PitchBook wrote. “As net funding continues to rise despite subdued exit activity, investors are clearly readjusting their expectations and recognizing that medtech venture time horizons have extended.”
VC funds are primarily targeting the surgical devices and tools segment. The segment accounted for 46% of deal value and 30% of the deal count in the second quarter. Diagnostics and life sciences was the second most active sector, accounting for 19% of the deal value and 28% of the deal count. PitchBook said the surgical sector is “now firmly established as the hottest destination for capital within medtech.”
