Investors bet $7.3 billion on AI startups tackling healthcare, more than on any other industry

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Healthcare is the top industry for AI deals.

• Over the last several years, private investors have poured billions into artificial intelligence startups working in areas like finance and retail.
• Healthcare has emerged as the "hottest area for AI investment," attracting $7.3 billion across more than 900 deals in the last six years, according to a new report from CB Insights.
• AI is thought to have particular potential in healthcare because of the sector's bounty of data. And though there's plenty of skepticism, too, these new figures show investors are betting it's got staying power.
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Healthcare is the hottest area for artificial intelligence investments.

That's according to a new report from the tech market intelligence platform CB Insights, which found that the sector attracted $7.3 billion across more than 900 deals over the last six years. Those figures put healthcare above even the finance and insurance sector, as well as the retail and consumer packaged goods industry, CB Insights said.

Healthcare is thought to be a particularly ripe area for AI technology because the industry has access to so much data. AI tech can process that data and make predictions from it on such subjects as the experimental drugs most likely to succeed, or how health insurers can cut down on rising healthcare costs.

Healthcare "has has been embracing data for a few years now. And I think once you have embraced the power of data, then AI is the natural next step," Vijay Pande, general partner at VC firm Andreessen Horowitz and founding investor in the a16z Bio Fund, told Business Insider.

"AI gives you the most powerful means to leverage that data to actionable outcomes," he said.

Read more: The $1.2 trillion pharma industry has ambitions for AI technology, but 'people are ignoring' a lot of its uses

Getting data ready for prime time, though, has come as a challenge for established companies - as well as an opening for startups taking new and different routes.

"For creating innovation, especially with a new technology in a domain that's not familiar with it, the disruptive power of startups is really uniquely powerful to achieve that goal," Pande said. Andreessen Horowitz's first biotech fund was about $200 million, and its second one rounds out at about $450 million. The VC firm has invested in AI firms like drug design startup Insitro and early cancer detection company Freenome.

Dealmaking for AI in healthcare has surged over the years, as the below chart from CB Insights shows.

CB Insights

A new CB Insights report finds that healthcare is the top industry for AI investment.

In healthcare, the top-funded startups include data analytics startup Tempus, which was started by Groupon billionaire Eric Lefkofsky and has raised $520 million for its work in areas like cancer, heart disease and diabetes; genomic data platform WuXi NextCODE, which has raised $455 million; and Butterfly Network, which has raised $350 million for its hand-held medical ultrasound technology.

Read more: How AI is changing everything

Other big names are companies using AI to make new drugs, like the US biotech Recursion or the UK startup BenevolentAI.

CB Insights

Many top-funded healthcare AI startups are working in biotech, according to a new CB Insights report.

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