Digital Health Funds Stable – Venture Capital is Flowing, IPOs reappear, and Megarounds is back in effect.
Startups in the space raised $9.9 billion in the first three quarters of the year, according to new data from Rock Health. $3.5 billion was raised in 107 transactions in the third quarter.
Trading activity has declined in the past quarter. There were 107 trades, down from 120 in the second quarter and 124 in the first quarter – but the ending round average was larger.
Some startups closed down to raise funds, totaling hundreds of millions of dollars. Examples include the $550 million round raised by value-based kidney care company Trive Health, the $400 million round raised by pharmacy welfare manager Judi Health (formerly CapitalRX), and the $243 million round raised by AI-powered document launch enterprise atmosphere.
The average digital health transaction size so far this year is $28.1 million, compared with $20.4 million in 2024.
Total $100 million or more rounds account for nearly 40% of all digital health funds this year. Another round will soon appear, Rock Health's report notes.
The report also notes that the Series B phase appears to have become a barrier for digital health companies.
It takes longer for a startup to enter the B-series phase. The median gap between their Series A and Series B has extended to 27 months this year, increasing from the 17-month period of the cohort in 2023. Meanwhile, the number of Series B deals has dropped sharply, completing only 30 rounds in the third quarter of 2025, about half of the past four years.
Rock Health believes that the digital health fundraising market seems to be developing and the path to success is becoming less direct. Many companies have raised unmarked rounds between Series A and B, making it harder for investors to gauge which startups can really be prepared to scale.
“There are a range of companies that are rapidly improving overvalued overvalued — and then there are everyone else. For those who drive a tough road, the script is to find the moat and double in terms of clear differentiation. We've seen companies break through a meaningful milestone when they reach a meaningful milestone, like landing a major distribution, getting a deal from the FDA or demonstrating a commercial business deal — which will be a link to the next round of the race.” said Becca Shmukler, partner at Million Lives Fund.
In a market that takes over big round headlines, there are also startups that will thrive by navigating less obvious paths with a proof of focus and value.
Photo: Bangon Pitipong, Getty Images
