Dive Brief:
- In the first three quarters of this year, total funding for digital health companies soared to $21.3 billion, shattering 2020's full-year record of $14.6 billion, according to a report out Monday from Rock Health.
- The sector saw 541 deals with an average deal size of $39.4 million in the first three quarters, according to the report.
- Overall deal volume decreased, though, with 169 deals in Q3 compared to 223 deals in Q2. The third quarter also saw fewer megadeals of $100 million or above than it did in the second and first quarters.
Dive Insight:
The COVID-19 pandemic spurred an unprecedented, rapid adoption of digital health services as patients avoided medical settings but still sought care amid early stay-at-home orders. While telehealth usage specifically has tapered off since reaching record highs last April, interest and investment in the digital health space is still sky high.
Investors are venturing outside of historical funding patterns, with more money going to women-led companies, women's digital health and health equity solutions, according to the report.
But similar to 2020, companies using software for research and development, along with those delivering on-demand healthcare services and those supporting disease treatment, continue to "reign in the top funded value propositions," Rock Health said.
Last year was the first in which digital health funding surpassed $10 billion, a figure that's already doubled in 2021 with three months left to go.
The first three quarters of 2021 have been the highest-funded quarters ever, though Q3 was a bit of a slow down from the first and second. The first two quarters saw about 24 megadeals each, while the third quarter saw 15 megadeals.
In Q3 alone, funding hit $6.7 billion across 169 deals.
Among research and development companies, the third quarter saw mega rounds from XtalPi, Reify Health and TrialSpark, with $400 million, $220 million and $156 million in funding, respectively.
On-demand healthcare companies Maven and Pager saw deals of $110 million and $70 million in the quarter, and digital health disease treatment companies InBrace and Woebot saw deals of $102 million and $90 million.
This year, mental health is the top funded clinical indication with $3.1 billion raised, followed by digital health tools for managing cardiovascular disease, diabetes, primary care and oncology.
Behavioral health provider SonderMind saw a $150 million deal in July, and Spring Health received a $190 million Series C round in September.
Funding for women's digital healthcare companies is also no longer a niche space.
Funding for those companies in Q3 was 2.3 times higher than the same quarter a year prior, boosted by deals from Maven, TMRW and Woebot.
Female CEOs have also closed more private market deals than ever before, raising $3 billion across 103 deals so far in 2021. In Q3, they closed 19% of digital health deals, the highest percentage recorded by Rock Health.
