In the post-COVID era, investors are cautious about digital health investment. Healthcare IT deal activity remained stagnant in Q1 2024 with 74 deals totaling approximately $1 billion, showing only a 3% increase from the previous year, PitchBook data reveals.
Despite the cautious environment, there are startups in the digital health space that have caught the attention of investors. Healthcare VCs have identified several companies with promising futures, with a focus on AI-driven startups addressing challenges in the U.S. healthcare system and other non-AI-focused businesses.
Abridge
What it does: Abridge utilizes AI to automate medical records based on conversations between healthcare providers and patients.
Established in 2018 by practicing cardiologist Shiv Rao, Abridge is a pioneer in medical note-taking and has integrated with the widely used Epic Systems health records software.
Why it’s promising: The Pittsburgh-based startup excites investors and healthcare institutions looking to streamline physicians’ note-taking processes. Abridge stands out among investors as a leading health tech startup in its category, competing with companies like Ambience, Nabla, Nuance, and Suki in the AI-powered medical note-taking market.
Funding: In February, Abridge secured a $150 million Series C led by Lightspeed Ventures, following a $30 million Series B just four months prior, signaling rapid growth and investor confidence in the company.
CodaMetrix
What it does: Founded in 2019, CodaMetrix uses AI to automate medical coding, translating medical notes into diagnostic codes to reduce errors and administrative burdens.
Why it’s promising: Medical coding is error-prone and time-consuming, with CodaMetrix offering one of the largest annotated coding datasets, positioning it as a strong player in the market.
Funding and valuation: CodaMetrix raised $40 million in a Series B round, valuing the Boston-based company at $220 million, attracting investments from Transformation Capital, SignalFire, and Cressey Ventures.
