March 3, 2024

Details of the Trends in Digital Health Investment Report for the First Half of 2023

The first half of 2023 saw fewer deals, smaller check sizes, and a smaller group of sector investors in the digital health sector, according to a new report from

Funding data also suggested that, if trends continue into the second half of 2023, digital startups are on track to have their lowest funding year since 2019, the researchers wrote.

In the first 6 months of the year startups raised $6.1 billion with 244 deals. This equates to an average of $24.8 million per market. While 131 deals worth $3.5 billion occurred in quarter 1 of 2023, only 113 deals worth $2.5 billion were completed in quarter 2, data from the Rock Health Digital Health Venture Funding Database showed.

Total investors in the space also fell in the first half of 2023 to 555. That total was recorded at 775 in the first half of 2022 and 832 during the same time frame in 2021. Most were repeat investors. the dealers in 2023 too, researchers said.

“To us, this is a sign that general and cross-market investors are moving away from one-off engagement, leaving a smaller group of digital health investors focused on leading sector activity,” they wrote.

Taken together, the data signals a new funding cycle in digital health that could be a challenge for startups.

Additionally, more than 40% of digital health financing deals to date in 2023 were not publicly labeled, representing the highest percentage of unlabeled raises since the company began tracking the data in 2011.

“To try to delay valuation cuts, many digital health players have raised capital without publicly attaching labels to weaker rounds,” research said. They caution that this practice, while it can help startups defend their previous valuations, is not a long-term strategy.

Despite fewer active investors in 2023, some who continue to make bets do so with confidence, the authors said.

Just 12 deals in the first half of the year accounted for 37% of total funding dollars, and the average check size was $185 million. This total is similar to the average mega-transaction size seen in 2021, at $188 million.

In 2023, “2 mega deals [were] at Tier A, 1 at Tier B, 2 at Tier C, and 6 at Tier D or higher,” the authors wrote. Many of them focused on themes such as enabling value-based care and home care. Others focused on non-clinical workflow and practice management.

Paradigm, Author Health, MedShift, and Strive Health were among the startups that got mega deals in the first 6 months of 2023.

In terms of acquisitions and sales, the first half of the year averaged just over 12 acquisitions per month. The researchers hypothesize that one reason this number is so low is that startups may be holding back on taking offers “they look lower than they might have received a few quarters ago ago or even lower than the sum of previous increases.” Acquisitions may also be underway, but are not being publicly announced.

Overall, the funding reset seen in 2023 means “bringing fresh and focused perspectives to digital health product development, partnerships, and commercial approaches, as well as team building,” the researchers wrote. “While challenging, tough times can be a much-needed market correction, given a right-sized innovator and investor expectations for a more stable and sustainable future,” they said.


Somaiya M, Knowles M, Krasniansky A, Zweig M, Evans B. H1 2023 digital health funding: a brave new world (lower funding). July 10, 2023. Accessed July 17, 2023.

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