Q2 Investment in Medtech

Investment activity is an important way in which we gauge the health of our industry.

Historical trends in healthcare funding helps us understand market confidence, support for specific types of innovation, and long-term opportunities in healthcare.

As a capital-intensive and time-sensitive sector of the larger life sciences market, tracking funding provides us with an important indicator on the innovation pipeline and optimism for (positive) disruption across clinical specialties.

This week, LSI wants to provide a high-level overview of investment trends we’ve seen in this past quarter and prognosticate on the outlook for the remainder of 2025.

Let’s take a closer look at the numbers and trends of 2025, as powered by the deal flow tracking capabilities of Compass.

The Investment Numbers

Despite many attention-grabbing headlines around US healthcare, trade policies, and the Middle East, venture activity in the medtech industry in Q2 finished strong.

Our preliminary Q2 data shows a 4% increase in the total number of deals (including M&A) closed compared to Q1.

• Total Q1 Deals Closed - 138
• Total Q2 Deals Closed - 143

While overall deal volume was slightly up, the total amount of capital raised across all deals declined an estimated 29% from Q1 to Q2.

Across those 143 deals, approximately $2.4B was raised.

Why the decline from Q1 to Q2? It’s all about the mega deals. 14 of the 21 deals over $100M were done in Q1. That means >$1.4B was raised across 14 rounds in Q1. That’s substantial.

A few other highlights from our data:

• While follow-on funding remains predominant, first round (i.e., seed) funding increased from Q1 to Q2.
• Average deal size in Q2 = ~$26.8M
• Over Q2, the number of deals closed month to month remained very consistent, with an average of 50 deals being closed a month → the “turmoil” of Q2 didn’t slow deals from being inked.

M&A activity also remains healthy, with nearly 2x as many deals being done in Q2 compared to Q1. Overall, the market sentiment remains positive with regards to M&A, with many strategics indicating the intention to buy and “tuck in” companies this year.

Pivoting to trends in fundraising, we want to highlight some clear winners in Q2.

Compass, our proprietary discovery engine for identifying startups, deal trends, and market opportunities, helps medtech executives find and analyze private companies first (while your competitors rely on google searches).

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Winners in Q2 2025

1. Cardiovascular Devices

Devices for the treatment of cardiovascular disease have been a clear winner, with investors favoring solutions for the treatment of arrhythmias and heart failure.

Significant unmet needs converge with large, global patient populations are driving attention, demand, and ultimately investment in better solutions.

Core Medical ($100M), EBR Systems, Inc. ($36.1M), Atraverse Medical, Inc. ($29.4M), Corvia Medical, Inc. ($55M) are just a few of the deals that were closed in Q2 that spotlight the noteworthy activity in this market when compared to other indications.

Prominent acquisitions have made this market even more attractive.

2. Diagnostics

Whether it be imaging or testing, there has been a consistent stream of capital flowing into diagnostic companies. Diagnostics have led in both deals done, capital raised, and acquisitions made in Q2.

Illumina acquiring assets of SOMALOGIC LIMITED ($425M), Resmed building its sleep therapy platform through its acquisition of VirtuOx, Inc. , and ClearPoint Neuro, Inc. ($110M) are just a few examples that demonstrate just how integral diagnostics are to executing on healthcare.

Both of these winners underscore the following investment themes that we are observing:

• Chronic diseases are a top-of-mind problem requiring better solutions. The management of chronic diseases is an area of priority for healthy systems that continues to attract capital.
• Solutions that facilitate early diagnosis are critical to catching disease early to improve treatment outcomes and keep costs down.
• Healthcare labor challenges necessitate innovative solutions in order to keep healthcare engines running.

Other Standout Deals

A standout deal isn’t always the biggest one. While there have been plenty of mega deals done in Q2, we’d like to highlight a few noteworthy deals that may or may not have crossed your radar.

ForSight Robotics raised $125M for its ophthalmic surgical robot. The deal stands out to us for two reasons:

1. We appreciate the diversification of surgical robotics beyond the general surgery market - especially when there is a clear benefit to the precision that comes with surgical robotics.
2. It follows the acquisition of LENSAR, Inc. by Alcon .

Cosm Medical closed a Seed round of fundraising for an undisclosed amount for its personalized solutions for the treatment of pelvic floor disorders in women. The patient-specific approach to their device eliminates the pain and inefficiency that is associated with off-the-shelf alternatives.

SafeHeal raised $35M in a Series C round led by Solar Eclipse, with participation from Gideon Strategic Partners , M&L Healthcare, and Sofinnova Partners . Their technology creates a temporary bypass sheath in the colon following colorectal resections, reducing the need for ostomies.

These are just a few deals that stand out to us for the disruptiveness of their technology and the investors backing these innovations.

Conclusion

Overall, 2025 has seen a resurgence in medtech investment from prior years.

When we look back at just the last year, we see that the number of deals and amount being raised is up compared to Q2’24.

Total amount raised is up nearly 10%, and the number of deals closed is up 28%.

LSI remains optimistic when it comes to fundraising in medtech in 2025. The uncertainty surrounding US and global events does not seem to be impeding the flow of capital into our industry, as venture, PE, and strategic capital remain hungry to find and back disruptive innovation.

With many of the topics that dominated the industry in Q2 seemingly in the rearview mirror, we anticipate that H2’25 will exceed historical trends in deal activity for our industry.

Numbers for this analysis are procured and estimated on a best-efforts basis.

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Until next week,

Henry Peck, Nicholas Talamantes, Gavin Kennedy

LSI Market Intelligence Platform