Digital health funding hits a wall

In 2023, the digital health sector experienced more pronounced declines in both funding and deals compared to the overall venture ecosystem, according to a Jan. 25 report from CB Insights.

Here are five things to know about digital health funding in 2023, per CB Insights:

  1. In 2023, global digital health funding plummeted by half for the second year in a row, accompanied by a more than one-third decrease in deal volume. The year saw only $13.2 billion raised across 1,397 deals, marking the lowest levels since 2016 and 2014 for funding and deals, respectively.

  2. The median deal size in digital health remained resilient at $4 million, setting a new record high. This contrasts with the broader venture landscape, where deal sizes have been on a downward trajectory since 2021. Mega-rounds, once prominent in digital health, nearly disappeared, with only three $100 million rounds in the fourth quarter of 2023, the lowest count since 2016.

  3. The digital health unicorn herd experienced a contraction in 2023, with the number of unicorns decreasing from 97 to 94. Despite the emergence of four new unicorns, the trend of unicorn loss outpacing births suggests a combination of startup exits, down rounds and shutdowns.

  4. Digital health M&A nearly doubled in the fourth quarter of 2023, signaling a trend of increased consolidation in the market. If funding continues to be scarce and IPOs remain elusive, M&A may become an increasingly attractive option for cash-strapped digital health startups, according to the report.

  5. In the fourth quarter of 2023, care delivery and navigation tech maintained its funding crown with $837 million raised, solidifying its position as the top-funded digital health sector. Monitoring, imaging and diagnostics tech followed with $501 million in funding.

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