{"id":3884,"date":"2023-04-05T09:18:09","date_gmt":"2023-04-05T09:18:09","guid":{"rendered":"https:\/\/regtechafrica.com\/healthcare\/?p=3884"},"modified":"2023-04-05T09:18:09","modified_gmt":"2023-04-05T09:18:09","slug":"digital-health-funding-reaches-3-4b-in-first-quarter-filled-with-mega-deals","status":"publish","type":"post","link":"https:\/\/regtechafrica.com\/healthcare\/digital-health-funding-reaches-3-4b-in-first-quarter-filled-with-mega-deals\/","title":{"rendered":"Digital health funding reaches $3.4B in first quarter filled with mega-deals"},"content":{"rendered":"

Digital health startups raised $3.4 billion across 132 deals in the first quarter, according to\u00a0Rock Health’s latest funding report<\/a>.<\/p>\n

Though investment in Q1 surpassed the last two quarters\u00a0\u2013\u00a0where companies notched $2.7 billion in Q4 and $2.2 billion in Q3\u00a0\u2013\u00a0the authors noted this probably isn’t a return to the booming funding environment seen in 2021 and early 2022.<\/p>\n

“Overall, Q1\u2019s mega-deal upticks don\u2019t necessarily foreshadow a sector rebound. Rather, they indicate that the sector\u2019s more established players and investors are trying to find their sea legs in this market, selectively deploying those dry powder reserves they\u2019ve been stockpiling since 2021 into teams and projects they know,” Rock Health’s Mihir Somaiya, Galen Shi and Adriana Krasniansky wrote.<\/p>\n

For one, digital health saw a relatively large number of mega-deals, or rounds worth $100 million or more, after a drought during the past two quarters. The report noted six mega-deals in Q1, which made up 40% of the quarter’s total digital health funding.<\/p>\n

Some of those deals included kidney care company\u00a0Monogram Health’s<\/a>\u00a0$375 million raise, staffing startup\u00a0ShiftKey’s<\/a>\u00a0$300 million round and clinical trial platform\u00a0Paradigm’s<\/a>\u00a0$203 million Series A. Notably, Paradigm was incubated by both ARCH Venture Partners and General Catalyst.<\/p>\n

Digital health companies are still not going for a public exit. The report found zero IPOs in the first quarter, and digital health stocks traded nearly 50% lower at the beginning of 2023 than they did at the start of 2021.<\/p>\n

The lack of appeal in\u00a0public markets may be one reason for the growth of mega-deals as late-stage startups look for more cash. The report also found an increase in the proportion of Series D+ rounds relative to other deal stages, compared with last year. However, median Series D+ deal size is down to $58 million, from $72 million in 2022.<\/p>\n

The aftermath of the\u00a0Silicon Valley Bank collapse<\/a>\u00a0could also linger for digital health funding. The report argued that not all startups were affected equally by SVB’s loss, and that later-stage companies had more options when it came to choosing a new bank.<\/p>\n

“It\u2019s hard to overstate just how supportive SVB was of the startup ecosystem, and the full ramifications of its closure and acquisition on technology innovation may not be felt until quarters later,” the report’s authors wrote. “On the funding front, we expect that SVB\u2019s collapse will contribute to the next few quarters of startup financing (debt and equity) moving more conservatively.”<\/p>\n

Meanwhile, the regulatory environment for digital health is also shifting as\u00a0the COVID-19 public health emergency<\/a>\u00a0comes to an end. Congress has also introduced a\u00a0health and location data privacy bill<\/a>, while the Federal Trade Commission is cracking down on\u00a0digital health companies<\/a>\u00a0sharing health data<\/a>\u00a0for advertising purposes.<\/p>\n

“While some may mourn the Wild West of 2021 digital health\u00a0\u2013\u00a0unbridled demand, lax rules, cheap money\u00a0\u2013\u00a0the next era will foster digital health entrepreneurship and intrapreneurship with guardrails that guide innovation rather than stifle,” the authors wrote.<\/p>\n

David Higginson will offer more detail in the HIMSS23 session “Leveraging In-House Machine Learning Innovations for a More Human Touch.” It is scheduled for Tuesday, April 18 at 1:15 p.m. – 1:45 p.m. CT at the South Building, Level 1, room S104.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Digital health startups raised $3.4 billion across 132 deals in the first quarter, according to\u00a0Rock Health’s latest funding report. Though investment in Q1 surpassed the last two quarters\u00a0\u2013\u00a0where companies notched…<\/p>\n","protected":false},"author":1,"featured_media":3887,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[80],"tags":[],"class_list":["post-3884","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/regtechafrica.com\/healthcare\/wp-content\/uploads\/2023\/04\/Digital-health-funding-reaches-3.4B-in-first-quarter-filled-with-mega-deals.jpeg?fit=1200%2C630&ssl=1","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/regtechafrica.com\/healthcare\/wp-json\/wp\/v2\/posts\/3884","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/regtechafrica.com\/healthcare\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/regtechafrica.com\/healthcare\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/regtechafrica.com\/healthcare\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/regtechafrica.com\/healthcare\/wp-json\/wp\/v2\/comments?post=3884"}],"version-history":[{"count":1,"href":"https:\/\/regtechafrica.com\/healthcare\/wp-json\/wp\/v2\/posts\/3884\/revisions"}],"predecessor-version":[{"id":3889,"href":"https:\/\/regtechafrica.com\/healthcare\/wp-json\/wp\/v2\/posts\/3884\/revisions\/3889"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/regtechafrica.com\/healthcare\/wp-json\/wp\/v2\/media\/3887"}],"wp:attachment":[{"href":"https:\/\/regtechafrica.com\/healthcare\/wp-json\/wp\/v2\/media?parent=3884"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/regtechafrica.com\/healthcare\/wp-json\/wp\/v2\/categories?post=3884"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/regtechafrica.com\/healthcare\/wp-json\/wp\/v2\/tags?post=3884"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}