The news: Digital health startup funding dropped to $10.3 billion in H1’22 from $29.1 billion in H1’21, according to a new Rock Health Report.
But it’s not all doom and gloom: VC funding is still higher than pre-pandemic levels.
Average US digital health funding during H1’19 was $8.1 billion with an average of 414 deals, per Rock Health. That’s fairly consistent with 2018 ($8.6 billion with 395 deals) and 2017 ($6 billion with 377 deals).
The fact that funding for H1 this year is still higher by more than $4 billion versus pre-pandemic levels is a good sign for startups. Inflation and a looming recession aren’t making healthcare investors as cautious as they were from 2017 to 2019.
The larger trend: Despite the annual funding drop this year, investors interest in Series A rounds hasn't unwavered.
We witnessed the Series A funding wave occur over the past few months. Especially as our previous prediction that fertility and women’s health startups would be a bright spot for funding this year rings true.
What’s next? Series A funding activity is good news for entrants addressing nonclinical labor shortages—a major problem for health systems right now.