Digital Health Funding May Be Down, but AI Still Draws Interest from Investors

Q2 2023 marked a significant downturn in digital health funding, with only $3.4 billion, the lowest since Q3 2017, as reported by CB Insights. The first half of the year saw a total of $6.9 billion in funding, merely half of the previous year's total, accompanied by the lowest number of deals since Q2 2015. The U.S. dominated digital health funding in Q2, although it declined by 80% compared to Q1. Investor interest primarily focused on care delivery and navigation technologies, recording 152 deals amounting to $1.5 billion. Clinical support and diagnostic imaging continue to showcase the promise of AI applications, with emerging applications for automating documentation gaining traction. While there is progress, improving the accuracy of these AI systems remains a priority. Notably, mega-round funding and deals increased in Q2, with the U.S. contributing to four out of five mega-round deals.