2023 trends in digital health funding

In 2023, venture funding plummeted in the digital health world, but it provided lessons for what should follow in 2024, according to a Rock Health post published Jan. 8.

Here are three key takeaways from the report:

  1. More startups sought extension raises, hoping to gather more capital in order to compete. This can be helpful for younger startups, which haven't yet had time to establish themselves.
  2. In 2023, 44% of fundraising deals were unlabeled, which means that the start-ups furnishing the deals were likely not meeting benchmarks for their next scheduled, labeled raise.
  3. Last year, it is speculated that a large number of deals were "silent", meaning that they took place among pre-existing venture capital investors. 

Here are three predictions:

  1. In 2024, labeled raises will make a comeback. With more start-ups finding their footing, this year will see more initiatives meeting the benchmarks they need to advertise labeled raises. More of these raises equates to more funding and a more solid future.
  2. This year, the number of mergers and acquisitions will greatly increase compared to last year. The poor financial performance of some start-ups in 2023 will provide those companies looking to acquire start-ups with a good opportunity to do so.
  3. The public market for digital health companies will rearrange itself, as many companies in 2023 were noncompliant with listing standards for the NASDAQ or NYSE. 

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