Market Trends

Unprecedented Funding Boom for Digital Health Led with Software & Mental Health

Investors are directing more of their money to health care digital technology companies than they ever have before. In 2020, total fundraising in digital health was $14.6 billion, the first time the sector ever surpassed the $10 billion barrier. Only three quarters into 2021, total funding for the year already stands at $21.3 billion. These are among the key findings of a new report from venture capital analyst firm Rock Health.

The Digital Health Sector

Rock Health’s analysis of digital health funding includes companies that build and sell technologies, including those paired with a service where the technology itself is the service. That includes companies like data warehouse platform builder Health Catalyst, online preventive health programs designer Omada Health, and Sotera Wireless, developer of the ViSi Mobile System. Rock Health excludes companies like Access MediQuip, Oscar, One Medical and other firms that are innovative but focus on selling labor-intensive services, rather than technology. The analysis also counts only deals of $2 million or more.

The Quantitative Analysis

Rock Health describes 2021 as a “blockbuster year” for digital health funding, with the three highest-funded quarters ever. The $8.2 billion posted in 2021 Q2 was higher than total funding for the entire year in 2019. However, funding dropped off just a tad in Q3, at $6.7 billion. Still, Q3 funding surpassed the total $6.4 billion of 2021 Q1, making it the second-highest quarter ever for digital health funding.


Deal volume followed the same basic pattern, with 169 deals in Q3 2021, as compared to the record-breaking total of 223 in Q2. Deal size was more evenly spread out during Q3, with only 15 “mega deals,” as opposed to the 22 posted in Q1 and 25 in Q2. The mega deals accounted for $3.1 billion, or less than half of all funding for 3Q; by contrast, mega deal totals contributed $4.1 billion and $4.5 billion to the totals for Q1 and Q2, respectively, well over 50 percent of total funding for each particular quarter.

The Narrative: Investment Patterns

Investment flows in digital health for the first three quarters of 2021, according to Rock Health, were consistent with patterns of previous years, with companies using software to accelerate research and development, delivery of on-demand healthcare services and support disease treatment raising the most money
Mental health was the highest-funded clinical area, with $3.1 billion raised. “As digital mental health companies compete in an increasingly crowded space,” the report notes, “we’re seeing more startups differentiate by focusing on complex mental and behavioral health support, including serious mental illness and substance use disorders.” Recent big deals cited in the report include:

  • The $64 million raised by Quit Genius in July;
  • The $16 million raised by Lucid Lane in August; and
  • The $33 million invested in NOCD in September.

The Narrative: Demographic & Social Patterns

The Rock Health analysis also looks at 2021 investment flows from a societal perspective, identifying three themes:

1. More Money Being Raised by Female CEOs

The report finds that companies led by female CEOs have been closing more private market digital health deals than ever before, with $3.0 billion raised across 103 deals so far in 2021. Female CEO companies have accounted for 19 percent of all the year’s deals, the highest percentage Rock Health has ever seen since it began tracking digital health funding patterns. That finding is consistent with previous year’s reports showing that female CEO funding has been steadily ticking up each year since 2017, when those deals accounted for only 11 percent. On the downside, Rock Health says that female-led companies are raising less money, on average, relative to their male-led counterparts ($29 million per deal vs. $42 million per deal in 2021).

2. More Money Going to Women’s Health

The second trend is the continuing growth of funding in what Rock Health describes as “women+health”, i.e., companies serving the health needs of women, including cisgender women identifying as transgender or nonbinary. Through August 2021, digital health startups serving women+health raised $1.3 billion, nearly doubling the $774 million in total funding for all of 2020. This has been a record year for women+health companies, with $443 million raised in 2021 Q3, the second-highest funded quarter ever for the segment, surpassed only by the $631 million raised in Q1.

3. More Money Going to Companies Supporting Health Equity

Companies designed to serve the socially disadvantaged and eliminate the health care disparities exposed by the pandemic and recent movements for social justice have also figured more prominently in 2021 digital health care funding, according to Rock Health. Examples cited by the report:

  • Soda Health raised $6 million to launch a social determinants of health benefits platform;
  • MiSalud secured $5 million for its health and wellness app for the Latinx community;
  • Alkeme Health attracted $3.5 million for its digital mental health platform tailored to the Black experience; and
  • Cayaba Care raised $3.2M to build out digital care offerings for underserved mothers.


Investors are sinking capital into digital health companies like they never have before, with software companies continuing to command the lion’s share of the funding. Clinically, mental health remains the top draw. At the same time, demographic and social developments, including the emergence of female CEOs and stepped-up efforts to redress injustices and disparities in health care are exercising a growing influence on investment patterns.


You have 2 articles left to view this month.

Your 3 Free Articles Per Month Goes Very Quickly!
Get a 3 month Premium Membership to
one of our G2 Newsletters today!

Click on one of the Newsletters below to sign up now and get unlimited access to all articles, archives, and tools for that specific newsletter!









Try Premium Membership