Another quarter’s gone in a blink, which means our friends over at Rock Health are already on deck with another recap of the biggest digital health funding trends of Q3.
Here’s Q3 by the numbers:
- US digital health funding totaled $2.5B across 119 rounds ($21M average)
- 4 of the past 5 quarters saw funding in the $2B range (establishing new normal)
- Capital shifting to digital support for disease treatment (notably kidney & heart)
Although the $2.5B raised in Q3 was the second-lowest total since 2019, it was also the fourth of the past five quarters to log funding in the $2B range – a far cry from the volatility we’ve seen since the start of the pandemic. (Chart: Funding Trend)
- On top of that, every quarter for the last year has notched an investment count in the low hundreds, maxing out at 131 rounds in Q1 2023.
- New norms have been established, meaning we’re finally past the shakeout and onto a fresh investment cycle.
The other major story from Q3 was that capital is shifting away from COVID-era favorites like life science R&D catalysts (a top investment in both 2021 and 2022) toward digital health solutions that support disease treatment. (Chart: Top Value Propositions)
- Disease treatment is now the most-funded value proposition of the year ($1.6B YTD), including recent raises from Vivante Health (virtual digestive care) and Healthmap Solutions (value-based kidney care).
Value-based care enablement was another obvious standout last quarter, and Rock Health predicts that VBC will become an increasingly important component of commercial roadmaps and enterprise partnerships.
- This will likely be particularly true in high-cost areas like mental health, cardiology, and oncology, not-so-coincidentally three of the top clinical indications in Q3 funding.
The Takeaway
The headline for the third quarter has a familiar ring to it – overall digital health funding is slowing, but bringing more stability along with it. That predictability is much needed after years of wild market swings, and the new investment cycle is also equipping founders with a clear playbook: find a high-cost area, focus on outcomes, and build a sustainable business.
