Market Overview
- Although funding increased substantially, the number of U.S. digital health venture deals dropped to 144, the fewest in a quarter since 2013. With funding and median deal size up but deal count down, we attribute these trends to the number of notable mega-round deals ($100M+ rounds). There were 7 mega-rounds in Q1, spread across various subsectors of the market. The largest round of the quarter was a $254M later-stage round raised by Freenome, a biotech company focused on cancer detection.
- The quarter’s investment activity signaled digital health’s priority areas, with AI naturally rising to the top. Approximately 40% of Q1’s funding went to AI-enabled companies, rising from 33% of 2023 digital health funding. AI-enabled clinician scribe software Abridge raised a $150M Series C in February and AI precision health company Zephyr AI announced a $111M Series A in March.
- An emerging subsector of interest within digital health, and more specifically, within specialty telemedicine, is digital weight management. Rising consumer demand for digital weight loss programs is largely attributable to the rise in popularity of, but limited access to, GLP-1 weight loss drugs.
Industry Snapshot
After a subpar finish to 2023, the U.S. digital health market showed signs of recovery in the first quarter of 2024, with equity funding increasing 44% QoQ to $2.6 million in Q1’24.
The sector’s median venture deal size also hit $6.7 million in Q1, higher than the median deal size of any full-year figure since before 2020.
