Digital health continues to break funding records as companies across the globe raked in $8.1 billion in venture capital during the third quarter.
Investments in the second quarter had already reached a all-time high with digital health companies scooping up $7.7 billion, as the money pumped into the sector continues to accumulate. Over the past year, each quarter has set a record for venture capital going to digital health startups, according to data from Mercom Capital Group, a market research firm that’s tracked digital health since 2010.
Venture capital investors have poured $23 billion into digital health companies so far this year, which is more than during all of 2020.
1. Telehealth: $2.5 billion (up 74.1% year-over-year). Telehealth continues to lead digital health funding. While telehealth utilization has dropped since the early phases of the COVID-19 pandemic, healthcare executives still expect telehealth to stabilize at a higher rate than before the pandemic. The top telehealth deal in the quarter was a $400 million Series D funding round raised by Cityblock Health, an Alphabet spinout that provides services to low-income populations through in-person outreach and virtual care.
2. Data analytics: $1 billion (up 143.2%). This subsector is the best-funded within a broader category of software companies that help healthcare providers manage health data. The implementation of federal data-sharing regulations designed to facilitate information exchanges between healthcare organizations has prompted greater investment in this area. Deep Genomics, a company that uses artificial intelligence to better understand genetics, led funding in this space with a $180 million Series C.
3. Mobile health apps: $682 million (up 287.5%). Apps make up about half of the larger mobile health category, which also includes wearable sensors and mobile devices. This category has taken off as the pandemic intensified demand for virtual care. Employers increasingly looking to boost employer benefits have embraced mobile health tools, also contributing to growth. Health and well-being app vendor Palta raised the largest funding round in the quarter with a $100 million Series B.
4. Practice management tools: $585 million (up 82.8%). Many hospitals and health systems are turning to digital tools to address persistent workflow challenges like burdensome clinical documentation and are turning to software designed to help clinicians capture data and derive insights. Olive, a robotic process automation company that sells tools to automate payer and provider workflows, raised the most in the subsector with a $400 million funding round.
5. Health information exchanges: $520 million (up 26,000%). Just two companies disclosed funding rounds in this subsector last quarter, but one mega-round—commonly defined as a funding round of $100 million or more—was enough to catapult it to the fifth spot. Commure, a software startup that sells a development platform to help vendors exchange data with one another, raised $500 million in a Series D funding round, which was the largest among all digital health companies that disclosed investments that quarter.