Healthcare Venture Markets Regain Momentum as Capital Returns, according to HSBC Innovation Banking

2026 Venture Healthcare Outlook points to improving investment conditions and optimism for the year ahead

NEW YORK--(BUSINESS WIRE)--After several years of constrained capital markets and heightened investor caution, the healthcare venture ecosystem began to stabilize in 2025, setting the stage for a more constructive, though still selective, environment heading into 2026, according to HSBC Innovation Banking’s 2026 Venture Healthcare Outlook.

The downturn that followed the post-pandemic peak was marked by slower investment pace, limited IPO activity, and an increase in insider-led financings. While these conditions persisted into early 2025, sentiment shifted in the second half of the year as investment activity improved, exit markets reopened selectively, and macroeconomic pressures eased. Total healthcare venture investment rose to $60 billion across 2,167 deals in 2025, up from $45.4 billion in 2024, marking the strongest annual level since 2022.

Private M&A and IPO activity also picked up, reopening exit pathways that had been largely closed in prior years. While the recovery remains uneven, momentum accelerated into year-end, with Q4 2025 representing the strongest quarter for healthcare venture investment in three years, pointing to renewed investor confidence and improved liquidity conditions.

As highlighted in July, mega-rounds continued to play a defining role in healthcare venture markets. In 2025, $100 million-plus mega rounds represented roughly 43% of total healthcare venture investment, reinforcing their significance in driving capital deployment amid a selective funding environment.

“While it would be premature to say the downturn is fully behind us, conditions across healthcare venture markets have clearly improved,” said Jonathan Norris, Managing Director at HSBC Innovation Banking. “The market has shifted from survival to selectivity, with capital deploying more consistently, exit markets reopening, and investors re-engaging with private companies that used the downturn to strengthen fundamentals, advance clinical milestones, and demonstrate operating discipline.”

Four Key Takeaways to note as we enter 2026:

1. Investment activity increased year-over-year, with momentum building in Q4: Overall healthcare venture investment rose from 2024 levels, with activity improving across most subsectors later in the year as public markets performance strengthened and macro headwinds eased.
2. Exit markets reopened selectively, improving liquidity and sentiment: Private M&A and IPO activity picked up meaningfully in 2025, providing renewed liquidity across the venture ecosystem and marking a clear shift from prior years, even as the IPO window remains discerning.
3. Investor behavior shifted from defense to higher-conviction deployment: Insider-led rounds and extensions remained common, but companies with differentiated technology, strong clinical data, and clear commercialization paths increasingly attracted new investors with step-ups in valuation.
4. The outlook for 2026 is cautiously optimistic: Stabilizing valuations, improving macro conditions, and more active exit markets point to continued momentum in 2026, with reasonable investment growth and a stronger exit environment for well-positioned companies.

Looking ahead to 2026, HSBC Innovation Banking expects healthcare venture markets to continue their gradual recovery. Healthcare venture investment is projected to reach $65-$70 billion in 2026, supported by improving IPO conditions, increased M&A activity, and continued engagement from growth and crossover investors.

The 2026 Venture Healthcare Outlook analyzes investment, financing, and exit trends across the healthcare venture ecosystem, drawing on proprietary data and market insights from HSBC Innovation Banking.

To view the full report, visit: https://www.hsbcinnovationbanking.com/us/en/business-stage/hsbc-healthcare-reports

About HSBC

HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from offices in 57 countries and territories. With assets of US$3,234bn at 30 September 2025, HSBC is one of the world’s largest banking and financial services organisations.

Disclaimer

This material has been prepared and provided to you by members of HSBC Innovation Banking, a business division with services provided in the United States by HSBC USA, N.A. Information referenced herein is based on information that is believed to be reliable as of the date of publication, but no representation or warranty is made as to its accuracy or completeness. For informational purposes only. Views are subject to change without notice.

See full report for data sources and additional disclaimers.