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The digital health sector is experiencing remarkable growth. In the first quarter of this year, startups raised $5 billion, a record since the second quarter of 2022. This significant increase surpassed the $3.7 billion raised at the same time last year.
This momentum reflects a renewed marked interest in innovative technologies, particularly those focused on artificial intelligence. Investors are increasingly favoring late-stage startups with strong regulatory milestones and scalable AI platforms. Additionally, the emergence of new unicorns highlights the growing confidence in the potential of these companies to transform the medical sector. Mega-funding exceeding $100 million illustrates this trend towards larger-scale investments.
The digital health sector is witnessing an impressive recovery in financing. With a total of $5 billion raised in the first quarter of 2025, this figure represents the highest level of investment since the second quarter of 2022, according to a recent report from CB Insights. In comparison, digital health startups had raised only $3.7 billion in the first quarter of the previous year. This positive momentum is supported by several key factors that we will explore in this article.
How have transaction sizes evolved in digital health?
One of the most notable changes in financing for digital health is the increase in transaction sizes. In the first quarter of 2025, the median size of funding rose to $6.4 million, up from $5.4 million in 2024. This trend reflects a preference among investors for more advanced-stage startups equipped with regulatory milestones and scalable AI platforms.
This evolution is also highlighted by the increased presence of mega-rounds—funding rounds of $100 million or more—which accounted for nearly half of total funding in the first quarter, totaling $2.5 billion. These massive investments demonstrate investor confidence in the growth potential of large-scale digital health startups. To learn more about funding trends, check out our in-depth analysis of venture capital funding in the medical technology sector.
Why is artificial intelligence at the heart of investments in digital health?
Artificial intelligence (AI) plays a central role in the resurgence of funding in digital health. In the first quarter, AI-focused startups secured eight of the eleven mega-deals completed, demonstrating a strong enthusiasm for advanced technologies. Notable funding rounds include Isomorphic Labs with $600 million in March, Truveta at $320 million in January, Innovaccer at $275 million, and Abridge at $250 million in February.
In total, AI-oriented digital health startups raised $3.6 billion, representing 60% of the total funding for the quarter. This preference can be attributed to AI’s potential to transform healthcare by improving diagnostic accuracy, optimizing treatments, and personalizing patient care. For an overview of current innovations, check out our medtech-en-ile-de-france-focus-sur-les-startups-innovantes/”>biography of MedTech in Île-de-France highlighting innovative startups.
What are the emerging new unicorns in digital health?
The first quarter of 2025 saw the emergence of six new digital health startups reaching unicorn status, meaning a valuation of over $1 billion. This number already exceeds the total of unicorns that emerged throughout the year 2024. Among these new companies, four are based in the United States: Abridge, a clinical documentation startup, Hippocratic AI, a company specializing in AI, OpenEvidence, a provider of AI assistants, and Truveta, a data analytics firm.
The other two unicorns are from abroad: Neko Health in Sweden, developing full-body scan technologies, and Insilico Medicine in China, specializing in drug discovery. This geographical diversification illustrates the global appeal of innovations in digital health and the key role of AI in these successes. For an overview of industry leaders, discover our biography of Dr. Oz, appointed head of CMS.
What are the impacts of this recovery on the digital health industry?
The recovery of funding in digital health has significant repercussions for the industry. It enables startups to transition from innovative ideas to concrete and scalable solutions, thus meeting the growing needs for patient health and well-being. With larger investment sums, companies can accelerate the development of advanced technologies, strengthen their market presence, and attract top talent.
Moreover, this momentum fosters research and development, stimulating continuous innovation. Collaborations between startups and research institutions are increasing, creating a fertile ecosystem for medical advancements. An example of this synergy is presented in our weekly summary of April 12, 2025, highlighting new data from MedTech companies.
Finally, the increase in investments helps to strengthen the confidence of stakeholders, including patients, healthcare professionals, and regulators, in digital health solutions. This confidence is essential for the successful adoption and implementation of technologies, ensuring a tangible improvement in healthcare. To keep up with the latest trends and analyses, check our weekly summary.
In conclusion, funding for digital health is experiencing a remarkable resurgence, marked by three essential trends. Firstly, the size of investments is significantly increasing, with a median deal size reaching $6.4 million in the first quarter of 2025, compared to $5.4 million the previous year. This progression reflects investor confidence in late-stage startups with solid regulatory milestones and scalable AI platforms.
Secondly, Artificial Intelligence is asserting itself as the primary driver of this dynamic. AI-focused startups have captured the majority of mega-rounds, representing 60% of total funding with $3.6 billion raised. Companies like Isomorphic Labs and Truveta illustrate this trend, demonstrating the growing attractiveness of innovative solutions capable of transforming healthcare through AI.
Finally, the emergence of new unicorns underscores the vitality and growth potential of the sector. With six startups reaching a valuation of one billion dollars or more in the first quarter, thus surpassing the achievements of the previous year, the landscape of digital health is diversifying and strengthening. Companies like Abridge and Insilico Medicine illustrate this rise, bringing critical innovations in clinical documentation, data analysis, and drug discovery.
These developments reflect a renewed confidence in digital health technologies and indicate a period of continued expansion and innovation. Investors are showing increased interest in solutions capable of addressing the complex challenges of the healthcare sector, thus promising a dynamic and promising future for startups pushing the boundaries of medical innovation.
