Digital health funding reaches $6.1B in first half of 2023

The digital health funding landscape in the first half of 2023 experienced a decline in deals, smaller check sizes, and a reduced number of investors. 

Startups are adapting to the changing environment, with some pursuing unlabelled raises and established investors seeking the next promising companies. The Rock Health H1 2023 Report reveals that U.S. digital health startups secured $6.1 billion across 244 deals, but funding in Q2 2023 decreased compared to previous quarters. 

There has been a shift towards a more focused group of repeat digital health investors, marking the beginning of a new funding cycle characterised by smaller totals and lower deal volume. Startups face challenges in attracting new capital without compromising valuations or facing negative public perception. 

Many companies have opted for unlabelled raises, accounting for 41% of H1 2023's digital health funding. However, relying solely on such raises is considered a short-term tactic. Startups adjusting their valuations to align with sustainable growth targets may be better positioned for success. Despite market fluctuations, active investors are actively pursuing highly promising companies, as evidenced by their involvement in mega deal raises. 

H1 2023 saw 12 mega deals accounting for 37% of total funding. These investments demonstrate confidence in the growth potential of startups across different stages of funding.