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Global Emerging Tech Trends

The Q3 2023 Emerging Tech Indicator report shows that venture funding for leading-edge startups continues to decline, though artificial intelligence and biotech remain resilient. Across 124 deals worth $3.0 billion, ETI activity dropped 16% by deal count and 13% by value quarter-over-quarter.

These declines align with a broad pullback in risk appetite since early 2022 when war, inflation, and rising rates began dampening sentiment. However, through the downturn, AI and biotech have remained priority areas for top-tier VC firms, together representing over 70% of total ETI funding this quarter.

In AI, mega-rounds went to AI defense platform Helsing ($226 million Series B) and AI deployment enabler Poolside ($126 million seed). These highlight intensifying national security applications alongside tools to democratize AI development. Meanwhile, AI healthcare deals like MindsDB ($47 million) and Cleanlab ($25 million) demonstrate the enduring need for robust, trustworthy data to enable real-world AI adoption.

In biotech, leading rounds focused on computational platforms for novel drug discovery, including Genesis Therapeutics ($224 million Series B) and Inceptive Nucleics ($100 million Series A). The success of these companies underscores how AI and biotech are intersecting to automate and transform pharma R&D. Further, crossover rounds for ROME Therapeutics ($149 million Series B) and Tisento Therapeutics ($81 million Series A) exemplify rising interest in developing new treatments for cancer and rare diseases.

Beyond AI and biotech, sizable rounds in climate tech (Harbinger), health tech (Thyme Care), and fintech (Karat Financial) show investors also tracking emerging opportunities in sustainability, digital health, and financial inclusion. However, with only 17 rounds over $50 million across all sectors, the number of breakout startups raising major capital appears relatively limited.

Overall, while formidable AI and biotech companies continue to make strides, the wider emerging tech environment remains constrained. Unless macro conditions improve significantly, investors may concentrate resources around an increasingly narrow band of proven winners for the foreseeable future.

The MedTech Story

The medtech industry showed signs of momentum in Q3 2023 venture funding activity, according to recent reports, though some weakness persists. Deal value reached $3.2 billion across 187 deals, rising 14.1% quarter-over-quarter. However, deal count hit a multiyear low, indicating ongoing challenges with securing funding.

Several key trends are shaping the sector:

Consolidation Continues: M&A activity remains robust, evidenced by Coloplast's $1.2 billion acquisition of Kerecis. Large medtech players are looking to small innovators to drive growth. Meanwhile, the EU levied significant fines against Illumina for prematurely acquiring Grail, underscoring regulatory pressures.

Surgical Robotics & AI Gain Traction: Top companies by funding include surgical robotics pioneer CMR Surgical ($1.2 billion raised) and AI-assisted robotic surgery startup Neuralink ($644 million). As innovations lower costs and boost capabilities, surgical robots are emerging as a major area of investment.

Cancer & Cardiovascular Diagnostics See Funding: Cancer diagnostic developers Freenome and Harbinger Health rank among the top-funded precision medicine companies, with $808 million and $140 million raised respectively. Cardiovascular diagnostics drew significant capital this quarter as well, including MicroPort CRM's $569 million.

Disease-Focused Models Attract More Capital: Startups tailored to specific therapeutic areas—such as Thyme Care (oncology), Sunrise (weight management) and Midi (women's health)—raised sizable early funding this quarter. The success of these companies highlights a shift toward more targeted digital health models.

Overall, while medtech funding shows momentum, uncertainty persists. Several key startups appear positioned for eventual public listings or sales, but economic turbulence could alter exit timing. Top-funded categories like surgical robotics and cancer diagnostics seem best positioned to weather near-term challenges. But for many startups, the path forward remains difficult. Though signs point toward sector recovery, caution remains prudent.

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