Bessemer Venture Partners put out an update to its top-tier blog series on benchmarks that health tech startups can use to see how they stack up against the competition.
We won’t dive into the full industry overview, but here’s a look at a few of the key metrics Bessemer shared to illustrate how the health tech segment has evolved since last year.
Graduating is hard. Health tech “graduation rates” from Seed to Series A and B have fallen significantly compared to previous cohorts.
- Of the companies closing Series A rounds, the median time it takes to reach that milestone is 50% longer in 2024 than prior years, and is longer in health tech than any other sector.
We’re so back. Although the funding environment remains challenging, the good news for those that are able to raise capital is that valuations have rebounded to peak levels.
- “Phoenix” companies that have risen from the ashes of the market correction are commanding premium valuations in massive late stage rounds (see Equip and Maven), while frothy investments in AI startups are fueling an early stage boom.
The AI factor can’t be ignored. The share of health tech investment directed at AI-focused companies has increased by 9 percentage points in just two years – hitting 38% in 2024.
- These startups are reaching 30-50x ARR multiples, with valuations 2-5x higher than their non-AI counterparts.
Services-as-Software is the new paradigm. These businesses use AI to automate workflows historically performed by humans, and benchmarks show an accelerated go-to-market trajectory compared to traditional SaaS models.
- Services-as-Software companies are reaching $10M ARR at unprecedented speeds as the industry rushes to test if they can deliver on their value promises, and the following chart has the full breakdown – at least for the readers that know their finance acronyms.
The Takeaway
Bessemer’s full post goes much deeper on the overall health tech landscape and the intricacies of AI Services-as-Software, but the four charts above give you a solid lay of the land. Bessemer remains as optimistic as ever on health tech heading into 2025, and it’s definitely impressive to see the resilience that these companies have showcased over the last year.
