Healthcare IT companies raised $1 billion in venture capital in Q2 — down slightly from the $1.3 billion raised in Q1 but up significantly from the $451.3 million raised in Q4 2022. Unsurprisingly, a lot of these investments were made in companies offering generative AI products. Another key trend was increasing cash flow to remote patient monitoring startups, likely caused by expanded reimbursement for these services.

This week, Abbott announced its plans to acquire Bigfoot Biomedical — a startup selling a “smart” insulin pen cap, which collects data from a user’s CGM to help them calculate the right dose. Most analysts were unsurprised to hear of the acquisition given that the two companies have been collaborating for more than six years, but they said the deal reinforces the steady pace of digital innovation in the diabetes care space.

During past recessions, the healthcare sector remained relatively immune to economic downswings — but things are different now that a sweeping labor shortage and lower patient volumes have been added to the mix.

Medtech funding reached its low point in the first quarter but will slowly pick back up over the rest of 2023, according to a new Pitchbook report. It noted that this year’s medtech funding total will not come close to the $19.7 billion the sector raised in 2021, and it might even come in below last year’s funding total of $13.5 billion.

Biotech startups raised $2.6 billion globally in the second quarter of this year, but that’s down nearly 46% compared to the same period last year, according to a report from Pitchbook. Capital is harder to find, and the report projects an uptick in M&A activity as companies run out of cash.

The food as medicine movement is gaining momentum, but there are several challenges, according to a PitchBook report. These challenges include resistance to diet restrictions and difficulty in tracking compliance.

Last year’s digital health investment trends have left some startups feeling uneasy about their ability to raise capital in the new funding environment. Venture capitalists think companies that have a demonstrable return on investment and serve multiple stakeholders will probably have the easiest time securing capital, while point solutions and startups in crowded markets will face a tougher environment.

It was a banner year for biopharma, with records broken in deal values, number of exited unicorns and the biggest-ever biotech IPO. But where do these unicorn valuations come from?

The report, by PitchBook, shows figures consistent with a similar report earlier this month by Silicon Valley Bank, which forecast more M&A deals this year.

Deals worth $50 million or more are becoming more frequent, even in Series A. But a VC investor said underlying drivers in life sciences are different from the technology sector.