US digital well being startups raised $10.1 billion in enterprise capital throughout 497 offers in 2024, down barely from 2023 to $10.8 billion throughout 503 offers, in line with a brand new report from Rock Well being .

Though in absolute phrases 2024 surpassed the $8.2 billion raised in 2019 (the benchmark yr exterior of Covid-19), the general image adjustments when adjusting for inflation. In 2024, one US greenback was equal to roughly $0.82 in 2019 – which means the $10.1 billion in digital well being financing raised in 2024 is roughly equal to $8.3 billion in 2019 {dollars}.

There are a number of causes for this decrease funding quantity in 2024. The primary is that buyers are shifting their focus to early-stage startups. About 63% of 2024 funding rounds had a label. Of those, 86% have been for startups that raised their Seed, Sequence A and Sequence B rounds.

Moreover, startups that hosted later-stage rounds had smaller verify sizes than in earlier years, Rock Well being stated. The common deal measurement for Sequence C and D fundraising was $50 million and $55 million, respectively – down from $62 million and $58 million in 2023, and down considerably from 2021 peaks of $73 million and $105 million .

“Growing early-stage fundraising exercise, together with smaller late-stage offers, has pushed down general 2024 funding numbers – a dynamic that gives us with vital info as we head into 2025,” Rock Well being stated. “New startups are attracting investor consideration regardless of a extra subdued financing setting; but…their development trajectories will rely on how successfully they navigate a Goliath-rich setting. Later-stage startups battling downward valuation strain or stalled fundraising rounds might exit or search for acquisitions within the coming yr, probably reigniting digital well being M&A exercise, which can high 118 offers in 2024 reached its lowest level previously ten years.”

One other key pattern the report revealed is that the VC area is turning into more and more concentrated. It cited analysis from Pitchbook exhibiting that of the 391 enterprise capital corporations within the US, 30 funds would account for 75% of dedicated capital within the US by 2024. Two “mega funds” – Andreessen Horowitz and Normal Catalyst – have been the most important buyers within the digital healthcare sector. 2024 and accounted for 20% of all dedicated LP capital within the US enterprise capital market.

Rock Well being additionally reported that AI-enabled digital well being startups noticed robust investor curiosity in 2024, representing 37% of digital well being funding this yr throughout 191 offers.

Moreover, the report revealed that funding was concentrated in 'already standard' worth propositions and therapeutic areas, equivalent to non-clinical workflow, psychological well being and weight problems care.

Finally, the traits of “early-stage startup exercise amid massive strikes by main healthcare gamers” have created a “David and Goliath dynamic” in healthcare innovation, in line with Rock Well being.

“We imagine {that a} steadiness between massive and small gamers shall be needed to take care of variety of thought and innovation in healthcare,” the report stated. “For founders and buyers, it's vital to do not forget that not each startup needs to be a Goliath (or unicorn…or decacorn) to achieve success. Creating worth for patrons and sustaining a transparent understanding of the addressable market, scale and valuation will assist keep the best perspective.”

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