The PitchBook H1 2025 Healthcare Funds Report highlights a widening divide between PE and VC healthcare specialists. Despite macroeconomic headwinds, healthcare remains a resilient and strategically attractive sector for investors.

Private Equity Healthcare Funds: Strength in Scale

Private equity fundraising in healthcare has remained strong, even as the broader PE market slows. Investors are consolidating capital into larger, established managers, signaling confidence in healthcare’s acyclical nature.

• $9.5 billion raised across 10 funds in H1 2025, on pace for one of the strongest years yet, second only to 2023’s $21.7 billion.
• Linden Capital Partners VI closed at $5.4 billion, over half of all PE healthcare capital raised in H1.
• Healthcare specialists now account for 3.8% of all PE funds and 4.5% of PE capital, a record share.

Ultimately, consolidation is accelerating. The largest managers are absorbing more capital as LPs lean toward proven players, while middle-market funds scale up into upper-middle-market territory.

Venture Capital: Healthtech Surpasses Life Sciences

VC fundraising tells a different story. While life sciences funds face headwinds, healthtech has surged ahead.

• Life Sciences VC: Only $1 billion raised in H1 2025, on pace for the lowest annual total in a decade.
  • Challenges: weak biotech equities (Morningstar Biotech Index down 4% YTD), a closed IPO window (Q2 marked the first quarter without a U.S. biotech IPO since 2016), and high capital intensity.
• Healthtech VC: Raised $1.4 billion across 12 funds in H1, marking the first time healthtech has outraised life sciences.
  • Key drivers: AI-powered provider solutions, digital health IPOs (Hinge Health, Omada Health), and LP appetite for software-based, capital-light models.
  • Healthtech now represents 2.8% of total VC fundraising, a record high.

The momentum is shifting decisively toward digital health and provider-facing AI. Life sciences faces a funding drought, while healthtech’s exit environment and adoption runway are improving.

Performance Insights

Fund performance continues to diverge across strategies:

• PE healthcare vintages (2012–2014): Outperformed overall PE by IRR, but later vintages broadly in line.
• VC (2021–2022 vintages): Life sciences and healthtech funds showed strong pooled IRR but lagged in TVPI, reflecting slower realizations despite promising marks.

Takeaway

The first half of 2025 reinforces healthcare’s duality: PE is consolidating strength, while VC is splitting between a struggling life sciences vertical and a rapidly accelerating healthtech segment. For investors, the implication is clear. Capital is concentrating in fewer, larger funds on the PE side, while healthtech VCs are emerging as the growth frontier within venture.