Digital well being funding skilled a serious slowdown final yr following a blazing sizzling 2021 — startups within the sector raised $25.9 billion in 2022, which is 57% much less than 2021’s file excessive of $59.7 billion. This yr, enterprise capital investments within the digital well being world have continued to chill off — with the third quarter of 2023 having the sector’s second-lowest quarterly funding whole for the reason that fourth quarter of 2019, in keeping with a report that Rock Well being launched this week.

On this yr’s third quarter, U.S. digital well being startups introduced in $2.5 billion throughout 119 offers. This brings the sector’s whole funding quantity for 2023 to $8.6 billion raised throughout 365 offers. Whereas the digital well being world is clearly experiencing a big decline in funding {dollars} and deal quantity in comparison with 2021, quarterly tendencies appear to be stabilizing — the sector could also be settling into its new regular, the report famous. For example, the third quarter of 2023 was the fourth of the 5 previous quarters to submit a funding whole within the $2 billion vary, signaling normalization inside digital well being funding tendencies.

Throughout this yr’s third quarter, digital well being traders moved their focus away from pandemic-era classes like on-demand telehealth and pharmaceutical R&D catalysts, the report identified. Buyers shifted their consideration towards startups creating merchandise for illness therapy, the development of nonclinical workflows and the enablement of value-based care.

Illness therapy startups have raked in $1.64 billion in the course of the first three quarters of 2023. A number of the third quarter’s notable funding rounds on this class embrace the $31 million spherical raised by gastrointestinal well being firm Vivante Well being and $20 million spherical raised by Equip, which offers digital consuming dysfunction therapy packages.

As for startups promoting nonclinical workflow options, they raised $1.59 billion in the course of the first three quarters of this yr. Corporations on this class are addressing a spread of nonclinical duties. For instance, Collectly obtained $29 million to simplify suppliers’ income cycle administration, Synapse Well being raised $25 million to assist suppliers handle their sturdy medical gear, and Keona Well being snagged $7 million to enhance affected person scheduling and communication.

In alignment with current years, psychological well being has remained probably the most funded medical indication amongst digital well being startups in 2023 — corporations on this house have raised practically $1 billion in the course of the first three quarters of this yr. Nephrology is one other medical indication garnering funding {dollars} this yr, with $700 million raised within the first three quarters. Investments made in each these specialties are more and more centered on corporations that allow value-based care contracts or tackle threat themselves, the report identified

For example, Healthmap Options, which offers payers and at-risk suppliers with value-based care options for power kidney illness, raised $100 million in August. That very same month, Higher Life Companions, which delivers value-based psychological well being care, raised $26.5 million.

As extra well being techniques undertake value-based care fashions and associated coverage initiatives decide up steam, value-based care enablement will turn out to be a key aspect of digital well being startups’ industrial roadmaps, the report famous. It additionally mentioned that this will probably be very true for high-cost therapeutic areas akin to psychological well being, kidney care, cardiovascular care and oncology.

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