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Despite a number of high-profile late-stage megarounds, overall funding for startups seems to have flattened out, according to a quarterly review of funding.
Over the first quarter of this year, digital health startups raised $1.1 billion across 77 deals, according to venture data platform PitchBook’s Q1 2024 Digital Health Report. That’s in line with activity from the past three quarters, where funding activity has stabilized at around $1 billion over 80 deals per quarter, the report said.
Aaron DeGagneThe flat levels of funding have been paired with relatively few companies managing an IPO or other exit, though PitchBook healthcare analyst Aaron DeGagne predicted that more will try to join the public markets next year.
“No one really wants to go first, they want to probably wait for other peers to go out,” DeGagne told Endpoints News. “Some may be a little more desperate, ones that maybe have more pressure from their investors to go public. And then if those are successful, that could kind of start the funnel.”
Over the past quarter, digital health has seen certain areas go private or exit the markets almost completely. Digital therapeutics no longer has any publicly traded companies after Akili cut half its staff and went private in a merger. Telehealth was hit hard too after Walmart Health and UnitedHealth’s Optum Virtual Care shut down their services.
Instead, PitchBook highlighted mental health chatbots and care search platforms as two areas it’s bullish on. Though there currently isn’t a way to get reimbursed by insurers for such technology, chatbots are a great way to reach underserved patients in mental health stuck on long waitlists for human therapists.
In addition, care search platforms, such as ZocDoc, Headway and SonderMind, could take off as major search engines faced with competition from other search technologies like ChatGPT may partner with them, the report said.