Digital health funding reached a fever pitch in 2021 with startups raising an eye-popping $29.1 billion across 729 deals, according to Rock Health, a venture fund dedicated to digital health.
But the high-flying startup ecosystem has come back down to Earth as part of an overall market reset.
Health tech companies are raising far less this year than in 2021. With the third quarter included, 2022 year-to-date funding totals $12.6 billion across 458 deals, raising doubts that this year’s digital health pot will reach even half of last year’s haul, according to Rock Health.
Despite the market downturn and investor caution amid an unstable market, there are health tech companies bucking the trend and raising significant amounts of cash. According to CB Insights, 23 healthcare-focused startups crossed the $1 billion valuation threshold to become "unicorns" in 2022.
"As would be expected amidst a challenging macroeconomic backdrop and funding environment reset, 2022 generated fewer new healthcare technology unicorns than the exuberant conditions of 2021," Sunny Kumar, M.D., partner at GSR Ventures, told Fierce Healthcare. GSR is a venture firm investing in early-stage digital health companies with over $3 billion under management.
In 2021, 85 global digital health startups reached unicorn status, up 49% from 2020, CB Insights reported.