Funders remain interested in AI

VENTURE CAPITAL FUNDING for digital health companies has dipped over the past year. Startups using artificial intelligence are no exception, despite the hype surrounding ChatGPT and other AI-based solutions.

2021 set a high-water mark, with 224 deals for companies using AI technology. While 2022 proved not as fruitful, it still surpassed the previous record set in 2020. Though experts say the levels from 2021 won’t be returning, the space remains of interest.

“There’s more AI investment going into healthcare than to any other industry,” said Erik Brynjolfsson, director of the digital economy lab at Stanford University’s Institute for Human-Centered AI.

Companies using AI have consistently pulled in around a third of overall digital health funding. While companies involved in research and development were attractive investments in 2021, last year saw a major decrease in capital infusion. The stark decline should be qualified, however: The gross number of deals in each space remains relatively small. A large funding round has the potential to inflate investment numbers.

Investors and experts say clinical decision support and precision medicine solutions remain of interest to investors, buoyed by the mounting margin pressure providers across the country are facing.

Despite 2022’s decline, analysts say little evidence exists to suggest AI investments will lose ground to other digital health sectors. Several tools using AI for imaging and entering visit notes into the electronic health record are already

 on the market.