European Healthtech Startups Face Growing Uncertainty

A new report puts European healthtech in the spotlight, and some segments are growing much faster than others.

Tug of War

Octopus Ventures compiled a deep dive into European early-stage healthtech investment. Overall, a disruptive economic landscape has left founders struggling to raise and venture capitalists hesitant to invest despite growth prospects remaining promising.

  • European healthtech investment has been up and down in recent years, from $4.6B in ’20 to $11.3B in ’21 to $7.3B last year.
  • Europe saw 57% growth in investment between 2020 and 2022, higher than the US (29%) and Asia (23%), with the UK, France and Germany leading.
  • Investment in early-stage (pre-seed, seed, Series A) startups rose from $2.3B in 2021 to $2.5B in 2022, but with fewer exits, IPOs and mega-rounds.

Of note, while VC investment is approaching $3B for H1 2023, its analysts believe it is unlikely to reach 2022 figures.

Between the lines: Inflation, a cost-of-living crisis, and fears of recession contributed to a down year, and investors remain wary.

Opportunities, however, do exist amongst the challenges. In particular, efficiency, productivity and automation are strong foundations for investment, with digital therapeutics (4.3x), AI drug development (4.0x), wearables (2.4x) and mental health (2.2x) becoming the fastest-growing segments over the past five years

As highlighted by the downfall of health apps earlier this year, businesses operating in this category must be meticulous and dynamic, offering solutions that go beyond surface-level support.

As consumers demand more transparency and ownership in their well-being, at-home testing and fertility care (both male and female) will continue to scale up. And as national healthcare services continue to strain under outsized demand, new takes on preventative health and diabetes care will increasingly shoulder the load.

Takeaway: There’s funding to be had for European companies that generate efficient and accessible digital health solutions. Not a replacement for traditional care, healthtech can create space for practitioners to return to the more personable aspects of healthcare – but making it work on a societal scale is about more than just money.

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