Healthcare AI funding has a record third quarter

Healthcare AI funding in Q3 surpassed its previous record, which was set last quarter.

Venture funding into healthcare AI startups topped $1.5 billion across 103 deals during the third quarter, according to a recent report from CB Insights on the state of the healthcare market.

Healthcare AI deals in Q3 raked in more than double the capital compared to the same period last year when $749 million was invested across 63 deals.

The third quarter outperformed its predecessor by 41 percent, or $669 million of capital. More than $926 million was invested during the second quarter across 79 AI deals.

The third quarter contained multiple mega-rounds of funding within the vertical and London-based Babylon Health reached unicorn status.

Babylon Health closed on a $550 million Series C round in August with participation from the Public Investment Fund of Saudi Arabia, Vostok New Ventures and Kinnevik, among others. The startup provides AI chatbot features to help patients self-triage their symptoms and connect them with a doctor if necessary.

San Francisco-based Freenome, which looks to use AI for early cancer detection, closed on a $160 million Series B in July.  The round was led by RA Capital Management and Polaris Partners with further participation from Andreessen Horowitz and Founders Fund, among others.

The virtual primary care and pharmaceutical supply chain verticals also had successful third quarters.

More than $605 million was invested across 16 deals in the virtual primary care market during the third quarter, which marks an increase of 3X from Q4 2018 through Q2 2019, which all recorded less than $200 million of activity.

Pharmaceutical supply chain funding topped a billion for the first time in the last year. During the third quarter, more than $1 billion was invested across 44 deals, which was up 76 percent from Q2 when $240 million was invested across 38 deals.

Other popular healthcare verticals like cannabis and women’s health saw slight declines in funding in Q3 compared to Q2. Women’s health saw the same number of deals, 38, but saw a slight decline in funding from $291 million invested in Q2 to $248 million invested during the third quarter.

Cannabis saw $923 million invested across 99 deals during the third quarter which is down from the more than $1 billion invested across 133 deals in Q2.

The report found that the global healthcare industry is on track to collect more VC investments in 2019 than 2018. More than $37 billion has been invested across 3,409 deals as of the end of the third quarter.