Dive Brief:
- A slowdown in medtech venture capital investments in the third quarter has dampened expectations that the sector can achieve its biggest year since 2021, according to PitchBook data shared last week.
- VCs invested $3 billion in the third quarter, down from $4.6 billion in the second quarter. However, after posting the lowest level of quarterly funding since the fourth quarter of 2023, PitchBook analysts said the sector is on course to reach or exceed its highest total funding since 2023.
- The analysts tracked a similar shift in private equity activity. PE funding was on pace at the midpoint of 2025 to reach its highest level in a decade, but the analysts are now uncertain if the sector will beat the $10 billion invested last year.
Dive Insight:
PitchBook made bullish predictions after seeing funding data for the first and second quarters of 2025, initially predicting a “strong year for global medtech funding” and then forecasting that VC financing may reach the second-highest annual total in its records. Yet the analysts dialed down expectations after a third quarter in which VC investments slowed down.
After the first nine months of 2025, medtech companies had raised $12 billion from VC funds across 647 deals. The level of activity puts the sector on course to beat the deal value from 2024, when VCs invested $14 billion in medtech companies.
Exceeding 2024’s funding would continue the recovery from the post-pandemic slump, when investment fell from $22.5 billion in 2021 to $12.3 billion in 2023. While deal value is recovering, deal volumes are continuing to fall. After nine months, the sector is on course to strike fewer deals than the 948 reported in 2024, which was down from the more than 1,000 agreed each year from 2020 to 2023.
The divergence of deal values and volumes represents the continuation of the previously identified trend for VC funds to focus investment on a relatively small pool of later-stage companies. PitchBook analysts said there “has been a deterioration of funding possibilities for early-stage medtech companies and especially ones without AI tailwinds.”
Similar trends are affecting the PE sector. PE groups invested $7.4 billion in medtech companies over the first nine months of 2025. While a slowdown in the third quarter raised doubts about whether funding will top the $10 billion record from 2024, PE activity has already exceeded the annual total dating back to at least 2015.
PE groups struck 75 deals in the first nine months of 2025. Annual deal volumes peaked at 146 in 2023 and never fell below 128 between 2022 and 2024. The disconnect between deal values and volumes in 2025 led PitchBook analysts to note that “capital is concentrated in top-tier assets with scalable models rather than incremental growth plays.”
