An unexpected comeback for European health tech investment in the third quarter of 2024 was a rare brightspot in an otherwise tough period for fund-hungry startups.
Oncology-focused health tech enterprises were among the most sought after investments, figures show.
European startup funding faltered in Q3 2024, with startups raising a total of US$11.3bn – down 35 per cent compared to the same time last year, according to Dealroom data.
However, total investment in European tech so far in 2024 totals US$40.9bn and is on track to equal 2023’s total investment (US$58.2bn), fuelled by a surge in AI-powered healthtech investments and the ongoing strength of generative AI (genAI), demonstrating the underlying strengths of the European startup ecosystem.
The healthtech sector experienced an unexpected comeback, securing more venture capital (VC) than any other sector during the year to date.
In Q3 alone, healthtech companies raised US$2bn, whilst oncology startups, in particular, saw a significant boost, attracting nearly US$600m in funding.
Companies like Catalym and Myricx Bio, specialising in immunotherapies and precision cancer medicine, secured substantial funding rounds – $US150m and US$117m respectively.
AI technologies continue to be a driving force in the European startup landscape.
GenAI, in particular, has attracted significant investor interest, with US$165m raised in Q3.
GenAI companies have raised a total of US$3.3bn so far this year, 8 per cent of total European VC funding.
Industrial technologies and hydrogen technologies also remain popular sectors for investment.
Germany-based Black Forest Labs raised US$31m to develop generative deep learning models for images and video, whilst London-based Raycast raised $30M for its productivity app in Q3.
The fintech sector demonstrated resilience, recovering from a downturn in 2023. Funding for fintech startups increased by 45 per cent year-over-year in Q3 2024, reaching US$1.6bn. This growth is attributed to innovations in AI and embedded finance solutions.
Despite a decline in late-stage investments, early-stage and breakout-stage deals have remained steady throughout 2024. Over 2,000 rounds of US$2m or more have been raised by European startups, indicating a healthy pipeline of innovative companies.
The European startup ecosystem is well-positioned for continued growth, driven by AI-powered healthtech, Generative AI, and a strong pipeline of early-stage companies. With a projected US$33bn in dry powder by the end of the year, the ecosystem is primed for further momentum in 2025.
The UK took the most funding of any European country in Q3, taking in US$2.9bn in total thanks to large rounds from Flo Health (US$200m) and CloudPay (US$120m), bringing its total raised so far to US$12.9bn.
However, this is still down nine per cent compared to 2023. Germany came second with US$2.7bn, with a total of US$6.6bn raised, up 6 per cent compared to the same period last year and France was close behind with US$1.6bn raised, of a US$6.0bn total, down 13 per cent.
Carina Namih, Partner at Plural, says: “The significant investment in health and oncology marks a new era in healthcare, where AI and biotech are poised to deliver life-changing advancements for patients.
“We’re witnessing the translation of these technologies from research labs to real-world applications such as Sano Genetics.
“With growing demand for precision medicine and groundbreaking therapies, specialised areas like oncology are poised to be major growth drivers in the coming year.”
