Venture capital investments in digital health companies are on the rise but deal flow continues to decline, according to a report published Monday.
There were 122 funding deals in the first three months of 2025 compared with 137 deals in 2024, according to data from venture capital and research firm Rock Health. Total funding for the sector stood at $3 billion in the first three months of 2025 compared with $2.9 billion in the prior year.
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Large funding rounds from later-stage digital health companies boosted the overall tally. Abridge ($250 million), Innovaccer ($275 million) and Hippocratic AI ($141 million) all received significant funding rounds during the first three months of 2025.
Average deal size increased this quarter to $24.4 million, up from $20.9 million in the first three months of 2024. Seed, Series A and Series B rounds comprised 83% of labeled deals in 2025, which was similar in 2024.
Despite this uptick, the report’s authors said market volatility hasn’t eased. Last Wednesday, President Donald Trump's tariff policies sent markets around the world plummeting in a tailspin that has carried over to this week. In healthcare, questions around return on investment for digital health tools persist and lawmakers have been unable reach a consensus on how much to cut Medicaid.
