If the momentum of funding continues, this yr might surpass year-end totals seen in 2019 and 2023 ($8.2B and $10.7B, respectively), two years that may function comparable durations outdoors the pandemic, in accordance with Rock Well being’s H1 2024 digital well being funding report launched this week.
Digital well being startups within the U.S. raised $5.7 billion throughout 266 offers within the first half of 2024.
Seed, Collection A and Collection B funding accounted for 84% of investments, with Collection A funding being most prevalent.
Of these Collection A raises, 38% went to startups leveraging synthetic intelligence, and 34% of the overall digital well being funding seen in H1 went to firms using AI.
The rise of unlabeled offers continued in H1 2024 from early 2023, with 40%, or 107 offers, in H1 being unlabeled in comparison with 44% in 2023.
The variety of unlabeled offers has regularly elevated since 2019, with 4% seen that yr, rising to 7% in 2020, 19% in 2021, and 22% in 2022.
Unlabeled offers can happen “when startups want entry to capital however don’t meet benchmarks for his or her subsequent labeled increase and/or try to delay powerful conversations on subjects like valuation,” the report stated.
Unlabeled raises have declined in 2024, reducing from 47% in Q1 of this yr to 33% in Q2, which Rock Well being beforehand predicted would happen.
The highest funding spot by worth proposition went to digital well being firms targeted on illness remedies, totaling $1.1 billion, whereas psychological well being topped the checklist of highest-funded medical indications, with $682 million raised.
Three exits by digital well being firms had been seen in H1 2024, together with these from the Nasdaq or NYSE, resembling income cycle administration firm Waystar, distant being pregnant monitoring firm Nuvo, and AI-powered information firm Tempus AI.
The three exits had been the primary seen in 21 months throughout the digital well being sector.
Acquisitions of digital well being firms by fellow digital well being corporations dropped in H1 2024 to 34 offers as in comparison with the 83 offers seen in all of 2023; nonetheless, PE corporations acquired ten digital well being startups thus far this yr, greater than the overall seen in 2023 and on observe to surpass 2021 and 2022 totals.
“The digital well being sector continues to exhibit resilience and flexibility. Funding momentum (particularly on the early stage) and the tapering of transition measures like unlabeled rounds trace that we is perhaps returning to extra “regular,” sustainable enterprise patterns,” the report’s authors wrote.
“The primary half of 2024 proved that digital well being founders and buyers have their eyes on the prize, which provides us confidence in what’s to return.”
