It’s been quite a ride this past year watching digital health catapult from a niche sector to a mainstream market. Seismic shifts from the COVID-19 pandemic launched digital health into high gear, and the momentum has only accelerated. In USA, 2021 first semester already surpassed 2020’s overall funding record. Monthly funding in June 2021 ($3.1B) was almost triple that of June 2020 ($1.1B).
The first half of 2021 closed with $14.7B invested across 372 US digital health deals with a $39.6M average deal size. Mental health, cardiovascular disease, and diabetes are the top-funded clinical indications, with oncology investments dipping from third to sixth place since 2020.
Private equity firms and growth funds in 2021 (1st semester) were more active in digital health venture investment than in the past. Only halfway into the year, private equity and growth funds have taken part in 102 digital health investment transactions, already exceeding last year’s total of 87.
Finally, direct-to-consumer (D2C) sprints ahead. COVID-19-driven changes in consumer health behavior support the investment trend, as people have grown more comfortable using different virtual care and wellness products in their own homes. First semester’s mega- D2C deals like Noom($540M), Ro($500M), and Capsule($300M) signal investor confidence in this business model. There are some key benefits to the D2C approach: it allows companies to move upstream in consumer acquisition (marketing to individuals before they enter the healthcare system), meet consumers where they are (outside of a clinical setting), identify people’s most pressing needs (as Ro’s co-founder Rob Schutz explained), and personalize service for specific use cases, rather than to enterprise clients’ aggregate need