Global digital health funding increases 79% YoY to reach $57.2 billion

Digital health startups pulled in a record-breaking $57.2 billion in funding in 2021, up 79% from 2020 totals as funding in all geographies hit record levels in 2021, fueled by the growing need to provide digital solutions and delivery models to patients during the pandemic.

This is according to ‘The state of digital health’ report by CB Insights; a tech market intelligence platform that analyzes millions of data points on venture capital, startups, patents, partnerships and others.

The report explores dealmaking, funding and exits by private market digital health companies.

Highlight of the report

• In 2021, the number of mega-rounds ($100M+) to digital health startups nearly doubled to 154 as mega-rounds accounted for the majority (57%) of total funding in Q4’21 — the second-highest quarter ever after Q1’21 (61%). 80% of the top 10 mega-rounds were to companies based in the US.

• The US digital health market continues to dominate, reaching a record $37.9B in 2021. US funding hit $10.8 billion in Q4’21 alone — more than the second-largest global market, Asia, which recorded in all of 2021 ($10.7B). US deal count dropped to 303 in Q4 – the lowest on record for 2021. This comes as smaller financings were overtaken by mega-rounds, which accounted for 63% of total US funding in Q4’21.

• Late-stage digital health startups are closing much larger deals at much higher valuations as the median late-stage deal size increased 87% from 2020 levels to $73 million in 2021 – At the same time, median late-stage deal valuation jumped to $1.5B, nearly 3x 2020 levels.

• Digital health startups are taking less time than ever to progress from mid-to late-stage financing. Moving from Series C to D, which took 22 months in 2017, has taken only 15 months (at the median) in 2021. Meanwhile, companies at later stages are progressing even more rapidly.

• 13 new digital health unicorns – valued at $18 billion in aggregate – were born in Q4’21, as the total hit 85. Nearly 77% of the new unicorns are US-based and 6 out of 13 provide telehealth offerings.

• Consolidation in the digital health sector took off in 2021. Despite a quarter on quarter decline, 2021 saw record M&A activity – with 574 total deals, up 44% from 2020.

• Digital therapeutics (DTx) startups secured a record-breaking $3.4 billion across 122 deals in 2021. DTx enables the treatment of chronic conditions at scale and is demonstrating improved patient outcomes in clinical trials. This is driving investor interest in the technology’s future.

• Funding to mental health tech startups jumped 139% year on year in 2021. This was driven largely by the need to build out digital solutions targeting mental health – an area of healthcare that has gained momentum during the pandemic. 68% of 2021 deals were early-stage – indicating room for further growth in the mental health tech space.

• Latin America set new funding records in 2021, pulling in $340M across 57 deals. In Q4’21 alone, funding increased 63% QoQ to $116M for digital health startups in the region. The region remains nascent with early-stage deal share making up 72% of total deals – indicating major growth opportunities for investors looking to enter new markets.

Why this matters

In recent times, the adoption of technology has led to several positive impacts in the healthcare sector. This has led to improvement in services delivery, allowing for patients to access and enjoy health services within the confines of their houses as services like drug purchase, telemedicine, health insurance, and medical consultation becomes easy with digital advancement.

What you should know

Nigeria appears to be gaining from the fintech funding as lots of Nigerian startups into health have secured funding round to scale operations in the country and beyond. An instance is DrugStoc, an e-health pharmaceutical distribution startup recently secured the $4.4 million series A funding to drive expansion within Nigeria.




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