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At least one group is optimistic about the outlook for the medtech industry: venture capitalists.

Venture capital firms poured $4.4 billion into medical device companies in the first half of the year, which Evaluate says is making investments for all of 2022 at a pace equal to totals for the last two years.

By contrast, the initial public offering landscape was relatively barren. In the first half, only three medtechs braved the public markets, and the Bausch & Lomb Corp. spin-off. (BLCO, financial) of Bausch Health Companies Inc. (BHC, Financial) was well below expectations.

The other two medical technology IPOs were Chinese companies, Meihua International Medical Technologies Co. Ltd. (MHUA, Financial) and spinal implant manufacturer Tenon Medical Inc. (TNO, Financial). The first went public at $10 a share, but has since dropped to around $3. This performance looks spectacular compared to Tenon. This company hit the market at $5 a share and traded as high as $60 before the bottom dropped and the stock fell below $2.

The past few weeks have seen additional activity, albeit hardly any blockbusters. Virax Biolabs Group Ltd. (VRAX, Financial) raised $6.8 million in its July 20 IPO, while medical AI software provider Lunit Inc. (XKRX:328130, Financial) scored $42 million.

Companies often favor the venture capital route because it buys them time to develop their products and bring them to market without public shareholders blowing their noses at them. Venture capital funds often allow companies to think long-term and make smarter decisions in difficult times.

Caption: Shares of the three medtechs that went public in the first half of 2022 disappointed investors.

The most common investment cycles so far this year have been cycles A and B, when companies are not ready for an IPO. These cash injections give companies smaller rounds of support needed to prove that their products or services are innovative. Investors may want to put the names of these companies in their back pocket as potential future buys.

Digital health is currently at the center of much of the innovation. The largest round of venture capital of 2022 so far has gone to Biofourmis, a Boston-based global leader in virtual care and digital therapies. The company claims to offer an innovative and complete solution [email protected] platform that enables clinicians to provide personalized predictive care to patients outside of a traditional hospital or clinic across the continuum of care.

The $300 million round allowed Biofourmis to secure two things: a unicorn valuation and the former Medtronic (MTD, Financial) CEO Omar Ishrak as Chairman of its Board.

Aidoc, Mindmaze and Viz AI are other digital medical technology groups that have achieved big results. Mindmaze is working on digital therapeutics, including a video game for stroke rehabilitation, while the other two target the use of artificial intelligence to assess diagnostic images and identify those most in need of examination more in-depth.