The report, based on Tracxn's database, provides insights into the UK HealthTech space.

Total funding in the UK’s HealthTech sector has dropped by 37% from $2.11 billion in 2021 to $1.32 billion in 2022. This decline is largely due to the 58% year-on-year (YoY) decline in late-stage funding from $1.1 billion in 2021 to $464 million in 2022. Early-stage funding fell 23% YoY to $625 million in 2022. However, seed-stage funding witnessed a 39% YoY increase in funding to $254 million in 2022.

2022 was the second-highest funded year in the past decade, after 2021, for HealthTech startups in the region. H2 of 2022 contributed to 61% of the funds raised during the year in this space. Q3 of 2022 witnessed the highest funding, contributing more than 38% of the funding raised in the year. There was a slight uptick of 6% in funding from Q4 of 2022 to Q1 of 2023 but is still 41% lower than the funds raised in Q1 of 2022.

HealthTech startups in the UK started experiencing a funding winter after Q4 of 2021. Concerns over inflation, change in investor interests and macroeconomic conditions have slowed down investment activity across the globe. Further, the economy was impacted by the rise in oil prices as a result of the Russia-Ukraine war.

Only one $100 million funding round took place in 2022, compared with four in 2021. Cera, an online platform offering multiple home healthcare services, raised $320 million in a Series C funding round from Quadria Capital, Lightrock India and others.

Among UK cities, London has been the leading hub for HealthTech funding over the last five years, followed by Manchester and Cambridge. The golden triangle of ‘London-Oxford-Cambridge’ is home to around 2,800 HealthTech startups and the number is still growing.

In 2022, The number of acquisitions in the UK HealthTech sector rose 10% from 47 in 2021 to 53 in 2022. Acquisitions of Pharmaspectra by IQVIA, and LifeWorks by Telus were some of the major deals that occurred during the year.

Healthcare IT, Healthcare Booking Platforms and Disease Self-Management were the top performing segments in the HealthTech sector in 2022. Funding in the Healthcare IT segment attracted more than 61% of the total investments raised in the overall sector. Pharmacy IT was one of the most underperforming segments, recording total funding of only $1.84 million in 2022.

The number of IPOs in the UK HealthTech space fell from four in 2021 to one in 2022. Benevolent, an AI platform for drug discovery and development, was the only company in this space that went public in 2022. The top seed-stage investors in the UK are Y Combinator, APEX Ventures and Calm/Storm, while the top early-stage investors are Mercia, Foresight Group and KHP Ventures. Squarepoint Capital, SoftBank Vision Fund, and AstraZeneca are the top late-stage investors.

During the pandemic, the UK government’s startup accelerator programs have grabbed the attention of many investors during the pandemic. The UK government is also taking initiatives to open a market for UK HealthTech startups in other countries through its Association of British HealthTech Industries (ABHI).

Amazon Web Services (AWS) has also launched its first UK healthcare technology accelerator programme that will provide end to end resources for startups to accelerate their technology and business in the healthcare segment.

The UK leads Europe's HealthTech startup ecosystem, in terms of funding amount as well as the number of startups. Increased awareness among the general public regarding the importance of health, accelerating adoption of multiple digital health technologies and products will definitely help the sector grow.