Digital Health

Rock Health Q1 2023 Funding Recap

Rock Health Stone

Rock Health’s Q1 2023 digital health funding report is out and its title couldn’t have put it any better: we’re investing like it’s 2019 again.

Here are the numbers in a nutshell:

  • US digital health funding totaled $3.4B across 132 rounds ($25.9M average)
  • Trend: $2.2B (Q3 2022) -> $2.7B (Q4 2022) -> $3.4B (Q1 2023)
  • Q1 2023: 28 Series A rounds, 10 Series B, 3 Series C, 7 Series D+
  • 6 mega-rounds over $100M accounted for 40% total funding 

Looking at the past decade (Chart: Funding Trend), it’s clear that the pandemic funding environment was an outlier capped by absolute mania in 2021. The funding uptrend seen in the last few quarters is also a far cry from a true bull run.

  • If funding for the rest of the year matched the average funding of the past three quarters, 2023 would still see the lowest funding total since 2019.
  • Although January and February brought cooling inflation and some real signs of hope, March stepped on any blooming momentum with the collapse of Silicon Valley Bank.

Something that Rock Health gave a lot of attention to – and for good reason – is that 40% of last quarter’s funding was from six mega-rounds (Chart: Mega-Round Breakdown) : 

  • Monograph Health – $375M Series C (at-home dialysis)
  • ShiftKey – $300M PE Round (staffing marketplace)
  • Paradigm – $203M Series A (clinical trial platform – largest digital health Series A ever)
  • ShiftMed – $200M Venture Round (staffing and workforce solutions)
  • Gravie – $179M PE Round (insurtech)
  • Vytalize Health – $100M Series C (Medicare ACO)

The other 126 startups split the remaining $2B slice of pie, with an average round size of $16M (vs. $25.9M with the mega-rounds). It makes a big impact, but if you remember back to 2021, we’re currently looking more sane than 88 mega-rounds combining for 56% of total funding.

The Takeaway

Outside of a positive funding trend over the last few quarters, it’s hard to interpret Rock Health’s report as great news for digital health startups. We have a regional banking crisis that might be in its early innings, the IPO market’s been barren since the 2021 SPAC craze, and the end of PHE isn’t exactly a tailwind for many business models. 
That said, it isn’t all doom and gloom. Rock Health is optimistic about the permanent expansion of some telehealth flexibilities and the improving guardrails for data privacy. “Those that make it to daybreak (though we can’t predict exactly when that’ll be) will come out with patched up ships and resilient mindsets.”

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