The trend: The average venture funding deal size in the US digital health sector has held steady at $21.7 million over Q2 and Q3 2024, up from $20.7 million in Q1 and just over 2023’s average deal size of $21.6 million, according to Rock Health.
Zooming out: We’ll take a look at 2024’s full-year digital health funding figures when Q4 numbers are available in the new year. Until then, we have the previous three quarters to analyze.
In Q3, the sector bagged $2.4 billion in venture funding across 110 deals, bringing year-to-date funding to $8.2 billion as of the quarter’s end.
While the average deal size remained consistent, the quarter’s funding and deal figures are the space’s lowest of the year.
The bigger picture: At a glance, these figures suggest that investors are making fewer, more calculated bets on carefully evaluated startups, especially when compared to the sector’s pandemic-era funding high of 2021. That year, digital health startups bagged a whopping $29.2 billion across 739 deals, marking an average deal size of $39.6 million, per Rock Health.
Looking ahead: Despite steadying funding in the space, digital health companies eager for investments aren’t out of the woods yet. With healthcare investors’ checkbooks comparatively collecting dust since 2021, startups have continued to struggle—and are cutting their valuations, selling off assets, or closing their doors without warning as a result, according to Business Insider.
We expect digital health startups’ woes to persist into 2025 as investors continue to lean into a capital-cautious approach to funding.
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