Q3 2023 Digital Health Funding Stalls at $2.5B

In Q3 2023, the digital health sector experienced a stabilization in funding, reaching $2.5 billion across 119 deals, the second-lowest quarterly funding since Q4 2019. Despite challenges, the digital health sector demonstrated resilience, characterized as "smaller but mighty." Factors contributing to reduced funding levels include economic uncertainty, rising interest rates, lower startup valuations, and limited IPO activity, making investors more cautious. Investments have shifted towards digital health products and services supporting disease treatment, nonclinical workflow, and complex condition management. Mental health remains the top-funded clinical indication. While facing challenges, the digital health sector's overall public market performance has shown resilience, outperforming certain indices despite IPO challenges and bankruptcies in 2023.