Faculty Bibliography

The integration of artificial intelligence (AI) in healthcare, known herein as Medical AI, has seen a remarkable increase in attention over the last few years. This study aims to provide a comprehensive analysis of the trends in venture funding in the medical AI sector in comparison to venture funding in healthcare and AI as a whole over the past decade, using data from the Pitchbook financial database, and its implications for the future of healthcare quality and delivery. An extensive review of venture investments in healthcare, AI, and medical AI (the overlap between healthcare and AI) sectors was conducted for a 10-year period from October 7, 2013 to October 6, 2023. The study used Pitchbook"™s database to catalogue deals across various stages, round numbers, and series, inclusive of all ownership models and geographic locations. The analysis focused on completed transactions, extracting descriptive statistics for deal flow, capital flow, and post-funding valuations while analyzing trends. The study found that the medical AI sector experienced a higher year-over-year growth in deal volume (P=0.01 compared to healthcare, P=0.08 compared to AI) and capital flow (P=0.01 compared to healthcare and P=0.03 compared to AI) over this time period, with all sectors witnessing a sharp stimulus during the coronavirus disease 2019 (COVID-19) stimulus period, alongside marked increases at the time of introduction of seminal AI technologies. This was followed by marked drawdowns with the onset of high inflation and high interest rates. Early-stage funding was dominant in medical AI, indicating a market leaning towards emerging technologies. Despite a decrease in total deal volume in recent years, there was a steady increase in median deal sizes and valuations, highlighting the sector"™s resilience and perceived value. The findings suggest that medical AI is a rapidly growing sector with significant investor interest, particularly in early-stage ventures. The findings align with the early stages of a valuation bubble, though the sector thus far has shown resilience and value growth despite broader economic fluctuations and reduced deal volume, indicating a selective yet robust investment environment.