HealthTech: the champions’ moment has arrived

The European healthtech market is entering a more selective phase. Capital is concentrating around fewer companies, larger rounds and platforms capable of scaling globally. That was once a fragmented landscape of point solutions is reorganising around a smaller set of category leaders building integrated technology stacks. For investors, the opportunity is no longeridentifying promising technologies in isolation but rather backing companies withthe potential of becoming structural players.

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After the post-Covid euphoria, marked by anabundance of capital and high risk tolerance, the market has reset and 2025confirmed a profound regime shift: a sharp polarization of capital, dominatedby a handful of players, geographies, with companies deemed sufficiently“de-risked” attracting the majority of funding.Through this consolidation phase, an entire segment of the digital healthmarket has become more structured and professional. Some segments have reached a level of maturity that makes them more legible, more resilient, and ultimately more attractive to funds. For investors, the challenge is no longer about backing a technology promise, but about identifying, within this more concentrated market, companies capable of demonstrating real traction and lasting integration into healthcare systems.

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The great capital polarization

Global digital health funding bounced back in2025, reaching $28.8 billion, up 9 % year-over-year. Behind this headline figure lies a more demanding investor stance: deal volumes continue to fall. The market is now structured around one clear principle: fewer teams funded,but with far larger ticket sizes.

"Mega-deals" (transactions exceeding $100million) now account for nearly half of capital deployed, illustrating investors’strong preference for established leaders. Average round sizes areclimbing, particularly at advanced stages, as investors move away from overly scattered bets in favor of dominant market positions with proven market traction.

This dynamic is sharpening a well-known phenomenon: the Series B gap. The average time to close a Series B now approaches 30 months, reflecting rising expectations around clinical validation, regulatory and commercial milestones. In 2025, Series B funding grew by 19 %,and Series D and beyond grew by 16 %, even as seed funding stagnated or slowed. In MedTech, Series B andlater rounds accounted for nearly 65% of all activity, a sign of heightened requirements before any meaningful commitment.

This concentration of capital at advanced stages also reveals the emergence, in Europe, of a deep pool of outstanding late-stage companies. These businesses, more mature and better de-risked than they were six or eight years ago, are now attracting large, often international investment syndicates. A shift that is reshaping the landscape: where Europe once struggled to fund its scale-ups, it is becoming fertile ground for investors capable of backing these champions on their path to global expansion.

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Europe, fuelled by American capital

With growth of 15%, reaching $6.2 billion, Europe posted the fastest growth of any region worldwide. Yet this momentum is largely fuelled by capital coming from outside.

In 2025, US investors participated in more than 60% of late-stage rounds in Europe, a threefold increase compared to 2023. Landmark raises such as Isomorphic Lab (600 M$ Series A) and Neko Health (260 M$ Series B) illustrate the trend: faced with a saturated andhyper-competitive domestic market, US funds are exporting their capital insearch of growth, strong technical talent, and valuations still seen asattractive.

For European VC players, this shift represents a strategic opportunity: it favours the formation of stronginvestment syndicates combining local funds and international capital, and strengthens the appeal of European start-ups capable of moving quickly into theUS market - by far the world’s largest and most dynamic healthcare ecosystem. For investors positioned in disruptive technologies and global markets, this movement opens up concrete co-investment prospects and pathways to commercial acceleration in the United States.

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From hype to “hard ROI”: the new investment standards

As we head into 2026, the market’s message isunambiguous: a technology promise is no longer enough. Investors now demandsolid fundamentals, demonstrated commercial traction, and immediate economic impact.

The first adjustment concerns valuations. After years of disconnect between price and economic reality, the market has undergone a significant reset. Multiples are now recalibrated to reflect fundamentals (revenue quality, margins, visibility), rather than strategic storytelling. One notable exception remains: artificial intelligence. Companies embedding AI, particularly in administrative and operational functions, still command an average valuation premium but we do not expect that to last long.

But beyond multiples, what truly dominates is the pursuit of “hard ROI”. Hospitals, payers, and health systems are now genuinely suffering from integration fatigue. They are no longer looking to“pilot” new solutions. Instead, they prioririze products that can demonstrate a clear and rapid operational value: cost reduction, clinical time savings, and measurable improvements in operational performance. The ability to prove robust unit economics and a credible path to profitability has become the decisive criterion for clearing the critical Series B hurdle.

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M&A: an expanding exit opportunity

In a context where IPO windows remain narrow (despite hopes of a selective reopening in 2026), M&A has emerged as the dominan texit route. Startup consolidation is increasingly used as a growth lever.

In Europe, startup-to-startup consolidations already represents the majority of digital health M&A transactions. This dynamic isset to accelerate in 2026. Well-capitalised category leaders are acquiring weakened competitors or complementary technology building blocks to extend their footprint at lower cost. We are also seeing a growing wave of startup-to-startup tie-ups driven by an offensive logic: pooling customer bases, consolidating technologies, and reaching critical scale more quickly in highly fragmented markets.

Meanwhile, large corporates and Private Equity funds are increasingly favouring “tuck-in” (adding a capability onto anexisting platform) strategies over transformative mergers. The goal is no longer to redraw the perimeter, but to enrich existing platforms with targeted capabilities (administrative management, revenue cycle, process automation)often supercharged by AI.

The future of digital health is taking shape not as a constellation of specialised startups, but as a small number of integrated technology ecosystems, built through progressive aggregation and strategic alliances.

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Karista’s strategy aligns with his evolution. We focus on later-stage opportunities where key risks (clinical validation, regulatory approval, product-market fit) have already been substantially reduced. Companies like SamanTree Medical, with real-time imaging deployed in surgical environments, illustrate clinically validated platforms capable of becoming structural category leaders. Our last investment in Waiv follows the same logic: backing companies that move beyond single products to become foundational components of healthcare workflows, ready to scale internationally and consolidate their markets.

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Tom Beauvironnet, Healthtech Investment Manager at Karista