Digital health funding leveled out in Q1 with help from investments in care delivery and navigation startups

After four quarters of decline, global digital health funding flattened in the first quarter of 2023, bringing in $3.4 billion across 387 deals, according to a new digital health report from CB Insights.

A steadying of digital health spending diverged from the broader venture market which saw funding fall 13% from the fourth quarter of 2022 to the first quarter of 2023. The global sector saw a 65% decrease in year-over-year funding that remains lower than any quarter in 2019. Within the U.S., overall venture funding reached a five-year low with 198 deals totaling $2.3 billion.

Care delivery and navigation tech companies led with 143 deals with monitoring, imaging and diagnostic tech coming in second at 90 deals and drug research and development in third place, scoring less than half that at 40 deals, according to the first-quarter report.

Only one unicorn rose above the fray, with Kindbody raking in a $100 million deal to increase its valuation to $1.8 billion. Kindbody brought the global digital health unicorn count to 90, with 68 of said mythical beasts based in the U.S. Overall, the venture market saw the birth of only 13 unicorns, the lowest since the first quarter of 2017.

The leading three unicorn valuations went to Devoted Health at $12.6 billion, Tempus with $8.1 billion and Caris with $7.8 billion.

Megarounds made up 17% of global digital health funding with three deals totaling $575 million. For the second straight quarter, only the U.S. saw megaround deals.

Along with Kindbody in this category, Monogram Health brought in $375 million and Carbon Health snatched up $100 million. All three companies are U.S.-based and reflect the country’s dominance in the area, bringing in $2.3 billion total. Europe clocked in second at 99 deals for $600 million and Asia came in third at $400 million with 66 deals.

Out of all digital health funding in the quarter, 68% came from U.S.-based startups. This group’s top nine deals cashed in at a combined $1 billion. The median deal within the country dropped from $5 million in the previous quarter to $4.5 million while both Europe and Asia increased. The median of Asian deals nearly reached U.S. levels with $4.3 million.

From the preceding quarter, global merger and acquisition deals more than doubled from 15 to 39 after a four-quarter decrease starting in the first quarter of 2022.

Almost two thirds of global and U.S. digital health deals were in the early-stage with 17% globally and 10% in the U.S. at the midstage and around 7% at the late-stage domestically and abroad. Median early-stage funding was also the only category to flatten funding while mid- and late-stage funding dropped.

The top seed or angel deals went to Artera, Shennon Biotechnologies and BeaconCure. Top A round went to Wellvana, top B went to Hexagon Bio and top C went to Monogram Health with funding from CVS Health and SCAN Health Plan.

By company count, Gaingels topped the list of investors by pouring in funds to five companies while four venture capital firms tied for investing into four companies: 8VC, Alumni Ventures, Calm/Storm Ventures and F-Prime Capital. As for corporate venture capital firms, CVS Health Ventures and Samsung Ventures came out on top with three company investments each.