Rock Health’s always-excellent digital health market overview painted an interesting picture for Q3, with venture funding continuing to climb despite several “signals out of sync.”
We’re steady on the surface. Digital health startups raised $3.5B across 107 deals in the third quarter, outpacing last year by a decent margin and bringing the year-to-date total to $9.9B across 351 rounds [Chart: Q3 Funding].
- Deal volume continued to slow, but fewer raises yielded larger checks. Q3 saw 107 funding rounds, down from 120 in Q2 and 124 in Q1.
- The average raise in 2025 now stands at $28.1M (up from $20.4M in 2024), and we’ve already seen 19 mega-rounds above $100M – surpassing last year’s total with a quarter left to go.
The middle is missing. Rock Health rolled up its sleeves and calculated some great funding velocity numbers. Of companies that raised their Series B in 2025, the median time since their Series A was 27 months, up from 17 months in the 2023 cohort.
- Series B deal flow has also thinned, with just 30 raises through Q3, compared to more than 60 annually over the past four years.
- Pair that with the persistent prevalence of unlabeled raises, and the thinning Series B pipeline suggests that startups are traveling increasingly winding roads to reach scale.
Activity is concentrating around workflows. The biggest theme of the Q3 report was that Clinical Workflow and Non-Clinical Workflow are now 2025’s two most-funded value propositions, capturing a combined 42% of the total funding [Chart: Value Propositions].
- A $1.3B lead separates these value propositions from the rest of the pack, and workflow tools now appear to be in a league of their own.
Startups are heading horizontal. The report also highlighted a growing group of startups pushing into adjacent workflows, such as Abridge’s partnership with Highmark Health (expanding into prior auths) and Judi Health acquiring Amino (moving into patient navigation).
- M&A volume is up 37% from last year, with 166 acquisitions through Q3 (already topping 2024’s 121 total), in large part due to these horizontal moves.
The Takeaway
The numbers look steady, but the market is also steadily splitting in half. That means that the real story going forward won’t be whether digital health startups can attract investors (they can), but whether companies can demonstrate the impact needed to land on the right side of the divide.
