What are the biggest issues in European HealthTech and MedTech for founders and investors today?

Today the biggest issues cluster around three themes: capital is more selective and milestone‑driven, regulation is getting heavier and more complex (MDR/IVDR + AI Act + data) and commercial proof is now non‑negotiable for both founders and investors.

1. Funding climate and deal dynamics

Digital health and broader healthtech have come off the 2021 peak; deal volumes are down sharply versus the boom years, even where absolute funding has rebounded or remained resilient, so capital is there but harder to access.

Investors are much more selective, concentrating on later‑stage or de‑risked assets (e.g. growth rounds, scaling proven solutions) and pushing earlier companies to show clearer paths to inflection points within 12–18 months.

MedTech in particular faces a “double squeeze”: inherently long, capital‑intensive development cycles versus investors demanding faster proof points, making rounds slower, more dilutive, and often tranched or milestone‑based.​

For many companies, strategic/industrial partnerships (distribution, licensing, carve‑outs, early M&A) have become as important as classic VC, because strategics can bring market access, regulatory infrastructure, and manufacturing.

2. Regulatory burden and uncertainty

MDR and IVDR continue to impose heavy documentation, clinical evidence, and post‑market surveillance requirements that weigh especially on SMEs and lengthen time‑to‑market and time‑to‑funding.​

The EU AI Act now classifies most medical AI as “high‑risk,” adding obligations on logging, robustness, human oversight and governance on top of MDR/IVDR, with industry bodies warning about overlapping and potentially duplicative requirements.

Uncertainty around how AI Act, MDR/IVDR and national implementations will be harmonised creates planning risk for product roadmaps; investors factor this into risk‑adjusted valuations and sometimes push companies to other geographies or to purely “non‑medical” use cases.

Founders must invest earlier in quality systems, regulatory strategy, and notified‑body interactions, which increases burn pre‑revenue and makes early “experimentation” harder.

3. Evidence, reimbursement and commercial traction

Both buyers and investors now expect robust clinical and health‑economic evidence, not just promising tech; assets that cannot demonstrate measurable clinical impact struggle to raise or win pilots.

Hospital and payer procurement remains slow, fragmented, and highly cost‑pressured, so even validated solutions face long sales cycles and tough price negotiations, delaying revenue ramp and increasing working‑capital needs.

Reimbursement for digital health, AI and novel MedTech is still patchy across Europe, with varying national schemes and coding, making cross‑border scaling complex and reducing investors’ confidence in pan‑European roll‑outs.

As a result, profitability, recurring revenue and proved unit economics have become central screening criteria for investors and acquirers, rather than “nice‑to‑have” upside.

4. Market fragmentation and scaling challenges

Europe remains structurally fragmented by language, regulation, reimbursement, and clinical practice; even though funding has rebounded and healthtech is one of the most funded sectors, this fragmentation makes scaling sales and operations expensive.

There is growing geographic specialisation of VC funds and ecosystems, which helps with local nuance but can hinder pan‑European syndication and create “regional silos” for founders trying to scale.

The MedTech industry is dominated by tens of thousands of SMEs, making the ecosystem sensitive to any tightening in funding, regulatory bottlenecks, or procurement delays.​

5. Strategic alignment between founders and investors

Investors increasingly demand clear alignment on regulatory, clinical and commercial milestones, and penalise “vision without execution plan,” especially in AI and data‑driven models.

There is tension between founders pursuing broad platform or multi‑indication stories and investors preferring focused, vertical solutions with clear beachheads and exit pathways.

Exit markets (IPOs, large M&A) remain cautious due to macro pressures, so investors push more for structured rounds, strong governance, and early optionality around strategic exits rather than late, valuation‑maximising IPOs.

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