Australian healthcare startups are currently enjoying a surge of attention. From Harrison.ai’s rapid scaling into AI-driven diagnostics, to AI scribe Heidi’s multimillion-dollar raise, investors are backing local innovators poised to transform global healthcare systems.
According to Cut Through Ventures’ recent Q3 report, healthtech and medtech remain among the most well-funded industries in Australia. Further accelerating the sector’s rapid momentum is AI. It’s transforming how healthcare is delivered and how investors assess opportunities, but it’s also changing the economics of startup building.
Since the release of ChatGPT and the subsequent wave of AI innovation, founders and investors alike are finding it harder to predict how much capital they will need to scale a business. While AI can reduce hiring costs through automation, its heavy computing demands and infrastructure costs can quickly escalate. This uncertainty is making capital planning more complex.
Adding to the challenge, healthcare is already inherently capital intensive. Developing medical technology requires longer research and development cycles and rigorous regulatory reviews. It’s often years before a product can launch to market, let alone bring in meaningful revenue. That means Australia’s healthcare founders need investors with deeper pockets and more patience than most.
What the data shows
Insights from Carta’s platform, which tracks private market activity across more than 50,000 companies, reveal a unique funding reality. In 2024, US healthcare startups raised more than US$23 billion across nearly 1,400 rounds, making it one of the most active sectors. Yet those founders gave up more ownership in the process: median dilution at seed and Series A stages hovered at or above 20%, significantly higher than in other industries.
Growing interest and funding for healthcare startups has largely been fueled by the rise of AI. Founders are applying AI to developing products for areas such as drug discovery and clinical documentation, while also using it to reduce costs. But while AI-native companies are helping to revitalise investor confidence, they also face greater capital requirements to build data infrastructure and hire specialist talent.
This data points to a hard truth. For healthcare founders, access to capital is more than just raising enough to cover long R&D timelines – it’s also needed to balance the equity trade-offs that come with it. The challenge is to raise enough to maintain momentum without over-diluting ownership, because every round affects the long-term financial reward for founders and early employees.
Implications for Australian founders
Plan fundraising around milestones:
For Australian founders, the first lesson is to plan for higher capital requirements. Fundraising stages can be planned around strong milestones – whether that’s compelling clinical results, published peer-reviewed evidence, or regulatory progress – so that founders can raise what they need, when they need it, with investor confidence.
Be disciplined about equity:
Second, they need to be disciplined about equity. Giving up too much too soon can limit future financial upside, which can leave founders and early employees under-rewarded just as the company begins to scale. In healthcare, where the biggest value creation often happens later, preserving equity through each round ensures those who contributed to early success are fairly rewarded in the long term while maintaining an element of control.
The impact on funding behaviour
For investors, healthcare demands a different mindset. Returns take longer, but the resilience of the sector is undeniable. Even in volatile markets, healthcare funding remains strong globally, buoyed by the simple fact that demand for better care only grows. In Australia, this is reflected in healthy deal activity and the sector’s place among the top categories attracting venture interest.
The funding environment is also reshaping founder behaviour. In a slower capital market, Australian healthcare startups are proving more disciplined. Leaner operations, demonstrable traction, and efficient AI use are now prerequisites for attracting investment preserving ownership. Founders who can clearly link AI adoption to measurable gains are best positioned to attract investment on favourable terms.
Building a more resilient healthcare system
The opportunity for Australia is enormous. We have world-class universities and research institutes, and the startup ecosystem is maturing, with local success stories inspiring new founders. Global investors are watching too.
But healthcare startups require patient capital and careful planning. By understanding the dynamics of dilution and extended runways, Australia’s healthcare startups can both attract the funding they need while retaining the ownership that ensures founders remain at the helm.
In healthcare, perhaps more than any other sector, building transformative companies is a long game. AI will accelerate progress, but it won’t shorten the journey. With the right balance of ambition and discipline, Australia is well-placed to deliver the next generation of global healthcare leaders.
