One thing I love about investing is that the best research often disproves your own assumptions.
I kept hearing “medtech VC is in decline,” so I decided to dig into the data myself. I expected shrinking investor interest, inflated valuations, and a weak exit environment.
Instead, I found a more nuanced story.
What’s true:
→ Medtech VC deal value fell 17.1% YoY in Q1 2026, but off a record $16.1B in 2025.
→ Deal count fell only 3.7% YoY. Participation held up far better than dollars.
→ Median deal size climbed to $11.8M (from 2025’s already-record $10M). The money isn’t leaving, rather concentrating into fewer, larger checks.
→ Medtech PE deal count dropped ~41% YoY to 26 deals in Q1.
What I got wrong:
I assumed overinflated multiples were scaring VCs off. The opposite is true. IHI (iShares US Medical Devices ETF) is down 17–20% YTD, trading at a compressed multiple vs. its 2021 peak. Public medtech comps are de-rating, not inflating. If rich multiples were the brake, we wouldn’t be seeing this.
I also missed the exit data. Medtech VC exits hit $4.1B in Q1 2026 alone, and nearly half of all of 2025, anchored by EdgeMedical’s $2.2B surgical-robotics IPO. Strategics are still paying full price for differentiated assets: Boston Scientific/Penumbra ($14.5B), Danaher/Masimo ($9.9B). Not a sector investors have given up on.
So what’s actually happening?
Medtech isn’t necessarily being rejected, but instead, being crowded out. AI absorbed 86% of all US VC dollars in H1 2026. And with LPs still starved for distributions, 89% of new fund commitments this year went to seasoned, incumbent managers. A tough backdrop for the smaller, specialist funds that anchor early-stage medtech.
I’m living a version of this firsthand. My own company is raising a pre-seed round right now, and the pattern shows up everywhere in conversations with investors: the ones still writing early-stage medtech checks are stretched thin, and a lot of the specialist funds that used to anchor rounds like ours simply aren’t raising new funds of their own. A medtech-focused fund manager put it well at a recent industry conference: with early-stage medtech funds in short supply, it’s become a buyer’s market for the VCs still active at seed and Series A. That tracks with what I’m seeing. The investors still in the game aren’t necessarily writing bigger checks because they love the sector more, they’re writing bigger checks because there are fewer of them left standing, and they can afford to be more selective about who they back.
There’s a second piece to this I initially missed too: strategics aren’t sitting on the sidelines waiting for VCs to de-risk deals for them anymore. Corporate venture arms like Medtronic Ventures, J&J’s JJDC, and Philips Ventures have all stepped up their early-stage activity, effectively filling part of the gap left by pulled-back generalist and specialist funds. That’s a meaningfully different capital structure than five years ago: less spray-and-pray from generalist funds chasing the next big multiple, more concentrated conviction from investors, traditional and corporate alike, who actually understand the regulatory and clinical path a device has to walk.
The real picture coming out of the clouds isn’t “medtech VC is dying.” It’s capital discipline colliding with an AI supercycle and an LP liquidity squeeze, while the exit window is quietly reopening underneath the headlines.
For founders building in this space right now, the takeaway is less “the money is gone” and more “the money got pickier.” Clinical validation, a clear regulatory pathway, and evidence of real hospital demand aren’t optional anymore. They’re the price of entry to get in front of the smaller pool of investors who are still writing checks.
I’m pretty curious how others read this: is medtech’s Q1 pullback a temporary AI crowding-out effect, or the start of a more structural re-rating?
Photo: drogatnev, Getty Images
Jordan Lisnow is COO and co-founder of CuffWay, a medtech startup building the first automated, adaptive cuff pressure controller for intubated patients. He is a three-time founder with two prior exits, and previously worked in venture capital at Traverse Ventures evaluating early-stage teams across AI, fintech, SaaS, and frontier tech.
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