Survey: Health care investors take “middle ground” on generative AI

Artificial intelligence in health care is the topic du jour, but a majority of investors aren't going all in on AI, according to a recent GSR Ventures survey.

Why it matters: These survey respondents remain cautious and want to see who will be the winners and losers and which applications will make for the best ROI.

Details: The results come from a survey of 40 leading health care technology VCs.

• The sectors that the survey participants believe are most impacted by generative AI are health care data and analytics and tech-enabled services.
• Investors believe that the clinical areas with the most promise for startups are oncology, followed by cardiology.

By the numbers: 71% of respondents said they believed ChatGPT/GenAI is changing their investment strategy somewhat or a little.

• 12% said it does not at all.
• Only 17% of investors were willing to say generative AI changes their investment strategy significantly.
• 78% said they believed valuations would be the same +/- 20%. However, slightly more investors believe valuations across health technology will continue to fall next year.

Zoom in: Expectations around valuations for seed stage digital health companies was split.

• 40% said their expectations remain the same, while 42.5% said it had decreased by 20%.
• For Series A, 64.3% said expectations on valuations had dropped by 20%, while 21.4% said it had increased by more than 40%.
• Expectations for Series B were mixed, with 43.9% saying they anticipate a decrease by 25% to 50%, nearly a third (29.3%) saying they see it dropping by more than 50% and about a quarter (24.4%) seeing it decline by 0% and 25%.

• Valuations for private digital health companies in 2024 compared with today, 31% said it increase by 20% and 31% said it will decrease by 20%. 26.2% of respondents said it would stay the same.

What they're saying: "We expected that generative AI innovations had impacted the digital health investment community and our poll results certainly confirmed it, with nearly 1 out of 5 respondents attesting that it is 'significantly' influencing their strategy," says Justin Norden, partner at GSR Ventures.

• "It will be exciting to witness over the remainder of 2023 into 2024 the many new generative AI healthcare startups that enter the market."