Healthcare startups are seeking increased mergers and acquisitions (M&A) after years of inactivity, but venture capitalists (VCs) predict limited opportunities for lucrative deals this year. Major buyers like Big Tech and private equity firms are cautious due to past losses and preference for stable companies. Startups are contemplating selling at discounted valuations or seeking additional funding to extend their operations. Nonetheless, the current environment also presents growth opportunities for financially stable late-stage startups willing to acquire other firms for expansion despite the overall reduction in valuation expectations.
Healthcare startups are hoping for more M&A in the market this year after a three-year drought of company combinations.
Big Tech companies like Amazon and retailers like Walgreens have already made multibillion-dollar buys in healthcare and, in some cases, been burned by their losses.
Many healthcare startups are looking to get bought or raising down rounds to extend their lifespans, sometimes offering discounts on their last-round valuations.
On the bright side, those descending valuations offer plenty of opportunities for late-stage digital health startups flush with cash and looking to grow.
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